Global Economic Intersection
Advertisement
  • Home
    • 카지노사이트
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
  • Home
    • 카지노사이트
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
Global Economic Intersection
No Result
View All Result

Iraq’s Impact on Oil Prices Depends on How Quickly We Respond

admin by admin
June 24, 2014
in Uncategorized
0
0
SHARES
0
VIEWS
Share on FacebookShare on Twitter

by David Elmes, The Conversation

Conflict between Iraqi government forces and Sunni militia group ISIS to the north of Baghdad has prompted some headlines to talk of “soaring prices”. Friday’s Financial Times was more measured, reporting that Brent Crude, “has seen only modest gains, rising just over $5 a barrel to a nine-month high of $115 since the onslaught by Sunni militia began two weeks ago.”

Iraq has always played a very significant role in world oil markets. The steady rise in production from the conflict of 2003 to recent levels of 3.3 million barrels a day meant Iraq provided 3.7% of world oil in 2013. The short-term view is that Iraq’s production lies south of the current conflict with Baghdad in between. The time to worry about a significant spike in oil prices of potentially $40-50 per barrel is if the current conflict spreads into the south, or if power in Baghdad changes so that who owns the oil and gets paid for it breaks down.

The rise in shale oil

So what about the broader context? Last week also saw the release of BP’s annual “Statistical Review of World Energy”. The company’s chief economist, Christoph Rühl, pointed out that world oil prices have been relatively stable at around the $110 per barrel level for the past three years.

But this apparent calm is on the surface only – underneath there have been two competing forces working in opposite directions. There have been significant supply disruptions in the Middle East & Africa, the worst of which have been the military upheaval in Libya and sanctions on Iran. But this has been offset by a steady increase in US oil production as part of what’s often called the “shale revolution“. The scale of decline on one side and the rise on the other have been remarkably similar, which explains the stability of world prices.

Arab Spring pressure

There’s another factor at play following the Arab Spring political events in 2011. The social unrest across North Africa and the Middle East forced leadership changes in Tunisia, Egypt, Libya and Yemen. For governments across the region with oil and gas revenues to afford it, one result was a significant increase in domestic spending to address popular concerns about living standards and opportunities.

The result is the price that many oil-producing countries now need to balance their national accounts has risen significantly for countries in the region. The average break-even price for OPEC members is reported as $105 per barrel. While it varies significantly between countries, many have seen this price rise $30-$50 per barrel over the last five years due to raised spending following the Arab Spring.

So oil prices at $110 per barrel have served the economic needs of producers in recent years. On the other hand, there is only so high the price can go before oil consumers turn to alternatives in the long run.

More than half of the world’s oil is used in transport, and more fuel-efficient vehicles vie with alternatives such as bio-fuels and electric vehicles. The answer may vary by country; Brazil’s light transport fuels are already 48% biofuel; Germany may direct its growing solar capacity to be stored in electric vehicles; and gas may be used in certain other transport markets. But the key point is that high oil prices will ultimately encourage substitutes.

While the trade-off between US shale oil and disrupted production in countries such as Libya and Iran has led to price stability over the last few years, the longer-term view is a steady rise. Global population growth and rising economic standards will require us to use steadily more expensive sources of energy so that the International Energy Agency predicted last year a price of $128 per barrel in 2035.

But that assumes a progressive climb of the sort that we can adjust to. Last year the IEA forecast a 2020 price of $113, which we’ve already exceeded, illustrating the conflict between long-term trends and market sensitivity to short-term changes. There will be disruptions along the way and it’s unlikely they will cancel each other out as they have over recent years. It was as recent as the summer of 2008 when a lack of confidence in managing short-term challenges led to the sudden climb to $147 per barrel.

Iraq implications

Losing Iraq’s production would nearly double the level of disrupted supply that has grown in recent years. It would match or exceed the spare capacity that OPEC members are believed to hold. While US oil production is expected to rise, it’s unlikely to happen as quickly as conflict could shut down Iraqi production. Spikes in oil prices have typically preceded recessions as long-term economic balances fall victim to the pressures of the day. Lets hope that all who need to be involved are ready to manage us through the situation we now face.

David Elmes owns shares in oil and gas companies he has worked for in the past

This article was originally published on The Conversation. Read the original article.

Previous Post

Eurozone Growth Slows

Next Post

What the Turmoil in Iraq Means for U.S. Investors

Related Posts

Unlocking the Future: Google's Game-Changing Move to Advertise NFT Games Starting September 15th
Business

Unlocking the Future: Google’s Game-Changing Move to Advertise NFT Games Starting September 15th

by John Wanguba
September 8, 2023
Bitcoin Is Finally Trading Perfectly Like 'Digital Gold'
Economics

Bitcoin Is Finally Trading Perfectly Like ‘Digital Gold’

by John Wanguba
August 5, 2023
Can Worldcoin Overtake Bitcoin?
Economics

Can Worldcoin Overtake Bitcoin?

by John Wanguba
August 4, 2023
Bitcoin Is Steady Above $29,000 Awaiting US NFP Figures
Economics

Bitcoin Is Steady Above $29,000 Awaiting US NFP Figures

by John Wanguba
August 4, 2023
Namibia Will Regulate And Not Ban Crypto With New Law
Finance

Namibia Will Regulate And Not Ban Crypto With New Law

by John Wanguba
July 25, 2023
Next Post

What the Turmoil in Iraq Means for U.S. Investors

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Browse by Category

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Browse by Tags

adoption altcoins bank banking banks Binance Bitcoin Bitcoin market blockchain BTC BTC price business China crypto crypto adoption cryptocurrency crypto exchange crypto market crypto regulation decentralized finance DeFi Elon Musk ETH Ethereum Europe Federal Reserve finance FTX inflation investment market analysis Metaverse NFT nonfungible tokens oil market price analysis recession regulation Russia stock market technology Tesla the UK the US Twitter

Archives

  • September 2023
  • August 2023
  • July 2023
  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • August 2010
  • August 2009

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized
Global Economic Intersection

After nearly 11 years of 24/7/365 operation, Global Economic Intersection co-founders Steven Hansen and John Lounsbury are retiring. The new owner, a global media company in London, is in the process of completing the set-up of Global Economic Intersection files in their system and publishing platform. The official website ownership transfer took place on 24 August.

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Recent Posts

  • Unlocking the Future: Google’s Game-Changing Move to Advertise NFT Games Starting September 15th
  • Bitcoin Is Finally Trading Perfectly Like ‘Digital Gold’
  • Can Worldcoin Overtake Bitcoin?

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

No Result
View All Result
  • Home
  • Contact Us
  • Bitcoin Robot
    • Bitcoin Profit
    • Bitcoin Code
    • Quantum AI
    • eKrona Cryptocurrency
    • Bitcoin Up
    • Bitcoin Prime
    • Yuan Pay Group
    • Immediate Profit
    • BitIQ
    • Bitcoin Loophole
    • Crypto Boom
    • Bitcoin Era
    • Bitcoin Treasure
    • Bitcoin Lucro
    • Bitcoin System
    • Oil Profit
    • The News Spy
    • British Bitcoin Profit
    • Bitcoin Trader
  • Bitcoin Reddit

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.