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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
Joe Trader
28 Nov 14 10:53:53
My strategy of balancing energy with airlines worked......kind of. $hal $slb $xom $rig $bhi $va $JBLU
Mark Trader
28 Nov 14 10:48:02
I banked over 200% in gains during my 14-day trial with http://t.co/6cvEHBeuNR. Their 5 guru traders are amazing. $MDLZ $HAL $GLW $AKS
Muratib Mike Fatah
28 Nov 14 10:45:02
Shale Producers Sink After OPEC Keeps Output Steady http://t.co/Onsxzb2QKc #IBDNews via @IBDinvestors $CLR $DVN $XOM $CVX $EOG $COP $HAL
Alfredo Rodarte
28 Nov 14 10:39:51
RT @CNNMoneyInvest: Call it a 'crude awakening': Nightmare Friday for oil stocks http://t.co/bK6EWcyQd5 $XOM $CVX $RIG $SLB $HAL http://t.c…
Craig Adams
28 Nov 14 10:36:17
RT @TheStreetAlerts: Halliburton $HAL Stock Declining Today on OPEC Decision http://t.co/OYyWidYl86
Zonebourse News
28 Nov 14 10:30:03
Wall St finit en ordre dispersé, les énergétiques ont pesé http://t.co/K4LNO61GMx $DJI $NDX $S500 $XOM $HAL $DAL
Annie
28 Nov 14 10:19:47
$HAL maintained throughout the day, even w/ oil fluctuations. EV/EBIDTA now 6.72, PEG .58. Outlook needs to stabilize for strong rebound IMO
Isaac Lee
28 Nov 14 10:19:18
$HAL Added more @ this level.. Will add more incrementally if heads south from here. Hope this is the bottom and it disconnects WTI.
Tape Reader
28 Nov 14 10:05:33
Lucky me with 25% of holdings in energy and gold. YTD gains were cut in half today! $CL_F $HAL $CSIQ $GC_F $NEM
TheStreet Alerts
28 Nov 14 10:04:36
Halliburton $HAL Stock Declining Today on OPEC Decision http://t.co/OYyWidYl86
TheStreet Hub
28 Nov 14 10:04:18
Halliburton $HAL Stock Declining Today on OPEC Decision http://t.co/KjDzqFpS68
BlockTradeAlert
28 Nov 14 10:00:31
BLOCK TRADE: $HAL 1,086,296 shares @ $42.20 [13:00:31]
Mr Popular
28 Nov 14 10:00:28
$HAL CEO has to be rethinking that deal now! $BHI Could bankrupt the company???
Gavin Martinsson
28 Nov 14 09:57:44
There was a flurry of Calls bot on $HAL earlier. I hope he has good life insurance.
RTShark
28 Nov 14 09:49:11
RT @StockCats: $HAL I'm worried about Dick Cheney's heart
StockCats
28 Nov 14 09:48:33
$HAL I'm worried about Dick Cheney's heart
Shady
28 Nov 14 09:40:02
Some stocks traded in chat today $ROST $TRN $QCOM $HAL $BITA $BBY
HotKeyTrading
28 Nov 14 09:30:06
Annual Lows: $WFT $CAM $JOY $ECA $SLB $LPI $NBR $HAL $SDLP $WAIR $RENN $MOLG $HNR $CYBX $GALT http://t.co/Vv2VEnpBuv #trading #analyst #dow
Daniel Ingulli
28 Nov 14 09:28:32
When a shock hits the energy markets: BUY LOW: Options Jan 2016: $HAL 77.50 C @ $0.27
PairsGuru
28 Nov 14 09:28:14
entering another pairs trade, long $HAL short $SLB #pairstrade #pairsguru
Edgar A.
28 Nov 14 09:27:15
$HAL L 250 sh....BRING IIIT
Allen McCarty
28 Nov 14 09:14:50
Long $HAL and $BHI via #options for acquisition arbitrage opportunity #tradetalk #oilprices
Mr.O
28 Nov 14 09:08:55
RT @StockTwits: There's a giant sea of red in the energy sector today -> http://t.co/YGXR7z5VZM $XLE $HAL $XOM http://t.co/AjOokIUUoz
Steven
28 Nov 14 09:07:43
RT @nanexllc: You think it'd be easy to buy $HAL this morning. These 6 examples show #HFT scurrying away: http://t.co/p7G4Eeku9K
Mr.O
28 Nov 14 09:06:56
RT @CNNMoneyInvest: Call it a 'crude awakening': Nightmare Friday for oil stocks http://t.co/bK6EWcyQd5 $XOM $CVX $RIG $SLB $HAL http://t.c…
Brad  Kelly
28 Nov 14 09:04:23
Some SERIOUS carnage in the oil space today. We are grabbing $HAL 40/45 Jan call spreads and $FCX Jan 27 calls. Will wait for bounce now.
Dr. Duru
28 Nov 14 09:02:37
$HAL's purchase of $BHI looking more and more expensive as oil falls further and further. Can deal survive? $HAL down a whopping 11% today.
Ernesto
28 Nov 14 09:01:50
$XLE $HAL Guess everything comes in full circle. #drillbabydrill
Eternity101
28 Nov 14 09:00:39
RT @LivevolForums: HIGH CALL VOLU $HSNI 4258% $DIN 3973% $BLK 823% $APL 565% $ECA 455% $SEE 372% $HAL 352% $CL 291% http://t.co/gwzPxhFaBv
Livevol Community
28 Nov 14 09:00:03
HIGH CALL VOLU $HSNI 4258% $DIN 3973% $BLK 823% $APL 565% $ECA 455% $SEE 372% $HAL 352% $CL 291% http://t.co/gwzPxhFaBv
Stock Wars
28 Nov 14 09:00:01
U.S. Active (Stock Wars): $AMZN +1.87%, $GPRO -2.07%, $LUV +7.38%, $SNE +1.61%, $HAL -10.67% http://t.co/KVD57T9vUA #StockWars
Mark McCisco
28 Nov 14 08:56:45
$PDS $HAL $RIG etc. are just getting whacked hard.....unreal....I guess more dividend cuts are on the way for these names.
Investors Hangout
28 Nov 14 08:55:11
Emylers: HAL Stock 41.89 Halliburton Company $HAL Hit a 52 http://t.co/F4qIVDerOT
Investors Hangout
28 Nov 14 08:55:09
Emylers: HAL Stock 41.89 Halliburton Company $HAL Hit a 52 http://t.co/t5GuWD3PNe
Annie
28 Nov 14 08:54:27
Take a look at $HAL 10-yr chart and you'll see what's really going on in US. Fact that $SPY does not equate this to jobs is insane
Klaus Daimler
28 Nov 14 08:52:24
Mentioned if $HAL and $BHI couldn't keep their bid that means all other energy going much lower. Here it is.
Wall Street
28 Nov 14 08:49:45
http://t.co/iQWRYqnOQl....Top penny stocks, NYSE, and NASDAQ trades from the stock market today. +296% last week. $MDLZ $HAL $GLW $AKS
Emylers
28 Nov 14 08:48:45
HAL Stock 41.89 Halliburton Company $HAL Hit a 52 week low of 41.88 Closing the day 10:45 at 41.89 -5.45 -11.5 http://t.co/TxGEtHCfwT
Emylers
28 Nov 14 08:48:23
$HAL HAL 41.89 Halliburton Company $HAL Hit a 52 week low of 41.88 Closing the day 10:45 at 41.89 -5.45 -11.51% Wit http://t.co/F3ymnmK6Ih
Long-Short Hedgie
28 Nov 14 08:46:30
#Bot Dec 42.5 Calls $HAL
Alpha Maven
28 Nov 14 08:35:52
RT @CNNMoneyInvest: Call it a 'crude awakening': Nightmare Friday for oil stocks http://t.co/bK6EWcyQd5 $XOM $CVX $RIG $SLB $HAL http://t.c…
John
28 Nov 14 08:33:43
RT @CNNMoneyInvest: Call it a 'crude awakening': Nightmare Friday for oil stocks http://t.co/bK6EWcyQd5 $XOM $CVX $RIG $SLB $HAL http://t.c…
JPU
28 Nov 14 08:32:07
RT @CNNMoneyInvest: Call it a 'crude awakening': Nightmare Friday for oil stocks http://t.co/bK6EWcyQd5 $XOM $CVX $RIG $SLB $HAL http://t.c…
v2 Ratings Bot
28 Nov 14 08:27:32
$hal still looks cheap (rating rose to 9.5 as price fell to 42.10). #stockratings http://t.co/lO9GBMlJdS
K.chang_789
28 Nov 14 08:24:39
RT @CNNMoneyInvest: Call it a 'crude awakening': Nightmare Friday for oil stocks http://t.co/bK6EWcyQd5 $XOM $CVX $RIG $SLB $HAL http://t.c…
sean
28 Nov 14 08:24:33
14% loss on $HAL should've taken my 2% a few days ago
Slip Free Floors
28 Nov 14 08:24:27
@cvpayne Balanced losses of $HAL and other energy losses with gains in $AAL and $UPS. When do we take profits and buy cheap energy? Thanks
Becky Hiu
28 Nov 14 08:23:39
$HAL going again.
Bobby Flay
28 Nov 14 08:23:24
RT @CNNMoneyInvest: Call it a 'crude awakening': Nightmare Friday for oil stocks http://t.co/bK6EWcyQd5 $XOM $CVX $RIG $SLB $HAL http://t.c…
Franco
28 Nov 14 08:23:15
RT @CNNMoneyInvest: Call it a 'crude awakening': Nightmare Friday for oil stocks http://t.co/bK6EWcyQd5 $XOM $CVX $RIG $SLB $HAL http://t.c…
				
				
By  +Follow June 18, 2014 8:15AM
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