Iraq's main export oil pipeline, transporting 450,000 bpd from Kirkuk in semi-autonomous Kurdistan Iraq to Ceyhan in Turkey, was shut down before an explosion and ensuing fire jeopardized the safe operation of the pipeline.
Presumed initially to be an act of terror, it was subsequently discovered that a falling power pylon caused the disruption. Upon arrival in Ceyhan, the Iraqi crude is placed on cargoes headed mainly to refineries in Mediterranean countries such as Croatia, Greece, Italy and Spain.
News of yet another supply disruption sent Brent Crude prices on Wednesday morning briefly to $89 per barrel, the highest level since October 14, 2014. Oil prices lost some of the gains later, but were still up on the day at 8:45 a.m. EST with Brent at $88 a barrel and WTI Crude trading at $85.85.
Oil prices continue to rally this week on the back of increased tension in the Middle East after the attack on the UAE claimed by the Iran-aligned Houthis and the standoff between Russia and the West over Ukraine.
Goldman Sachs said this week that Brent oil prices are expected to rise above $100 per barrel later this year.