The Iraq oil market felt the impact of rising global crude prices on Wednesday. Oil prices surged over 4%, reaching their highest levels in more than two months. Traders responded quickly to news of possible US embassy evacuations in Iraq, sparking fears of escalating regional tensions.
Brent crude prices rose by $2.90, or 4.34%, ending at $69.77 per barrel. At the same time, US West Texas Intermediate crude gained $3.17, or 4.88%, closing at $68.15. Both benchmarks hit their highest marks since early April.
The Iraq oil market sits at the heart of these developments. As OPEC’s second-largest producer, Iraq plays a critical role in maintaining global supply. Reports that the United States might evacuate its Baghdad embassy introduced a fresh geopolitical risk. The news caught traders off guard and triggered a rush for oil futures.
One US official noted that military dependents might also leave Bahrain, further heightening security concerns. These developments came shortly after Iran’s defense minister warned that Tehran would target US bases if nuclear talks with Washington break down. Tensions with Iran could keep its oil exports suppressed under sanctions, limiting global supply.
At the same time, OPEC+ plans to increase production by 411,000 barrels per day in July. This move will mark the fourth consecutive monthly hike as the group continues unwinding previous cuts. Yet, some experts believe that increased demand within OPEC+ countries, especially Saudi Arabia, could balance the supply rise and help sustain oil prices.
In addition to regional unrest, broader global events also influenced the Iraq oil market and global prices. A new trade agreement between the United States and China eased concerns about reduced demand. Under the deal, China will provide rare earth minerals and magnets, while the US will allow Chinese students to return to American universities.
Analysts noted that this agreement removed some trade-related risks, at least temporarily. However, many investors remain cautious, unsure how this deal will affect long-term economic growth and global oil demand.
Back in the US, crude stockpiles fell by 3.6 million barrels, reaching 432.4 million barrels. This drawdown exceeded expectations and signaled stronger demand. Motor gasoline usage rose sharply, with daily product supplied reaching 9.17 million barrels.
US inflation data also played a role. Consumer prices increased only slightly in May, increasing the likelihood that the Federal Reserve will cut interest rates by September. Lower rates often stimulate economic growth and energy demand, providing more support to the Iraq oil market and global prices.