Oil prices were little changed this week after fears that drone attacks on oil fields in northern Iraq would lead to supply cuts, as well as concerns about a possible decline in demand amid uncertainty over US customs policy.
Four days of drone attacks on oil fields in Iraqi Kurdistan, which halted half of the region's production, supported prices over the past few days.
In addition, seasonal travel demand supported the market. In the first two weeks of July, global oil demand averaged 105.2 million barrels per day, up 600,000 barrels per day from a year earlier, and broadly in line with forecasts, JPMorgan analysts noted in a research note.
However, uncertainty over the final US customs policy, which is unlikely to be settled until after August 1, is weighing on the market, along with plans by major oil producers to lift production restrictions, which will lead to increased supply as seasonal summer demand in the Northern Hemisphere ends. This week, Brent and WTI oil prices fell by more than 1%.
"Short-term oil market fundamentals remain favourable, with the market expected to remain quite tight during this quarter before supply begins to increase compared to the last three months of the year," ING analysts noted in their note.
Oil production in semi-autonomous Kurdistan has fallen by 140,000-150,000 barrels per day, two energy officials said, which is more than half of the region's usual production level of about 280,000 barrels per day.
Officials pointed to Iranian-backed militias as the likely cause of this week's attacks on oil fields in Iraqi Kurdistan, although no group has claimed responsibility.
Despite the attacks, the Iraqi federal government said on Thursday that Iraqi Kurdistan would resume oil exports via pipeline to Turkey after a two-year hiatus.
As we head through the remainder of July prices will largely be influenced by the usual supply and demand factors, with potentially tighter supply being offset by frantic US policy shifts.
Fuel card prices will remain fairly static this week with small falls in the region of .20 pence per litre depending on card type.
