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Oil Highest Since 2014 as Turkey Outage Adds to Tight Supply Outlook

Oil Highest Since 2014 as Turkey Outage Adds to Tight Supply Outlook

Wednesday, 19 January, 2022 - 05:00
The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, US, November 22, 2019. REUTERS/Angus Mordant/File Photo

Oil prices rose for a fourth day on Wednesday as an outage on a pipeline from Iraq to Turkey increased concerns about an already tight supply outlook.

Brent crude futures rose 39 cents, or 0.5%, to $87.90 a barrel at 0740 GMT, adding to a 1.2% jump in the previous session. The benchmark contract climbed to as much as $89.05 earlier in the session, its highest since Oct. 13, 2014.

US West Texas Intermediate (WTI) crude futures climbed 64 cents, or 0.8%, to $86.07 a barrel, adding to a 1.9% gain on Tuesday. WTI earlier jumped to $87.08, its highest since Oct. 9, 2014.

Turkey's state pipeline operator said it put out a blaze following an explosion that cut oil flow at the Kirkuk-Ceyhan pipeline, adding that it would be operational "as soon as possible". The cause of the explosion is not known.

The pipeline carries crude out of Iraq, the second-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), to the Turkish port of Ceyhan for export.

The loss comes as analysts are forecasting tight oil supply in 2022, driven in part by demand holding up much better than expected as the highly contagious Omicron coronavirus variant spreads, with some predicting the return of $100 oil.

OPEC officials have told Reuters that oil's rally may continue in the next few months due to recovering demand and limited capacity in OPEC+, and prices could break $100 a barrel.

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