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

By  +Follow June 18, 2014 8:15AM
Tickers Mentioned:

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
21 Oct 14 18:30:06
Top Stock Picks: $NLNK $MU $SCOK $SUNE $HAL $POST $ILMN $JCP $AAPL $BAC $BBRY http://t.co/XQITF0lRKD #watchlist #daytrader #analyst #stock
Stocks Pastor
21 Oct 14 17:53:33
$VFC, $HES, $SONC, $HAL, $HXL, etc..
Rosner Stocks
21 Oct 14 17:49:50
$NFLX Day High Click Here: http://t.co/7JwclhhGvF Also See: $HAL $PSID $XOM $KORS ~
US Banking News
21 Oct 14 17:23:33
Halliburton Company Upgraded at Guggenheim $HAL http://t.co/UL4oxdroDC
Pivot Point Trading
21 Oct 14 16:46:47
VIDEO - Fledging Volume - Slope of Hope? $AAPL $AMZN $BIDU $CAT $TWTR $FB $HAL $DIS $GOOGL $TSLA $DJIA $NFLX $SBUX http://t.co/CQyWlZf5eq
21 Oct 14 16:41:10
PT Chg 10/21: $RMBS, $VRX, $AAPL, $NCR, $GCI, $CRZO, $RCII, $KITE, $HAL, $CDNS, $NLNK, $ZION, $IBM http://t.co/gMvnQNFMzc
21 Oct 14 16:30:03
Top Stock Picks: $NLNK $MU $SCOK $SUNE $HAL $POST $ILMN $JCP $AAPL $BAC $BBRY http://t.co/XQITF0lRKD #analyst #investors #watchlist #mkt
Investors Hangout
21 Oct 14 16:22:04
$MMM Quotes Click Here: http://t.co/fgnjm4jK19 Also See: $MYEC $ENZY $JNJ $HAL ~
21 Oct 14 16:19:05
Halliburton Company's buy reiterated at S&P Equity Research. http://t.co/GEGzFRWA2D $HAL #HAL via @RatingsNetwork http://t.co/4cj2zpSOtN
21 Oct 14 16:14:43
Halliburton Company's buy reiterated at S&P Equity Research. http://t.co/GEGzFRWA2D $HAL #HAL via @RatingsNetwork http://t.co/4cj2zpSOtN
21 Oct 14 16:14:18
Halliburton Company's buy at Jefferies Group. $74.00 PT. http://t.co/3DRH22rO9l $HAL #HAL via @RatingsNetwork http://t.co/4cj2zpSOtN #Oil
21 Oct 14 16:13:57
Halliburton Company upgraded by Guggenheim to buy. http://t.co/uSif5m872p $HAL #HAL via @RatingsNetwork http://t.co/4cj2zpSOtN #Oil #invest
21 Oct 14 16:13:35
Halliburton Company's outperform at Credit Suisse. $76.00 PT. http://t.co/9BwK489erw $HAL #HAL via @RatingsNetwork http://t.co/4cj2zpSOtN
21 Oct 14 16:01:18
S&P100 #Stocks Performance $TXN $HAL $AMGN $EBAY $DVN $APA $GILD $NOV $CVX $SLB $MA $HON $ABBV $AMZN $INTC more@ http://t.co/n4QZIDxy7w
21 Oct 14 15:46:16
$SLB and $HAL Earnings Beat! http://t.co/0i20iC2Yyn
21 Oct 14 15:32:06
RT @StockSignaling: Upgraded Stocks Active After Hours: $ETFC $ILMN $HAL $WERN $KEY $HST $JCP $CLMT $NAVI $XLNX $QLGC $AMD $FMI $MGM $TWC h…
Stock Signaling
21 Oct 14 15:31:44
Upgraded Stocks Active After Hours: $ETFC $ILMN $HAL $WERN $KEY $HST $JCP $CLMT $NAVI $XLNX $QLGC $AMD $FMI $MGM $TWC http://t.co/Vtx6dLy0Nw
21 Oct 14 15:17:24
The 5 best analyst rated stocks in the last 72hrs: $AAPL $HAL $VRX $SLB $OXY View here: https://t.co/IRID6zuG7K
Dave Neville
21 Oct 14 14:30:41
Biggest Movers in Energy Stocks Now - $PDS $PGH $HAL $KOG | InvestorPlace http://t.co/jE4W5nmRR8 @investorplace
sumeet vatsa
21 Oct 14 14:08:54
In last few days: New positions created$AGIO $LUV $DAL $HAL $SWKS $DHI; added to $REGN $URI $SBNY $PANW Portfolio: http://t.co/1G8rCXG5hZ
US Banking News
21 Oct 14 13:59:19
Halliburton Company Earns “Buy” Rating from S&P Equity Research $HAL http://t.co/KGcHDYI9p2
21 Oct 14 13:54:33
Halliburton, Baker Hughes buy more sand, railcars as demand piles up. $HAL, $BHI. http://t.co/7OmPVqruVR
Scott Smith
21 Oct 14 13:53:17
Setups I liked today that we'll again be watching tomorrow. $HAL $SMCI $W $AAPL $FB $COST $NDLS $IWM $SPY $QQQ More http://t.co/OJIG8EhC4R
21 Oct 14 13:30:38
Halliburton Company Stock Rating Reaffirmed by S&P Equity Research $HAL http://t.co/jg9YOQyjAm
US Consumer News
21 Oct 14 13:18:57
Halliburton Company's buy rating reiterated at S &P Equity Research. http://t.co/j6MbkJEU9n $HAL #HAL
Analyst Ratings
21 Oct 14 13:11:42
Halliburton Company's buy rating reiterated at S &P Equity Research. http://t.co/x1XpbRzBMj $HAL #HAL
21 Oct 14 12:58:57
S&P100 #Stocks Performance $TXN $HAL $AMGN $EBAY $DVN $APA $GILD $NOV $CVX $SLB $MA $HON $ABBV $AMZN $INTC more@ http://t.co/n4QZIDxy7w
Zachary Shrier
21 Oct 14 12:50:41
What it feels like to have shorted $HAL last Wednesday. http://t.co/XMo4OZX4IT
Alpha Maven
21 Oct 14 12:50:35
RT @CNNMoneyInvest: What a difference a week makes. All 10 S&P 500 sectors are in the green, led by a 2% jump for #energy stocks like $HAL …
Nancy Boots Davison
21 Oct 14 12:34:33
@GdaytoYou Selling from posted entry swing long common $HAL 55.58. Like return for a weeks trade. Thank you Mr. Market. Resistance 56
21 Oct 14 12:31:28
Feels like some inst. inv in energy here...[or short-covering] -- vol rising in afternoon vs. others fading $HAL $CVX
Jon Vince
21 Oct 14 12:24:58
@NerdElert - Hearing crude 'might' sell off tmrow on gov't report of higher inventories... If that helps? $HAL
Nancy Boots Davison
21 Oct 14 12:18:29
@EQSenseTrades Held $HAL from yesterday eod 55C entry .47 exit 1.20 into resistance here 55.77 over 56 could fly.No o/n today, crazy mkts
21 Oct 14 12:13:09
first $HAL targets were $56 and its coming up now
21 Oct 14 12:07:57
$HAL big trade on big size... have discussed for a week now
Bill Haynes
21 Oct 14 12:05:51
@KeithMcCullough $HAL
21 Oct 14 12:05:05
Halliburton : Iraq approves $278 mln oil deal with Halliburton http://t.co/WpsDmaUQgm $HAL $XOM
21 Oct 14 12:04:34
$HAL 50 to 55.38 ... oh yes
Alexander Morris
21 Oct 14 11:49:02
$HAL: 1mRunaway+:7 [+4%,.2%offHi], News, tf:0111111; TLM:1.2; ILM:0.8, Gap+[+0.8%], DyVol:12.81M:0.7x:0.4x, DyRng:2.5%:0.6x:0.4x
21 Oct 14 11:48:11
@KeithMcCullough $BX, $HAL
21 Oct 14 11:30:08
$HAL | Halliburton Compa is down 26% since we reported $4,219,388 of insider selling on 07/23/2014. Did you ... - http://t.co/EpIhVRITYd
Johnny Trades
21 Oct 14 11:22:31
RT @CNNMoneyInvest: What a difference a week makes. All 10 S&P 500 sectors are in the green, led by a 2% jump for #energy stocks like $HAL …
Investors Hangout
21 Oct 14 11:20:03
$HZU.TO Tick Click Here: http://t.co/6yz9ePtFqV Also See: $HAL $ISNS $C $CSCO ~
Thomas Collins
21 Oct 14 11:01:44
$HAL Eros Halliburton Company (HAL) CEO Dave Lesar on Q3 2014 Results ... http://t.co/DiYmjpQL2N
Seeking Alpha
21 Oct 14 10:12:46
Oil Services Stocks: Compelling Value For Investors? http://t.co/SgrYHhuLeD $OIH $USO $HAL $SLB $OIS $BHI
Tommy Humphreys
21 Oct 14 09:01:56
Crude Oil Finds a New Equilibrium http://t.co/4U0AahjgOr $WTIC $OIL $HAL $PTA.v
Mark Romero
21 Oct 14 08:46:36
"@wyattresearch: 4 Stocks to own on the recent oil selloff. http://t.co/im7c32HIK4 $SLB $HAL $BHI $WFT http://t.co/4Ar0dp7UhE"
Wyatt Research
21 Oct 14 07:38:47
Overreactions in the major #oil and #gas equipment companies offer attractive entry points. http://t.co/kmClDFhYe4 $SLB $HAL $BHI $WFT
Long-Short Hedgie
21 Oct 14 07:22:53
$HAL: $54.79 ... #UP 3.5%.... I am #LONG Nov 55 Calls $HAL (OTM yet)... Nice....Let's go Halliburton (O&G driller)
Matt Egan
21 Oct 14 06:47:57
RT @CNNMoneyInvest: What a difference a week makes. All 10 S&P 500 sectors are in the green, led by a 2% jump for #energy stocks like $HAL …
By  +Follow June 18, 2014 8:15AM



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