Jun 13 2014, 9:36am CDT | by Sumayah Aamir
With militant Islam on the rise, not just in Iraq but worldwide, the price of oil is one thing which is liable to undergo radical ups and downs. Al Qaeda is on the rampage and it seems the civil war may get ugly as time moves on. The terrorists already have full control over an oil refinery.
As for oil prices, they have increased by $4 per barrel. This fluctuation in rates is a common phenomenon that occurs every time there is crisis or chaotic series of events in the Middle East. The problem may exacerbate to the extent that the insurgent forces takeover Baghdad and thus influence oil rates throughout the world.
According to Yahoo! Finance, "oil prices have shot up by about $4 per barrel to new highs for the year. Brent, the benchmark for Europe, is trading around $113 per barrle, while West Texas crude, the U.S. benchmark, is at about $107."
According to Reuters, "Brent crude oil pared gains but remained above $113 a barrel on Friday on easing concerns that an insurgency in Iraq would trigger a sudden and significant halt in its oil exports."
"The market in general is trying to assess the risks on Iraq. There was a big market reaction and then the IEA (International Energy Agency) said it did not see a risk to supplies so the volatility is reflecting this," Olivier Jakob at Petromatrix consultancy said.
Currently in Iraq, out of the three million barrels of oil that are being produced, over two million are being exported. Iraq has a role that may be important but it is not as vital and crucial as Saudi Arabia or even Russia or the USA.
“While the Iraqi military faces low morale issues in the north, Shia fighters would prove much more resilient in protecting their homes and provinces in southern Iraq, and Sunni insurgents have no local support,” Ayham Kamel, director of the Middle East and North Africa at Eurasia Group, wrote earlier this week.
There were several other reasons for the hike in oil prices. Supply issues caused many delays and disruptions in the oil flow through the veins of the world economy. As for the Islamic revolution, it may stop things in their tracks for awhile but not in the long term.
But the fact of the matter is that Iraq has not reached its expected apogee in oil production. Besides, the US prices of oil were bound to spike at some point and it made no difference whether that time was now or in the future. Why not face the inevitable? Peak oil has pretty much reached its final denouement.
"Concerning as the latest events in Iraq may be, they might not for now, if the conflict does not spread further, put additional Iraqi oil supplies immediately at risk," the Paris-based agency said.
With the world civilization on the brink of a massive transformation, events are changing for better or worse. Things will go from a industrial oil-dependent mode of production towards a post-industrial information style economic existence.
This is definite and while the United States can depend on the oil sheikhs for now, ultimately it will either have to step up domestic production of the black gold or find alternative environment-friendly energy sources.
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