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Oil prices down after Obama speech on Iraq strategy

U.S. benchmark West Texas Intermediate for October delivery eased 14 cents to $91.53

Published: Updated:

Oil prices fell in Asia Thursday after coming under pressure due to weak global demand and a supply glut even as U.S. President Barack Obama vowed to destroy jihadist militants in Syria and Iraq.

U.S. benchmark West Texas Intermediate for October delivery eased 14 cents to $91.53 while Brent crude for October fell four cents to $98.00 in afternoon trade.

In a prime-time televised address, Obama said the United States was ready to strike the “Islamic State of Iraq and Syria” (ISIS) in Syria, while vowing to expand operations against them in neighboring Iraq.

“Our objective is clear: we will degrade, and ultimately destroy, ISIL through a comprehensive and sustained counter-terrorism strategy,” Obama said.

ISIS, also known as the Islamic State of Iraq and the Levant (ISIS), has overrun large swathes of Iraq and Syria and declared a “caliphate” in those areas.

The sweeping offensive began on June 9, preventing Baghdad from exporting oil via a pipeline to Turkey and by road to Jordan.

In Syria, a three-year civil war between the government and insurgents including IS has seen production diminish from 400,000 barrels a day in 2010 to around 25,000 barrels a day in January, according to the US Energy Information Administration.

Desmond Chua, market analyst at CMC Markets in Singapore, said oil prices were unlikely to surge after Obama's speech.

“Unless there is a dramatic escalation in the situation with the Islamic State, we are unlikely to see crude supplies being threatened,” Chua told AFP.

“The global supply glut combined with signs of weak demand will continue to contribute to a somewhat slackening of oil prices,” he said.

The Organization of the Petroleum Exporting Countries on Wednesday said in a report that demand would grow by 1.05 million barrels per day in 2014 to 91.2 million barrels, trimming 50,000 from the previous outlook.

Demand in 2015 is expected to grow 1.19 million barrels per day, 20,000 barrels a day fewer than before, the cartel said.