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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. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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Results for hal
nasdaqfan
5 May 15 11:53:06
JD http://t.co/u7HbS7y0w3, Inc. Investor Opinions Click Here -> http://t.co/ODtQRMKs0k Trending $JD $RSX $HAL $JD #JD #nasdaq…
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DennyT
5 May 15 11:50:36
GDXJ Market Vectors Junior Gold Miners Chart Click Here -> http://t.co/SkIdxLzrGc Trending $GDXJ $HAL $UTX $OIH #GDXJ #stockmarket…
leahanne
5 May 15 11:49:06
EFA iShares MSCI EAFE Index Fund Last Trade Click Here -> http://t.co/Rm8xjodHTx Trending $EFA $UWM $AA $HAL #EFA #finance #finance
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5 May 15 11:49:04
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Kym L
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I am, because I'm nuts, a little tempted to try farther dated $HAL here. Resisting the temptation.
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Largest Energy Equipment and Services Revenue 1: $SLB 2: $HAL 3: $BHI Chart: http://t.co/FBjHA2qpwZ http://t.co/UwTTHoAZgZ
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ICYMI: Monday's Notable Options Activity: $APC, $GOOG, $HAL, $MCD, $XOP http://t.co/BVWsmyU9Ba
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XLY Exxon Mobil Corp. Exchange Click Here -> http://t.co/cTticn9TQk Trending $XLY $AMDA $IBIO $HAL #XLY #invest #invest
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RT @CowenResearch: Jim Crandell on visit w/ $HAL - Company thinks drill bits should be one of easier units to sell given existing infrastru…
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RT @CowenResearch: Jim Crandell on visit w/ $HAL - Company maintains divestitures will be capped at $7.5B in revenues, but believes ~$3.5B …
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5 May 15 10:50:00
Jim Crandell on visit w/ $HAL - Company thinks drill bits should be one of easier units to sell given existing infrastructure & franchise 3/
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Jim Crandell on visit w/ $HAL - Company maintains divestitures will be capped at $7.5B in revenues, but believes ~$3.5B more likely 2/
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$BSFT Short Sales Updated Tuesday, May 5, 2015 1:07:10 PM $HAL $CGRA $SLW $LB http://t.co/CEl55vLEcI
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$BHI vs. $NOV vs. $WFT vs. $HAL Compared Across 9 Critical Measures http://t.co/PXSesDIBRu http://t.co/speuALnbbf
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$HAL vs. $WFT vs. $RIG vs. $BHI Compared Across 9 Critical Measures http://t.co/WbnRxeFihm http://t.co/oYMhLdklyl
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Many commodity related equity charts hitting resistance simultaneously, meanwhile indices looking weak $CAT $GDX $FCX $HAL $XLE $USO $SPY
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$HAL Daily https://t.co/gap0LHLJEO via http://t.co/xwjHFW9NcP
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$HAL vs. $NOV vs. $CAM vs. $RIG Compared Across 9 Critical Measures http://t.co/KkGbWkc3Sb http://t.co/NKw0ypTnxC
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Invest | Donate
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S&P100 #Stocks Trend $XOM $BAC $BK $MET $JPM $AIG $HAL $DIS $MA $C $MRK $GS $NOV $COF $DOW $WFC $ACN $ORCL $MS @ http://t.co/cKkr8csQUU
12Stocks.com
5 May 15 08:51:22
S&P100 #Stocks Performance $HAL $CVX $COP $V $MON $SLB $XOM $DOW $BAC $NOV $APA $WFC $BK $ALL $COF $MET more@ http://t.co/cKkr8csQUU
CJ
5 May 15 08:36:29
Sold $HAL june calls at $1.96 for a 38% profit.
FortuneCookieStocks
5 May 15 08:36:02
#finance $V $EA $BX $HAL Life to you $GPRO is a dashing and bold adventure @PolgarStocks https://t.co/qT2sb98qSv
UnderValue
5 May 15 08:18:20
http://t.co/8Snhv4o2zW $ABEV $ZNGA $AMD $CMCSA $QLYS $WFC $GILD $HAL $ITUB $ALU $ACRX $OPGN $SCOR $WAC $PTCT $MSO $GOOG $FEYE $IMPV $GIMO
Mikal Jaymes Moore
5 May 15 08:09:30
@cameltrader50 and was on 2 $HP drilling rigs yesterday where sperry drilling, owned by $HAL, had just finished their lateral curve.
Sean D. Emory
5 May 15 08:03:28
$HAL nice day in a sea of red
Capital Market Labs
5 May 15 08:02:22
Largest Energy Equipment and Services Earnings 1: $SLB 2: $SDRL 3: $HAL Chart: http://t.co/L1aIKBBwUG http://t.co/YmjowgOvfD
Mikal Jaymes Moore
5 May 15 08:00:20
@cameltrader50 $SLB & $HAL frack every other well in the 2 largest plays in the U.S. Both have a directional company & make drilling BHA.
Investors Hangout
5 May 15 07:55:15
NEM Newmont Mining Corp. E.P.S. Click Here -> http://t.co/fb5ZP9hDkd Trending $NEM $HAL $TSLA $XLY #NEM #investing #tradeideas
Mikal Jaymes Moore
5 May 15 07:52:28
$CLR $DVN $CHK $CVX $PXD $HAL are the majors who brought fracking to the business, they are the ones to tag your doom & gloom posts to.
Lucky Jimmy
5 May 15 07:52:05
GLD SPDR Gold Trust Shares Company Info Click Here -> http://t.co/r9duB7jSLr Trending $GLD $HAL $EUO $BAC #GLD #stocks #stockmarket
lookn4wins
5 May 15 07:52:05
HAL Halliburton Co. Current Price Click Here -> http://t.co/EzkeN8lOJ8 Trending $HAL $GLNG $UNP $AMBA #HAL #share #investing
Mikal Jaymes Moore
5 May 15 07:45:04
@Stacy47 you've posting this earthquake mess on $ECA. Have you heard of a company called $SLB or $HAL who actually do the fracking.
Mark Mansfield
5 May 15 07:38:33
RT @OptionAlert: Largest open interest increases among single stock options for 5/5 include $AAPL, $BAC, $DAL, $HAL, and $TWTR.
Jake13
5 May 15 07:02:27
WMT Wal-Mart Stores, Inc. Chart Click Here -> http://t.co/2U2IraeIUC Trending $WMT $GG $GGAL $HAL #WMT #pennystocks #tradeideas
				
				
By  +Follow June 18, 2014 8:15AM
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