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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
23 Oct 14 08:46:09
$GM Alright! Have been buying $HAL $GM, added to General Motors it's as cheap as buy one get one free. Cheap, massively undervalued.
23 Oct 14 08:23:51
$HAL cup&handle+handle+handle since 10/13...
23 Oct 14 08:16:28
$HXD.TO Horizons Betapro S&P/Tsx (HXD.TO) 5.28 -0.12 (-2.22%) $HAL $PFE $FXI http://t.co/44ysmsFZZZ
Stock Relay
23 Oct 14 08:06:22
$IRBT Ask Click Here: http://t.co/CRhHHXEg2I Also See: $KNDI $LCI $HAL $TBT ~
Long-Short Hedgie
23 Oct 14 08:01:14
$HAL: $56.241.... #UP 3.3%...I am #LONG Nov 55 Calls $HAL (ITM now)... Let's go Halliburton ... O&G driller
Ticker Report
23 Oct 14 06:58:33
Credit Suisse Reaffirms “Outperform” Rating for Halliburton Company $HAL http://t.co/1KhQAUd6OM
Investors Hangout
23 Oct 14 06:52:20
leahanne: $HAL Halliburton Company (HAL) 55.39 +0.96 http://t.co/aFjhCWRwtX
Investors Hangout
23 Oct 14 06:52:19
leahanne: $HAL Halliburton Company (HAL) 55.39 +0.96 http://t.co/lYTEXe3vHC
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$HAL Halliburton Company (HAL) 55.39 +0.96 (+1.76%) $MINE $BABA $NXPI http://t.co/eews7N80WL
23 Oct 14 06:45:16
How can Dow be up so much and my stocks very tight... $AAPL $HAL $CELG $FB etc... not convincing break-outs yet IMO; watching bull traps
Stock Relay
23 Oct 14 06:39:44
$HL Summary Click Here: http://t.co/Thw9EAA3cw Also See: $LCI $AUY $FVI.TO $HAL ~
Jake Mitchell
23 Oct 14 06:12:00
Schlumberger: The Luxuries Of Being A King http://t.co/L7qw3gFND7 $SLB, $HAL
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23 Oct 14 06:00:24
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Ticker Report
23 Oct 14 05:58:45
Halliburton Company Earns “Buy” Rating from Jefferies Group $HAL http://t.co/UFuXcDO7mD
Stock Relay
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Stock Relay
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23 Oct 14 05:41:09
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23 Oct 14 05:18:46
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23 Oct 14 04:58:46
Halliburton Company Price Target Lowered to $70.00 at RBC Capital $HAL http://t.co/f76W2LsPPW
23 Oct 14 04:10:07
Halliburton Company Lifted to “Buy” at Guggenheim $HAL http://t.co/05AldWj5ef
Stock Relay
23 Oct 14 04:03:38
$GLD Yield Click Here: http://t.co/w0MKyNfVno Also See: $IWM $HAL $DSCR $DSCR ~
23 Oct 14 03:01:24
Weekly S&P100 #Stocks Performance $GILD $AMGN $UNH $TXN $DOW $SLB $HAL $UNP $HON $GD $FB $DVN $HD $DIS more@ http://t.co/n4QZIDxy7w
Langan Stocks
23 Oct 14 02:59:12
$C Ask Click Here: http://t.co/Ew3hlJI9gU Also See: $HAL $KO $RGLS $SVAD ~
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Stock Signaling
23 Oct 14 00:31:51
Movers and Shakers: Recently Upgraded: $NLNK $BSX $BIIB $USB $DF $TXN $STLD $DVN $ILMN $HOG $HAL $RCL $AIG $STI $BK http://t.co/Vtx6dLy0Nw
IH News Desk
22 Oct 14 19:50:08
$NTEK Open Click Here: http://t.co/DTwsGuAOv7 Also See: $HAL $VPCO $LNKD $EUO ~
Stock Relay
22 Oct 14 19:24:57
$CMG Day Low Click Here: http://t.co/BPoXCbGx12 Also See: $COP $AAPL $NLNK $HAL ~
charts not opinions
22 Oct 14 19:13:22
@walkslow4 @RaginCajun $Uso crude needs to go where speculators want/need it to go ST but listen to $HAL and $SLB,there's $$ to b made long
Vizimi Stocks
22 Oct 14 18:56:27
Wednesday 10/22 News: $HAL volume down for the 5th straight day #NYSE #stocks
Pivot Point Trading
22 Oct 14 17:08:18
Video Resistance $AAPL $AMZN $BIDU $CAT $TWTR $FB $HAL $DIS $GOOGL $TSLA $DJIA $NFLX $SBUX $SPX $COMPQ http://t.co/oNh8Kfrq1L
22 Oct 14 17:01:30
RT @StockSignaling: After Hours Volume Leaders: $YELP $EMC $CREE $HPQ $MAT $TXN $KEY $HST $ODP $JCP $HAL $TSLA $AVNR $FSP $RDN http://t.co/…
22 Oct 14 17:01:12
RT @StockSignaling: After Hours Volume Leaders: $YELP $EMC $CREE $HPQ $MAT $TXN $KEY $HST $ODP $JCP $HAL $TSLA $AVNR $FSP $RDN http://t.co/…
Stock Signaling
22 Oct 14 17:01:07
After Hours Volume Leaders: $YELP $EMC $CREE $HPQ $MAT $TXN $KEY $HST $ODP $JCP $HAL $TSLA $AVNR $FSP $RDN http://t.co/Vtx6dLy0Nw #daytrader
22 Oct 14 16:43:09
Swing Sell Picks: $ALU, $AXAS, $BXE.CA, $CKE.CA, $CNQ.CA, $COS.CA, $ERF.CA, $FANG, $HAL, $LYB, $NBR, $P, $PD.CA http://t.co/JPl64LHaND
Patrick Miller
22 Oct 14 15:39:25
@jimcramer $Hal ??? Frack king !
Stock Relay
22 Oct 14 14:44:06
$ABX Ex-Div Date Click Here: http://t.co/2nbwR0aGbZ Also See: $LCI $HAL $GPRO $AAPL ~
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22 Oct 14 13:57:11
$ACHN Bid Size Click Here: http://t.co/IDvXVCb7o5 Also See: $GE $HAL $GS $ZAZA ~
22 Oct 14 13:12:20
$CL_F $HAL $PE Oil prices continue to go down. Energy sector is still in trouble here.
bigblaster stocks
22 Oct 14 11:05:21
RT @IHPosts2: leahanne: $HAL Halliburton Company (HAL) 55.35 -0.31 http://t.co/MKgg87qdz1
22 Oct 14 11:04:41
http://t.co/vVojvVrNNL chartguy89: Stock Charts: JNUG Stock Chart $JNUG $GS $HAL $HUV.TO http://t.co/0ThAhTOqcF
22 Oct 14 11:01:44
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Investors Hangout
22 Oct 14 10:26:17
leahanne: $HAL Halliburton Company (HAL) 55.35 -0.31 http://t.co/MKgg87qdz1
Investors Hangout
22 Oct 14 10:26:16
leahanne: $HAL Halliburton Company (HAL) 55.35 -0.31 http://t.co/0NVOIuBXHf
22 Oct 14 10:22:01
$HAL Halliburton Company (HAL) 55.35 -0.31 (-0.56%) $HAL $GOOGL $XLY http://t.co/uPYy9jbIah
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22 Oct 14 10:01:02
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22 Oct 14 09:52:34
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Sleek Money
22 Oct 14 09:52:32
Halliburton Company Earns “Buy” Rating from S&P Equity Research $HAL http://t.co/pTdYS0IeFc
Sleek Money
22 Oct 14 09:52:32
Credit Suisse Reiterates Outperform Rating for Halliburton Company $HAL http://t.co/FNiaVKwvjM
22 Oct 14 09:37:00
vast majority of that comes from $HAL fwiw
22 Oct 14 09:36:45
$HAL has 6 analyst ratings in the last 2 days and 100% are positive. Median target: $72 (29% upside). View here: https://t.co/YdryTfcJUK
By  +Follow June 18, 2014 8:15AM



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