...the danger of a major supply cutoff cannot be ruled out. Iraq’s 3.3 million barrels per day exceeds what Saudi Arabia holds in spare capacity – which stood at 1.96 million barrels per day in the first quarter.
It is unlikely that Iraq will lose all of its production, particularly since two-thirds of its capacity is located south of the current turmoil, but should a significant volume be cut off from global markets, Saudi Arabia’s ability to make up for it is questionable.
And in a world still woozy from a credit depression, this is an existential threat.