London (BBN)-Global oil prices have fallen to their lowest level in nine months, despite fears that conflicts in Ukraine and Iraq would inflate prices.
Brent crude oil has fallen to $103.70 (£62) a barrel, its lowest rate since November 2013, reports BBC.
In July, oil hit its highest level in nine months, valued at $115.71 per barrel. Violence in Iraq was cited as the reason for the rise.
The current dip in price has led to an increase in demand from wealthy states.
Iraq has scheduled to export about 2.4 million barrels per day of Basra Light crude in September, up from 2.2 million in the previous month.
In a report on Tuesday, the International Energy Agency (IEA) said: “Oil prices seem almost eerily calm in the face of mounting geopolitical risks spanning an unusually large swathe of the oil-producing world.”
The agency said that while tensions in Iraq and fighting in Ukraine continued, other oil resources were available, such as those of the US, Libya and Saudi Arabia.
According to the IEA: “The Atlantic market is currently so well supplied that incremental Libyan barrels are reportedly having a hard time finding buyers.”
It had been thought that sanctions imposed by the US and EU on Russia over its support for Ukrainian rebels might affect oil distribution.
‘TURNING OFF THE TAPS’
But the IEA said: “The consensus in the industry seems to be that neither set of sanctions will have any tangible near-term impact on supplies.”
Oil analyst Malcolm Bracken said there was no need to worry about Russian oil, as the most testing time was past.
He said: “The Crimean crisis hasn’t tempted [Russian President Vladimir] Putin to disrupt oil supply, and nor has the Donbas crisis, so most of the crisis premium from earlier in the year has unwound.
“Russia’s oil flows west, and [Mr Putin] needs our money even more than we need his oil. This limits his options more than ours.
“It is the largest oil producer in the world, at over 10 billion barrels equivalent per day or 13 percent of world supply.
“Russia turning the taps off would cause an oil shock in the West as it would cause a steep rise in prices and significant disruption, especially in Germany. It would also bankrupt the Russian state.”
Concerns over Iraq have also been mounting.
Amrita Sen, chief oil analyst at Energy Aspects, told the BBC: “We do not expect southern Iraqi oil exports [which account for the bulk of Iraqi exports] to be impacted by the current conflict, as the fields remain far away from where the fighting is currently ongoing.
“In the highly unlikely and very small probability that southern exports do get impacted, oil prices are likely to rise sharply, possibly towards $130 or higher, as it will not be possible for the world to replace Iraqi production, simply because the world doesn’t have that much spare capacity available.”