For the third time in 10 days, WTI Crude futures broke above $51 (this time running stops back to its highest level since May) amid growing concerns over the potential reactions to the results of the forthcoming Kurdish independence vote.
Positive comments from Russia and OPEC over clearing the global glut helped, but it is the potential for supply disruption from the Kurdish independence vote that is having the most impact on WTI and Brent.
President Tayyip Erdogan warned on Monday Turkey could cut off the pipeline that carries oil from northern Iraq to the outside world, intensifying pressure on the Kurdish autonomous region over its independence referendum.
The Kurds, which make up about one-fifth of Iraq’s 38 million people, have long-standing grievances against the government in Baghdad. They won a large degree of autonomy under the post-Saddam Iraqi constitution adopted in 2005, and nationalism has deepened since Kurdish troops scored battlefield successes against Islamic State and brought the city of Kirkuk under their control. Turkey fears the independence vote could set back its own campaign to stamp out a Kurdish insurgency it’s been battling for three decades.
Erdogan spoke shortly after Prime Minister Binali Yildirum said Ankara could take punitive measures involving borders and air space against the Kurdistan Regional Government (KRG) over the referendum and would not recognize the outcome.