Iraqi Crisis Could Drive Oil Prices Up To Recession-Era Levels If Insurgents Expand South, Analysts

Global oil prices could spike to levels not seen since the financial crisis if the armed insurgency in Iraq spreads further south, analysts say.

Al Qaeda splinter groups this week seized control of two major northern cities, Mosul and Tikrit, and parts of Kirkuk, which has some of Iraq’s key oil fields. The takeovers escalated worries that the violence could hit major oil production sites and export facilities in the southern part of Iraq, which in turn caused oil prices to jump on Thursday.



West Texas Intermediate, a U.S. benchmark crude oil, rose $1.54 to trade at $105.94, and Brent futures were up more than $2 to more than $112 a barrel, trading at the highest level since early March, MarketWatch reported. But Brent prices could approach the record $147 high hit in 2008 if the worst fears for Iraq’s oil exports are borne out, said Fadel Gheit, a senior oil and gas analyst at Oppenheimer & Co. Inc. in New York.

If that happens, “it will derail the economic recovery, spike inflation and put an end to the rally on the stock market,” he told International Business Times. “The situation is bad and can get worse.”

Iraq’s oil exports — the sixth-largest in the world — could still take a hit even if Iraqi forces manage to block a southern siege. Ongoing violence could delay the Iraq-Turkey pipeline, one of the country’s two main export routes, from coming back online as soon as planned. Shipments were halted in early March for repair work related to periodic bomb attacks.

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http://www.ibtimes.com/iraqi-crisis-could-drive-oil-prices-recession-era-levels-if-insurgents-expand-south-1599844