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Brent holds gains after failed military coup attempt in Turkey

Monday, July 18, 2016 - 07:25
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Brent oil held gains on Monday as trading resumed after a failed military coup attempt over the weekend in Turkey, a vital conduit for crude from Russia and Iraq to the Mediterranean Sea.

[HONG KONG] Brent oil held gains on Monday as trading resumed after a failed military coup attempt over the weekend in Turkey, a vital conduit for crude from Russia and Iraq to the Mediterranean Sea.

Futures were little changed in London after settling 0.5 per cent higher Friday. President Recep Tayyip Erdogan returned to Istanbul early Saturday and ordered massive reprisals for the failed attempt to oust him.

Oil tankers are loading and unloading cargoes normally at Turkey's ports and shipments are arriving in tankers and pipelines from neighboring countries, an energy ministry official said Sunday, declining to be identified in line with ministry rules regarding comments to news media.

Brent for September settlementwas at US$47.65 a barrel, up 4 US cents, on the London-based ICE Futures Europe exchange at 6:09 am Hong Kong time.

Prices reached as high as US$48.25 in after-market trading Friday after settling at US$47.61 a barrel. The global benchmark crude traded at a US$1.08 premium to the equivalent contract for West Texas Intermediate.

WTI crude for August delivery lost 13 US cents to US$45.82 a barrel on the New York Mercantile Exchange. Prices closed up 0.6 per cent at US$45.95 a barrel on Friday, before trading as high as US$46.33 amid the first reports of the coup.

Major Chokepoint

The Turkish Straits, including the Bosphorus and Dardanelles, are one of the world's major chokepoints for seaborne crude, with about 2.9 million barrels of oil passing through daily in 2013, the latest year of available data from the US Energy Information Administration.

No cargoes have been halted since large tankers were barred for security reasons from sailing in the Bosphorus waterway near Istanbul for several hours on Saturday, a port agent said.

Turkey is also home to pipelines that transport crude and condensate from nations including Iraq and Azerbaijan to the port of Ceyhan, on the Mediterranean Sea in southern Turkey. 

BP Plc, operator of the Baku-Tbilisi-Ceyhan pipeline from Azerbaijian via Georgia, confirmed that oil was flowing uninterrupted.  In Nigeria, Exxon Mobil Corp declared a force majeure on Qua Iboe crude after "a system anomaly observed during a routine check of its loading facility," the company said in an e-mailed statement Friday.

Qua Iboe is the third Nigerian crude grade to be declared under force majeure currently, joining Brass River in May and Forcados in February, according to information from companies compiled by Bloomberg.

BLOOMBERG