Brent (NYMEX:SCU14) crude fell after Kurdish and Iraqi forces seized control of Iraq’s largest dam from Islamic State militants. West Texas Intermediate declined.
Brent slid as much as 1.4%. Kurdish forces and government anti-terrorism units took over the Mosul Dam after receiving air support from the U.S., reversing gains made by the Sunni-Muslim insurgents in the north, according to Iraqi military spokesman Qassim Ata. Futures rose the most in a month on Aug. 15 after Ukraine said its forces attacked and partially destroyed a military convoy entering the country from Russia.
“The anti-ISIS forces are gathering strength and making progress,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “The threat has peaked, and the risk premium is declining. We are selling off from Friday’s Ukraine-inspired bump.”
Brent (NYMEX:SCQ14) for October settlement slid $1.26, or 1.2%, to $102.27 a barrel at 9:01 a.m. New York time on the London-based ICE Futures Europe exchange. The contract rose $1.46 on Aug. 15, the most since July 17. The volume of all futures traded was about 28% below the 100-day average for the time of day.
WTI (NYMEX:CLQ14) for September delivery decreased 87 cents, or 0.9%, to $96.48 a barrel on the New York Mercantile Exchange. Volume was 14% below the 100-day average. The October contract of the U.S. benchmark crude was at a discount of $7.80 to Brent for the same month on ICE. The spread closed at $8.21 on Aug. 15, the widest since June 24.
Islamic State fighters forced the Kurdish forces, also known as peshmerga, to retreat earlier this month as they swept toward Erbil, the capital of the semi-autonomous region of Kurdistan. In response, President Barack Obama authorized airstrikes on Aug. 8 to protect U.S. personnel and threatened Iraqi minorities.
Obama widened the U.S. military role over the weekend, authorizing attacks for the first time to protect critical infrastructure. American bombers were used for the first time since the offensive began to help secure the dam.
The conflict in Iraq, the second-largest producer in the Organization of Petroleum Exporting Countries, has spared the south, home to about three-quarters of its production. The nation pumped 3 million barrels a day in July, according to data compiled by Bloomberg.
“The civil war in northern Iraq has stabilized without the Islamic State moving towards Baghdad.,” Christopher Bellew, senior broker at Jefferies International Ltd., said by e-mail.
In Libya, also an OPEC member, production increased to 540,000 barrels a day as the port of Es Sider prepared to ship crude, according to Mohamed Elharari, a spokesman for National Oil Corp.
Output has expanded from 415,000 barrels a day on Aug. 14. Es Sider was one of two export terminals handed over last month by rebels seeking self-rule in the eastern regions.