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Crude prices fall to 13-month lows despite Iraq turmoil

The International Energy Agency said oil prices were "eerily calm"

Crude prices fell to their lowest levels in almost 14 months in mid-August, despite ongoing instability in Iraq. Brent fell to $101.60 per barrel (/b) on 18 August - its lowest level since June 2013 - as Iraqi and Kurdish troops regained control of Iraq's largest dam from Islamic State (IS) militants. 

The International Energy Agency (IEA) said oil prices had been "almost eerily calm in the face of mounting geopolitical risks spanning an unusually large swathe of the oil-producing world". 

After a spike in early June, crude prices fell throughout August as weak OECD refinery runs offset concerns about escalating conflicts in Iraq, Libya and Ukraine. 

WTI was also under pressure as US crude output continues to rise, falling to six month-lows of under $96/b on 14 August. Brent and WTI were trading around $102/b and $97/b, respectively, on 19 August. 

On 15 August Saxo Bank said in a note that Brent's fall may trigger a response from Opec to reduce the cartel's oil output, especially if Brent falls below $100/b. 

In its August Oil Market Report, the IEA lowered its forecast for 2014 global oil demand growth to 1 million barrels a day (b/d) on lower-than-expected second-quarter deliveries and a weaker GDP outlook from the International Monetary Fund. The IEA expects global oil demand growth to accelerate in 2015, to 1.3m b/d, as the economy improves. 

Meanwhile, in Libya, the National Oil Company said on 18 August the country's production had risen to 535,000 barrels a day (b/d), up from 400,000 b/d earlier in the week. The increase was due to ramp-ups at the Sharara, Misla and Sarir fields. This follows the resumption of oil exports from the Ras Lanuf terminal on 13 August. The terminal had been off line for about a year. Exports from the country' Ed Sider port are expected to restart in August. 

However, the IEA cautioned that gains in Libyan output were fragile and a lasting recovery remained at risk from ongoing violence in the country. 

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