Oil market drifts lower as Turkey worries subside

NEW YORK (AFP) – World oil prices fell on Monday on fading market jitters following the failed coup in Turkey over the weekend.

In London Brent North Sea crude for September delivery finished off 65 cents at US$46.96 a barrel.

In New York trade, US benchmark West Texas Intermediate for delivery in August shed 71 cents from Friday at US$45.24 a barrel.

“Brent climbed … late on Friday following the military coup in Turkey,” said Commerzbank analyst Carsten Fritsch. “Prices shed their gains again after the coup was quashed at the weekend.”

While a sense of calm has returned to Turkey following the failed coup attempt, analysts said the situation remains volatile as authorities press on with a ruthless crackdown against the plotters, detaining over 7,500 people.

Turkey is of major importance to the oil market because the country is a crucial oil transit hub – and a major global consumer of crude.

“Oil pipelines with a daily throughput capacity of more than three million barrels cross Turkish territory, transporting crude oil from the oilfields in the Caspian Sea and north of Iraq to the Turkish Mediterranean port of Ceyhan,” said Fritsch.

“Then there are the Bosphorus and the Dardanelles, key shipping routes through which nearly three million barrels of crude oil and oil products are transported each day from Russia and the Caspian Sea to the Mediterranean.”

Still, crude prices remain locked in a US$44-US$52 a barrel range with the market still awash in generous supplies and demand growing very slowly.