Professor, I have a question.
We are getting the result I’ve been clamoring about...lower prices at the pump. You’ve been discussing the effect of modern production techniques on $/bbl rates, and OPEC profits.
Recent events in Iraq have ISIS et al capturing huge oil holdings and selling them way below market prices to fund their murderous ideology.
My question is:
What effect is this having on the “global” crude oil prices?
Huge? That would not be my description. Not as a comparison to global rates of oil production.
I understand they area they control used to produce 350,000 bpd and now produces 50~60,000 bpd. Removing oil from the market will put more pressure on raising prices than selling a portion of that production at discounts.
I don't see any way that discounted oil, through illegal channels reduces global prices. In total, I see their actions reducing global supply and increasing prices, slightly.