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Crude’s Ambiguous Reaction to US Anti-ISIS Strikes

August 8, 2014 at 16:07 by Andriy Moraru

Oil prices surged following Barack Obama’s speech on the situation in Iraq (a de facto war of the state with ISIS). It was delivered yesterday at 2:00 GMT and oil immediately spiked on the news. The commodity reversed to fall through the day and pared its early gains completely as of now.

Initially, the traders decided that the US involvement, which consists of airstrikes on the ISIS positions and airdrops of aid for the Iraqi loyal forces, will disrupt the supply of oil from the country. Iraq is the second biggest exported in OPEC. However, as the actual strikes followed, it became apparent to the market participants that the US military aid will help the Kurdish and other loyalist forces to reclaim the territories and infrastructure.

Analysts believe that the current course of action will lead to increase in the oil supply in long-term perspective as it will lead to a faster defeat of the militants. Meanwhile, the WTI grade of crude fell from $97.97 to $97.35 as of 16:05 GMT today.

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