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London oil prices fall as US launches strikes in Iraq

Oil prices fell in London on Friday (Aug 8) after the US said it had launched air strikes on jihadist militants in Iraq who are threatening the crude-rich Kurdish region.

NEW YORK: Oil prices fell in London on Friday (Aug 8) after the US said it had launched air strikes on jihadist militants in Iraq who are threatening the crude-rich Kurdish region.

Brent North Sea crude for September delivery lost 42 cents to finish at $105.02 in London trade. Earlier, before the US strikes were announced, Brent had surged to as high as $107.45. Prices rose modestly in New York however, adding 31 cents to $97.65 a barrel, though finishing well off the day's highs.

US President Barack Obama ordered his country's warplanes back into Iraqi skies to stop the Islamic State militants from moving into autonomous Kurdistan.

CMC Markets analyst Desmond Chua said the development could add "significant risk premium to oil prices" as dealers worry about potential supply disruptions.

"The announcement certainly edges up the geopolitical concerns about Iraq and the Middle East region, and comes as a bit of a surprise to investors," Chua told AFP.

Meanwhile OPEC trimmed its 2014 forecast for global oil demand growth on Friday due to weaker-than-expected economic growth in rich countries in the second quarter and a "fragile" worldwide recovery. The Organisation for Petroleum Exporting Countries said it now expects demand to be 91.11 million barrels a day, down from a previous projection of 91.13 mbd.

In its new monthly report, OPEC, which pumps a third of the world's crude, stuck however to its forecast that demand would grow to 92.32 million barrels a day in 2015.