The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
Militant action in Iraq over the last 48 hours has seen control of a number of major cities taken over by groups suspected to have Al-Qaeda links. At the moment these cities are in the north of the country, and there has been disruption to the maintenance and repair of the main pipeline to Turkey.
OPEC is rounding off its second day of discussions at its annual Vienna conference and as Iraq is one of the larger energy suppliers, this action will have undermined any decisions that have been made.
The uncertainty that has been created from this has seen crude spike up to five-month highs and looks set to close at levels last seen at the turn of the year.
At the moment, it looks quite a task for the crude oil price to break above the $113 December high, but the worse the situation becomes in Iraq the greater the chances. A word of caution as the relative strength index has now moved into overbought territory, but this still feels like a price that will be driven by fundamentals rather than technical for the short term at least.