(Bloomberg) -- Oil extended gains from the highest settlement since 2014 after a key pipeline running from Iraq to Turkey was hit by an explosion, taking out crucial supply to an already tight market.
Futures in New York rose as much as 1.8% in early trading toward $87 a barrel. The fire has been brought under control and the cause of the explosion was unknown, according to pipeline operator Botas. The global oil market has tightened recently due to outages in OPEC+ producers including Libya, with buyers in Asia paying higher and higher premiums for cargoes.
Crude’s sizzling start to the year has prompted Goldman Sachs Group Inc (NYSE:GS). to boost its forecasts for global benchmark Brent, predicting $100 in the third quarter. OPEC expects markets to remain “well-supported” by robust demand, maintaining the outlook that has allowed the group to revive output.
The pipeline hit by the blast is an important route bringing oil from northern Iraq to Europe through Turkey’s Mediterranean port at Ceyhan, transporting more than 450,000 barrels a day last year. Botas said the conduit would reopen once the “necessary measures” had been taken.
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