It looks like Iraq is headed to civil war with the fall of mosul and tikrit to the islamists. If civil war does to Iraq’s production —what it did to Libya’s production—then there’s going to be a spike in oil prices coming in the next weeks & months. Nor will the civil war play out in weeks or months. Rather it will play out in years and decades.
If the oil price hike is too big and too long—the price hike will tank the economy.
In the short term, the islamists are headed to the nearest oil fields for a takeover.
That’s going to set off big news across the world because Iraq is a large oil producer. Even the threat of the loss of Iraqi oil production will materially affect oil prices around the world.
imho that will spike oil prices to 120@ barrel. Then the market will wait and see what happens next.
I don’t know what happens next. But the Islamists raided the banks in Mosul and walked away with 500 million dollars. Plus they seized immense stores of american weapons when government troops just ran away.
So the islamists are now well armed and funded for battle with the government in bagdad.
Unless others in OPEC raise production to offset.
We have significantly reduced our imports, particularly from Nigeria. They and Saudi may have capacity to spare, although I really would not want to depend on Nigeria.