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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
22 Aug 14 10:41:54
$HAL feels like an early $BC steady climb up with plenty pullbacks to jump back in..riding the waves..
Algorithmic Pump
22 Aug 14 10:40:22
$HAL Is Bots? lol @CryptoCobain
22 Aug 14 10:24:03
I haven't lost money since $XLB Thanks to the IE Experience @IconicExpert $CLSTR $CLD $HAL $CLOAK $GML
Business News Now
22 Aug 14 10:23:59
$HAL: Must-know: Halliburton expects to continue growing in 2014 http://t.co/OMBj4DdXp7 http://t.co/OZLlhk9meP
Quantpost Basic Mats
22 Aug 14 10:16:23
$HAL News Alert: http://t.co/3aD1XxYu0V Updated options view: https://t.co/PGA91sOdhK All options views: https://t.co/OmDYbXnHv6
Seeking Alpha
22 Aug 14 10:16:21
Halliburton: 10% Decline Is Solid Entry Point http://t.co/pUtBBeo3nh $HAL
22 Aug 14 10:08:34
Sell side thinning up on $HAL ...could breakout but also has already moved up plenty
Gillian Rich
22 Aug 14 09:50:46
Baker Hughes Seen Saying 'Ola' To Petrobras Project $BHI $SLB $HAL http://t.co/tDIpPansB2
Algorithmic Pump
22 Aug 14 09:00:07
$HAL-A-LOO-YA! @CryptoCobain
Alt Coin
22 Aug 14 08:46:58
Moved my $hal stop loss up, still watching and waiting, but playing it safe
22 Aug 14 08:39:47
RT @SiFuLaoZi: $HAL whitepaper: https://t.co/96dSa7WEV9 #halcyon #crypto #cryptocurrency #btc #bitcoin #hal #halcyoncoin
Michael Geister
22 Aug 14 08:38:25
This is what I think about anon whitepapers anymore $HAL #halcyon http://t.co/5ycLCiWOxz
22 Aug 14 08:08:38
$HAL whitepaper: https://t.co/96dSa7WEV9 #halcyon #crypto #cryptocurrency #btc #bitcoin #hal #halcyoncoin
Alessandra prosperi
22 Aug 14 07:29:46
RT @SiFuLaoZi: $HAL, can you feel it in the air? moon! #HalcyonCoin @HalcyonDev #btc #crypto #bitcoin #cryptocurrency
Stock Headlines
22 Aug 14 07:23:58
$HAL: How the Dow Jones industrial average did on Monday http://t.co/XgvJwNAjq4 http://t.co/UET6GBFVqy
Algorithmic Pump
22 Aug 14 06:56:03
'Price is going up.' $HAL @CryptoCobain
Algorithmic Pump
22 Aug 14 06:54:00
'Sell Orders In Above 0.00030000' $HAL @CryptoCobain
Algorithmic Pump
22 Aug 14 06:48:06
'Well I Do.' It's Called $HAL & It's On It's Way To The Stratosphere! @CryptoCobain
22 Aug 14 06:32:16
A bullish engulfing would be nice on $HAL here... we'll see what today brings
Alt Coin
22 Aug 14 06:26:25
Watching $hal very closely next couple candles are critical
Stock Updates
22 Aug 14 06:23:44
$HAL: Overview: Halliburton’s completion and production segment http://t.co/Jnu3TXZSan http://t.co/6BGK0Sewmx
22 Aug 14 06:10:47
realized I was sitting on some $HAL I bought at 14k. nice surprise to start my day. sometimes ADHD works to my advantage. have an A1 day.
Bidness Etc
22 Aug 14 06:09:45
Baker Hughes poised to win Petrobras’s major offshore drilling contract http://t.co/EhMwOIcIqI $PBR $SLB $HAL $BHI
22 Aug 14 06:09:33
$HAL, can you feel it in the air? moon! #HalcyonCoin @HalcyonDev #btc #crypto #bitcoin #cryptocurrency
Algorithmic Pump
22 Aug 14 05:37:06
Iron Maiden - $HAL_LOWED Be Thy Name (lyrics): http://t.co/tAYZm5VYNR @CryptoCobain
22 Aug 14 05:28:43
@CryptoTradeKid ya might be a scam lol. but then $hal looked like this at the beginning & so did $mns..
Biz News Pioneer
22 Aug 14 05:23:45
$HAL: Interesting September Stock Options for Halliburton http://t.co/rCT85pWGgY http://t.co/35sWab5EQH
22 Aug 14 05:15:45
$HAL, I was just scaring weak hands. Whitepaper is coming today! No reason not to buy. #Halcyon @HalcyonDev #btc #bitcoin #crypto
22 Aug 14 05:02:43
RT @SiFuLaoZi: Look at how high $HAL is already, dangerous stuff. I'm not buying that high. #Halcyon #cryptocurrency #crypto #btc #bitcoin
22 Aug 14 04:52:07
RT @SiFuLaoZi: A lot of resistence on $HAL, don't get dumped on! #Halcyon @HalcyonDev #btc #bitcoin #cryptocurrency #crypto
22 Aug 14 04:49:29
RT @SiFuLaoZi: A lot of resistence on $HAL, don't get dumped on! #Halcyon @HalcyonDev #btc #bitcoin #cryptocurrency #crypto
22 Aug 14 04:48:21
A lot of resistence on $HAL, don't get dumped on! #Halcyon @HalcyonDev #btc #bitcoin #cryptocurrency #crypto
Algorithmic Pump
22 Aug 14 04:45:08
$HAL Held Up Overnight. HAL-A-LOO-YA! @CryptoCobain
Algorithmic Pump
22 Aug 14 04:39:51
RT @Lord_Ashdrake: Confirmed @CryptoCobain is in $HAL. RE http://t.co/V9W96aIuMY Thats a strong buy signal if u ever needed one. Whitepaper…
22 Aug 14 04:30:30
Look at how high $HAL is already, dangerous stuff. I'm not buying that high. #Halcyon #cryptocurrency #crypto #btc #bitcoin
Financial Headlines
22 Aug 14 04:23:46
$HAL: HALLIBURTON CO Files SEC form 8-K, Other Events http://t.co/HbfJlgZE9T http://t.co/Vqx4kc7voV
Alt Coin
22 Aug 14 04:05:32
$hal gearing up for the run!
22 Aug 14 03:45:03
Be careful with $HAL, that trend is too perfect. #Halcyon #btc #cryptocurrency #bitcoin
22 Aug 14 02:51:54
Dat $HAL money! I'm out for now, enjoy the rest of the trip. :-) http://t.co/5xUkDaYgJX
22 Aug 14 02:51:21
RT @FreshMarketism: the feel when you could have put in $5 on $hal & walked away with $250 in only 14hrs..
Alt Coin
22 Aug 14 02:06:57
Not sure I mentioned this, so if not I'm mentioning it now, $hal is a buy even at this range!
22 Aug 14 01:44:33
Nobody fatfingers a 5BTC buy, unless there are major increases planned later. $HAL
Stock News Guru
22 Aug 14 01:23:46
$HAL: Stock Update: Halliburton Company (NYSE:HAL) – Halliburton to Present at the ... http://t.co/nJwmqnArtS http://t.co/0E9O6Y4bYu
22 Aug 14 01:20:02
Halliburton : to Present at the Barclays CEO Energy-Power Conference http://t.co/wNIKwugbcM $HAL
22 Aug 14 00:34:28
#HAL looks strong this morning. Last chance to buy below 20K, whitepaper is almost done and buy support is strong. $HAL. Train leaves soon
Chris Rod
21 Aug 14 22:44:54
@kayden1989 you should buy halcyon $HAL. It will help get you to your 1 btc goal.
21 Aug 14 19:57:02
RT @CryptoCobasher: 'Fooooolin' with $HAL'
₡RY₷TO ฿O$$
21 Aug 14 18:12:08
I didn't even bother reading a single ANN. I can smell shitcoin a mile away $HAL $NEOS $CLSTR
₡RY₷TO ฿O$$
21 Aug 14 18:11:12
TID (Today I Dumped): $HAL $NEOS $CLSTR
21 Aug 14 18:10:32
Confirmed @CryptoCobain is in $HAL. RE http://t.co/V9W96aIuMY Thats a strong buy signal if u ever needed one. Whitepaper in the next 1-2day
By  +Follow June 18, 2014 8:15AM



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