Iraq: If Terrorists hit Southern Iraq oil fields, $5-$7 a gallon Gas?

By Juan Cole

Iraq’s former oil minister, Ibrahim Bahr al-Ulum, warned on Thursday that the so-called “Islamic State” terrorist organization could hit the Iraqi oil fields in the south around Basra.

Basra is deep in the Shiite south, so IS could not take the city of 2 million as it did largely Sunni Mosul. But Bahr al-Ulum is pointing out that Basra’s oil fields and refineries are vulnerable to terrorism operations, i.e. bombings.

Brent crude oil futures have fallen about $10 a barrel in the past month, in part on economic news that China’s manufacturing sector is slowing.

Iraq exported about 2.4 million barrels a day in July.

In the unlikely case that Iraq’s southern production were taken off line, that would put the price up to $150 or $200 a barrel (hence $5 a gallon or even twice that for gasoline). The world produces about 86 million barrels a day of liquid petroleum, not counting ethanol and biofuels. But prices are at about $102/ barrel for Brent crude only because of hydraulic fracturing in the US, which has brought over 2 million new barrels a day on line in the past 3 years. The loss of Iraq would wipe out that excess US production and send the price shooting up.

Although Libya has brought its production up this year (who knows how and for how long), and Saudi is doing 10 mn barrels a day, there are countries that aren’t doing so well. Iran’s world sales are way off because of sanctions. South Sudan and Syria production, as well as that of Kirkuk in northern Iraq, are way down. Nigeria is unstable.

There was an attack on a Basra oil field in 2004.

IS fighters have been known to pull off big bombings deep in hostile territory. Strategically, cutting off the Baghdad government from its main funding sort

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Related video added by Juan Cole

CNN: “Is Iraq’s oil under threat?”

16 Responses

  1. Emad Mostaque

    . al Qaeda in Iraq hit the southern oil fields frequently back in 06/07, but oil from there v easy to bring back online

  2. Nauman Sadiq

    . God forbid, if something happens to Saudi 10 million bpd crude production, can the price reach $500 per barrel?

    • One might wonder if the ol’ Caliph there is trading oil futures, wouldn’t you? His Gunmen certainly have the apparent ability to “move the Market.” Our mobsters here in the USA, including the drug carteliers and of course the Bankstas, are known to dabble in the Market for their own account too. Some Saudi princelings seem willing to support activities that might bring the whole petro-financial-based house of cards down, to satisfy some patently hypocritical religious notions or maybe do a little profit-taking. .

      In the meantime, us US Imperial Citizens, feeling fearful but safe behind the walls of our Security State cocoon, link to amazon.com, continue to consume, and/or get rented and robbed to be poor and weak and dead, like there’s no tomorrow… link to youtube.com

  3. Big silver lining here. We need to lose our addiction to oil as an energy source, and protect the reserve for pharmaceuticals, etc. Paying the true cost of oil puts the economics in perspective which helps accelerate the development and use of alternative energy. It would also, one hopes, help people in the US see the need for Congress to actively lead and do its job, rather than serve ideologies of — where to begin? But so many problems to solve, which means people need to come together constructively. Lets.

    • Yes, of course. But this is part of paying its true cost of production. The strife of destroying cultures, human beings. All the blood on the money. If we can see our connection, our part, we can disempower oil.

  4. erniesfo

    . Guess this is why Hagel, et al calls the capability of ISIS “beyond anything we’ve seen” + why bombing continues around dam. #oil

  5. Americans have little to no interest in foreign policy and most may not know Iraq for Iran, including some of the guys and ladies who served there in the US military. But one thing Americans know is, Dont Mess W/My Car. ISIS Beware.

  6. Nothing new here. The US is tottering along with the idea that cheap gas will last forever and the stock market is all that matters. Guzzler, high performance, and 3500# Significantly Unefficient Vehicle sales continue strong while EV sales that could save the nation grow but remain a tiny percentage. Who ya gonna bomb when the Percipitative Event eventually happens that jacks up fuel 20, 50, or 80%? How does the disintegration of Mid East nations make fuel supply more assured? How do you choose between plastic whatzits, road asphalt, and getting to work? When, not if, the next jump comes a lot of people will be whining.

  7. Hoo boy! Let’s America get rolling off to new wars, to keep the price of oil where we like it.
    War, God and Oil. Three letter words to bring the great Rapture!

  8. It is likely we are entering a new era of price volatility with alternative energy continuing to drop rapidly in costs for the next 3-10 years and thus literally becoming cheaper than fossil fuels, thus putting enormous pressure on fossil fuel companies. But many areas of the world are becoming unstable for a number of reasons, including bad actors like Putin.

    I’m not clear why Fracking is leading to excess production at the moment in the U.S., but I suspect tax advantages are a major reason (including a 2009 rule to postpone paying taxes for oil and gas producers, a neat rule for small companies where the controlling partners pay themselves salaries and let the company go bankrupt, with foreign investors holding the bag).

    Because California is no longer considered part of the Fracking picture, Fracking will reach it’s maximum production sometime between now and 2020. This will produce even more volatility when the time comes. But growing alternative energy should eventually stabilize the picture…hopefully.

  9. Given that 30% of the oil from southern Iraq fields is currently exported to China, and that is where the majority of China’s development contracts which would see most of the new production go to China making those exports about 80% of southern Iraq production… al Maliki “forgot” that those contracts should have gone to US/EU corporations, which is why the US invaded Iraq in the first place.

    Oh ya, and that pesky BRICS thing, China being the “C” in that acronym. And the fact the US borrowed $trillions to pay for invading… Iraq. Debt which a war with Russia and China would wipe out. Did we miss the US making a big deal out of a Chinese fighter jet making a US military plane in Chinese airspace feel “unwelcome”?

    So many dots to connect, so little mainstream, or even progressive media coverage.

  10. Have you noticed how stable oil prices have been lately? The US will NEVER let IS take the main oil producing areas…

  11. The inherent inelastic nature of secondary and tertiary sources of fossil fuels (i.e. fracking and tar sands) means that oil companies cannot react quickly to market signals (I.e. prices) to backfill lost primary sources where you stick a pipe in the ground and oil comes up. The huge capital outlays and lead times required to increase production of these sources preclude timely resolution of market shortages. Not only that, the low and falling EROEI on these sources of petroleum means our society’s productivity is grinding toward zero. The laws of thermodynamics have not been repealed.

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