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Iraq Crisis: Why Haven't Gas Prices Spiked Yet?

By  +Follow June 18, 2014 8:15AM
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iraq oil production, how much oil does iraq produce, oil prices middle east, brent crude prices, iraq crisis oil prices,Members of the militant Islamic State of Iraq and the Levant (ISIS) continue on the offensive, and sabotaging oil production in Iraq has remained a major strategy. As of Tuesday, June 17, insurgents forced the shutdown of the Iraq’s largest oil refinery in Baiji. As they close in on the Kurdish-run provinces of northern Iraq, ISIS forces threaten the second of only three Iraqi refineries. With only two thirds of its refineries currently in operation, lowered supply has already placed strains on domestic production.

Prior to its forced closure, the Baiji refinery had a production capacity of 300,000 barrels per day. However, it is a domestic supplier, and as such, its closure does not directly threaten international crude oil prices. What it does threaten is a shortage of supply within Iraq, with indirect long-term ramifications including increased pressure on the remaining two refineries as well as potential rerouting of refined, usable oil to account for the domestic shortage.

Insurgents Surge Forward, Jump in Gas Prices Anticipated

Projections for Iraqi crude oil production are dwindling as ISIS insurgents increase their territory holdings. The International Energy Agency estimates for future Iraqi oil production are looking leaner. Maximum extraction has dropped to 4.54 million barrelsper day by 2019, far below the 2012 expectation of 9 million per day by 2020.

As export prospects shrink, futures prices for Brent crude are on the rise. At a current trading price of $113, various sources speculate that it could continue climbing to anywhere from $116 to an extreme of $150 per barrel. Last month, Brent was trading at about $108 per barrel.

Stephen Schork, editor of energy industry newsletter The Schork Report, told CNNMoney the price of gas typically rises between 2 and 2.5 cents per dollar jump in crude oil. The national average for a gallon of gasoline is about $3.65. If the barrel price of crude continues to rise, this translates to a potential jump in gas prices by anywhere between 20 and 84 cents per gallon with a delay of about two to three weeks to account for barrel trading, exporting and refining. 

China is currently the largest consumer of Iraqi oil, importing about 60% of the 3.3 million barrels produced each day. Meanwhile, the IEA expects 2014 global demand to rise by 960,000 bpd more than its previous May 2013 projections, reaching an average of 92.6 million bpd. The report shows the variety of pipelines linking Iraqi oil fields, all of which cross ISIS territory and many of which are currently offline due to the conflict.

Global Oil Demand Expected to Fall Though Oil Companies Remain Strong

Despite a 2014 increase in demand, the IEA expects a gradual slowdown in oil demand after 2015. Recurring unrest in the Middle East combined with severe environmental impacts and the rising price at the pump are placing limits on future oil dependency. The investment needed to develop Iraq’s oil capacity to reach its full potential is likely to be deterred or entirely impeded.

While prices at the pump are likely to increase within the next few weeks, Western oil corporations with holdings in Iraq oil fields remain in good health.

Over the past five days, shares in Halliburton Company (HAL) have risen 0.75%, while British Petroleum (BP) shows gains of 1.35%. All Western oil companies claim holdings on oil fields located in southern Iraq, away from the current conflict to the north.

Chevron Corp. (CVX)  is faring particularly well despite its proximity to the conflict, with shares up 2.78%. The corporation holds an 80% stake in Kurdistan’s Qara Dagh block. Production is still in the exploratory stage, but previous drilling efforts have confirmed the presence of active petroleum deposits.

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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Results for hal
TickerChirp
22 Sep 14 08:14:05
Leading in Twitter Related to $HAL on 09/22/2014 http://t.co/rOMzatrMrw
Trefis.com
22 Sep 14 07:32:01
Oilfield Services Week In Review: Higher Land Rig Count, Schlumberger's Probable Con... http://t.co/HmVnT4HLIt by Trefis Team $HAL $BHI $SLB
env121
22 Sep 14 07:27:12
Fifty foundations pledge to divest from fossil fuels: http://t.co/lqD6BNNPKF via @MercNews #fracking $CHK $RRC $MWE $AR $CNX $EQT $HAL $RDS
FinGraphs
22 Sep 14 01:47:28
RT @fgusequity: $HAL Potential consolidation period in an Uptrend on an Investor's View : W-D-Hourly charts http://t.co/MPeYTJVGIj
FinGraphs US Equity
22 Sep 14 01:47:25
$HAL Potential consolidation period in an Uptrend on an Investor's View : W-D-Hourly charts http://t.co/MPeYTJVGIj
Kym L
21 Sep 14 17:23:26
@RChang6 $HAL for something, maybe $BHI ? It was a couple of weeks ago, $HAL got spanked.
Kym L
21 Sep 14 17:19:40
@RChang6 Nice, except that $HAL rumor might spank it :(
Kym L
21 Sep 14 13:41:41
$HAL Weekly https://t.co/WZZc83nbSu
Mark McCabe
21 Sep 14 13:39:18
@KymLang $HAL falls into the "it could break either way" category.
Kym L
21 Sep 14 13:38:34
$HAL weekly candle, BTW is a bit or a reversal candle. Bulkowski has called it a "nubbin," which gives me the heebee-geebees
TV_Trading Ideas
21 Sep 14 13:36:00
HAL $HAL http://t.co/UZ7jltoDzc
Kym L
21 Sep 14 13:34:42
$HAL Daily https://t.co/XK2VQm8TFg
FollowingTop5traders
21 Sep 14 12:41:04
Also closed $hal from btcangelo
danrocks
21 Sep 14 10:05:47
$HAL Hit my list a few days ago $NUGT $KINS $GLW $VRTX $DRYS http://t.co/uBbQtrRZ2s
leahanne
21 Sep 14 09:52:06
$SRPT Sarepta Therapeutics Inc (SRPT) 21.78 -0.75 (-3.33%) $HAL $KINS $QLD http://t.co/QiWMovZbcs
danrocks
21 Sep 14 08:51:34
$XLI Hit my list a few days ago $ABHD $DOW $MLHC $F $HAL http://t.co/Hdx2L0N487
lookn4wins
21 Sep 14 08:07:12
$PPC Stock Chart $PPC Most recent stock chart and technical analysis. $AVNR $HAL $CKSW $CDE $AMJ $HTA http://s http://t.co/9brl2XSi5C
Investors Hangout
21 Sep 14 07:25:43
danrocks: $HAL alot of talk going around about this one http://t.co/FmxeYKHBiA
Investors Hangout
21 Sep 14 07:25:37
danrocks: $HAL alot of talk going around about this one http://t.co/z4eRX7NdPo
leahanne
21 Sep 14 07:18:46
$MLHC M Line Hldgs Inc (MLHC) 0.0015 +0.0001 (+7.14%) $CHK $HAL $SIRI http://t.co/Jw3clPzRkb
danrocks
21 Sep 14 07:18:11
$HAL alot of talk going around about this one $GILD $BERY $IMG.TO $TVIX $TVIX http://t.co/kUjO1BUWuW
Investors Hangout
20 Sep 14 18:03:18
Stock Contest!! Pick $HAL and WIN a FREE Tablet!! Enter NOW! Click here for details: http://t.co/6PGABUaw72 $MRK $UNG $DAL $CSCO ~
Crypto Trap
20 Sep 14 17:12:53
I'm staking most of my $JBS. Other picks.. $XMR (dropped from baseless FUD, new features coming), $HAL (crazy accumulation), $Sync, $Pink.
Cryptopath
20 Sep 14 15:35:22
@ArmaanDorno some groups will use it as an exit tomorrow (definitely $HAL, $LXC and $XST) but we'll all be back on trex by next sunday
Investors Hangout
20 Sep 14 10:46:40
Stock Contest!! Pick $CELG and WIN a FREE Tablet!! Enter NOW! Click here for details: http://t.co/GDNOKyP9Gc $TLT $FXA $AMLP $HAL ~
Investors Hangout
20 Sep 14 10:33:18
Jake13: $HAL Buy or Sell Opinion Click here to find out http://t.co/LYO9Q5EOfQ
Investors Hangout
20 Sep 14 10:33:18
Jake13: $HAL Buy or Sell Opinion Click here to find out http://t.co/OnYWoBoLvj
Jake13
20 Sep 14 10:27:17
$HAL Buy or Sell Opinion Click here to find out if $HAL is a buy hold or sell. Watching these stocks. $CYH $ID http://t.co/icUlX6mHvB
Rosner Stocks
20 Sep 14 10:12:35
Stock Contest!! Pick $BIIB and WIN a FREE Tablet!! Enter NOW! Click here for details: http://t.co/aHMbIUrniP $INCC $CELG $HAL $BIIB ~
cryptopenoze
20 Sep 14 10:07:04
Make a few swings today with $hal $drk $pot $bc . I like to play with the swings :). Putting now a few low buyorders on $pot $ppc $via $bc
Investors Hangout
20 Sep 14 08:57:18
danrocks: $MFC.TO Making Some Noise $HAL $AEM $T $GDXJ http://t.co/G9yzDx3B4s
Investors Hangout
20 Sep 14 08:57:17
danrocks: $INCC Picking Up MOMO $IFON $SWKS $BHI $HAL $KMI http://t.co/oacBfdt4Bh
Investors Hangout
20 Sep 14 08:57:13
danrocks: $MFC.TO Making Some Noise $HAL $AEM $T $GDXJ http://t.co/JlfpN1gNM5
Investors Hangout
20 Sep 14 08:57:12
danrocks: $INCC Picking Up MOMO $IFON $SWKS $BHI $HAL $KMI http://t.co/J73qc9QGCP
danrocks
20 Sep 14 08:53:49
$MFC.TO Making Some Noise $HAL $AEM $T $GDXJ $RWLK http://t.co/gy8GXDeKCo
danrocks
20 Sep 14 08:53:16
$INCC Picking Up MOMO $IFON $SWKS $BHI $HAL $KMI http://t.co/cW0y8bUXrJ
Bitcoin Turtle
20 Sep 14 08:53:11
RT @marcoporretto: just bought again $HAL, will be added to new #Mintpal V.2 next days! #halcyon
lookn4wins
20 Sep 14 08:40:53
$MYEC Volume $MYEC Most recent stock chart and technical analysis. $XLI $UGLD $BBRY $HAL $BHI $CSCO http://sto http://t.co/rlOOmCjxdI
danrocks
20 Sep 14 08:12:00
$HL Hit my list a few days ago $HD $RY.TO $JNUG $CVX $HAL http://t.co/PHotzp6D1o
LeSmoke
20 Sep 14 07:19:35
RT @jdebunt: MintPal V2 To Add GreenBacks, Halcyon, Stealthcoin, Shadowcoin, Viacoin & Others! http://t.co/Fzk2D7cOOT $VIA $GB $HAL #XST $S…
Rosner Stocks
20 Sep 14 07:15:02
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Stock_Tracker
20 Sep 14 06:40:27
$HAL News Tesla, Michael Kors, Gap skid; Quicksilver sinks 3:03 p.m. Sept. 5, 2014 - Angela Johnson BP outperf http://t.co/spNZeu4rgv
markfontenot
20 Sep 14 04:26:25
RT @Mrsomebodyelse: Be aware of $HAL $IOC $LXC $SDC $XST remember they will enter in the new @MintPalExchange in 2 days #Altcoin
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20 Sep 14 01:28:30
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Nicholas
19 Sep 14 17:10:55
RT @Mrsomebodyelse: Be aware of $HAL $IOC $LXC $SDC $XST remember they will enter in the new @MintPalExchange in 2 days #Altcoin
Nicholas
19 Sep 14 17:10:08
RT @jdebunt: MintPal V2 To Add GreenBacks, Halcyon, Stealthcoin, Shadowcoin, Viacoin & Others! http://t.co/Fzk2D7cOOT $VIA $GB $HAL #XST $S…
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Stock_Tracker
19 Sep 14 15:06:45
Halliburton Company (HAL) 66.51 $HAL Halliburton Named Corporate Sustainability Leader by DJSI - Analyst Blog http://t.co/Btw1Jv3KX8
				
				
By  +Follow June 18, 2014 8:15AM
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