Posted on 06/18/2014 5:59:09 AM PDT by thackney
When U.S. President Barack Obama spoke briefly on June 13 outside the White House on the deteriorating security situation in Iraq, he ruled out sending in U.S. troops, but said that he had instructed his national security team “to prepare a range of other options.”
While the potential use of force – most likely consisting of airstrikes in some form – is what made headlines, Obama also hinted at the fact that his administration was working behind the scenes to plan for a possible major disruption in Iraqi oil output, which accounts for some 3.5 percent of global supply.
“One of our goals should be to make sure that in cooperation with other countries in the region, not only are we creating some sort of backstop in terms of what’s happening inside of Iraq, but if there do end up being disruptions inside of Iraq, that some of the other producers in the Gulf are able to pick up the slack,” Obama said.
Essentially, “other producers in the Gulf” really means Saudi Arabia, the only nation with significant spare capacity – i.e. dormant oil capacity that can be ramped up at a moment’s notice.
Coincidentally, OPEC met last week – before ISIS began is conquering drive across Iraq – and decided to leave its oil production quota unchanged. Even before the shockingly quick deterioration of Iraqi security, global oil production was already coming dangerously close to just meeting demand (at current prices). In order to avoid a price surge later this year, Saudi Arabia was already going to have to increase production.
Now, with Iraq’s production threatened, pressure on Saudi Arabia to raise outputs is even stronger.
(Excerpt) Read more at oilprice.com ...
That may have been the case before last week, but 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.
Iraq tightens security at oilfields in the south
https://www.middleeastmonitor.com/news/middle-east/12175-iraq-tightens-security-at-oilfields-in-the-south
A senior Iraqi security official said that Iraq has enforced security measures and deployed more troops guarding oil infrastructures and crude oil fields to help protect this vital sector from militants who seized control of a number of towns and cities over the past week.
Brigadier Moussa Abdul Hassan, chief of the South Oil Police, deployed additional forces around oil fields, power plants, drilling sites and the headquarters of oil companies.
The militants defeated the Iraqi army and took control of large areas of the north of the country, threatening to destabilise the whole country.
Abdul Hassan told Reuters: “We have doubled security measures to keep oilfield operations and companies 100 per cent safe. Now we have more than 100,000 oil policemen on ground on high alert, ready to protect energy facilities in the south.”
Approximately 71 per cent of Iraq’s oil reserves lie in the south, with Basra’s refineries exporting 2.5 million barrels of crude oil per day.
Conflicting reports
What a friggin idiot, or should I say genius? All of this going on and we learn that Canada approved the funding to reroute its intended pipeline now to the Pacific coast so it can go to China.
http://www.freerepublic.com/focus/f-news/3169208/posts
The transformation is virtually complete. Darth Vader wins this one.
funding?
The ideal state that the Kurds would like to see is an Iraq divided between its kurdish shia and sunni sections.
but that’s not what’s going to happen.
there’s too much oil in the shia section.
so once ISIS consolidates their control of the sunni section of the country they’ll invade the shia section. That battle will go on forever. Its hard to know how that will turn out. While the shia are more numerous and have plenty of money... they are much poorer fighters than the sunni soldiers.
Its said that ISIS now has about 2 billion dollars after several big bank heists in the iraqi north and syria. that will pay for a lot of weapons and a lot of soldiers.
How fast will this happen. Beats me. but oil prices have nowhere to go but up. this is great for oil companies but at some point it suck the oxygen out of growth in the world’s economy. If it happens too fast we’ll see a scenario like in 2008 where prices went up wildly in the summer and crashed in the fall
Not a reroute of the Keystone XL pipeline.
They are separate projects by separate companies and has been trying to get approval for quite a long time. Northern Gateway is by Enbridge, competition for TransCanada.
The $7-billion pipeline would be developed by Enbridge Inc., a major Canadian energy delivery company based in Calgary. Enbridge submitted its application for the pipeline to the National Energy Board in 2010.
I was only questioning his statement that Canada was funding the project, which would imply that Canada would own the pipeline.
Canada (government) is not funding the project, nor was it a reroute of the Keystone XL. Different projects, different companies, both have been trying to get approval for year.
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