Oil Prices Subdued Despite Geopolitical Tension

Brent crude oil slipped further on Tuesday as an oversupplied market outweighed supply concerns due to instability in several OPEC producers.

The commodity traded at $104.20 at 6:54 GMT as investors waited for U.S. inventory data for a better picture of the number one oil consuming nation’s crude appetite.

The conflict in Iraq escalated on Monday as the nation’s former Prime Minister Nouri al-Maliki refused to step down.

Bloomberg reported that Haidar al-Abadi has been named Prime Minister in Iraq, however al-Maliki called the appointment “legally worthless” and vowed to “fix the mistakes."  

U.S. Secretary of State John Kerry warned al-Maliki to step aside and allow the political process to run its course, saying that political upheaval would further escalate the country’s ongoing battle with Islamic State militants in the north.

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Despite the problems in Iraq, oil prices remained unfazed as investors saw an oversupplied market as outweighing the chances of a supply interruption.

Rising tension between the West and Russia also failed to buoy oil prices even though NATO said there was a good chance that Russia would use its nearly 45,000 troops stationed at the Ukrainian border to intervene in the nation’s conflict.

On Monday, Russian President Vladimir Putin said he was planning to send humanitarian aid into Eastern Ukraine. Western leaders have cautioned Putin against using the aid convoy as an excuse to bring troops into Ukraine.

Moving forward, investors will be waiting for U.S. inventory data from the American Petroleum Institute, due out later in the day. The figures are expected to show a 2.2 million barrel decline last week, which may reverse some of crude’s recent losses.