The Low Post News

Iraq Conflict Could Affect Oil Prices

The ongoing conflict in Iraq involving government forces and the Islamic State of Iran and the Levant, known as ISIS, has pushed the oil futures to highs of nine-months.

Some companies have started feeling effects of the increase, as airline shares dropped sharply on Thursday over fuel supply concerns.

The fighting has come as oil production in Iraq appeared in stride, while the price of crude has been stable for the past 4 years.

During February, oil exports from Iraq increased to 2.8 billion barrels per day, a new record. However, insurgents surrounded the largest refinery in Iraq on Thursday in Naiji a town in the north making concerns over the disruption of supply to grow.

ISIL is thought to attempt to exploit its current momentum in the northern region of Iraq and take possession of as much area as it possibly can to keep political pressure on the current government, said an analyst who studies terrorism and insurgency.

ISIL has seized at least one big city in Iraq’s northern region. According to one research group, the ISIL has also attacked oil facilities in that region, while also threatening Kirkuk the hub of oil in Iraq’s northern region.

However, for now, one oil analyst said the current situation he not yielded any major impact on global supplies of oil.

One report showed that crude exports from southern Iraq were flowing normally and are now unaffected by violence that is sweeping the Iraq’s north.

However, even though the U.S. now produces historic amounts of natural gas and oil, analysts have said that any large disruption of oil in an oil behemoth such as Iraq, an OPEC member, would have wide-ranging and a negative impact economically.

One strategist said that oil shock, which is a rapid rise in the commodity’s price, was a common cause of U.S. recessions.

There were years such as 1973, ’79, ’91, 2001-2003 and 2007 as well that are examples of oil shock causing economic mayhem in the U.S.

Additionally variables include the uncertainty of ISIL and what plans it holds for the region if they were to be successful in taking overall control.

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