As geopolitical tensions rise in the Middle East, concern spreads over global oil supplies. The prospect of a civil war in Iraq and the potential overspill to neighbouring countries within the region are currently sending oil prices higher.
Investors Notes:
- Iraq is one of OPEC’s biggest crude producers.
- Baghdad could lose control over the Southern states of Iraq- which currently produce 2.5 million barrels of oil exports.
- The Shi’ite controlled Southern states could form an allegiance with Iran.
- The pending loss of control of Iraq and Iraqi oil exports will likely motivate the U.S. to step in and initiate air strikes in the region.
- This crisis is superimposed on the already fragile global oil supplies as a result of similar tensions in Ukraine as well as political issues in Libya.
- With Iraq tensions aside, the EIA have forecasted a rise in oil prices due to seasonal factors including the April- September ‘summer driving season,’ resulting in a 4 cents rise in prices compared with last year’s prices.
- Banc De Binary analysts predict that Oil prices will continue rise as tensions unfold in Iraq, indicating a potential long-term upward movement in OIL prices.