Subscribe to our free, weekly email newsletter!


Intensifying Iraqi turmoil poses another threat to supply in tight global oil market

By Patrick Burnson, Executive Editor
June 23, 2014

IHS Energy experts say oil markets have turned their attention squarely to Iraq and the fast-moving attacks of the Islamic State in Iraq and Syria (ISIS). The impact on global supply chains has yet to be measured.

Global oil prices have increased by several dollars per barrel in the past few days, with Brent front-month futures rising above $114 in intra-day trading late last week. Prices will remain elevated during this crisis, all else equal.

So far, the ISIS offensive has been largely confined to the north and west of Iraq—still some distance away from the epicenter of the country’s oil production in the south.
Derik Andreoli, Ph.D.c., a senior analyst at Mercator International LLC, says time will tell how this spells out for supply chain managers.

“It all depends on how long the prices remain elevated,” he says. “But in general, elevated oil prices push through to elevated bunker prices.”

The increasing potential for supply outages in Iraq comes against a backdrop of an already tight global market,” says IHS.  OPEC spare capacity is currently at the lower end of the market’s comfort zone of 2.5- to 4.5 million barrels per day (mbd) as market balancers Saudi Arabia, Kuwait, and the United Arab Emirates continue producing at high levels in part to offset some 3.5 mbd of supply offline globally.

The global balance is expected to tighten this summer as demand picks up seasonally.
Energy analysts say further global oil price increases could spur discussions of releasing oil from strategic reserves. New supply outages in Iraq would likely push global oil prices higher still—possibly toward $120, a level that could trigger discussions among consuming countries of tapping strategic stocks.

About the Author

image
Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

As the calendar turns to September and we approach 2015’s final third, there are, as usual, many things that require our attention from a freight transportation, logistics, and supply chain perspective.

According to Panjiva data, July shipments-at 952,126-were up 1 percent over June, following sequential gains of 7 percent for May over April and 1 percent for June over May.

While the previous edition of the Shippers Conditions Index (SCI) from freight transportation consultancy FTR showed some encouraging signs for shippers in terms of a mild uptick in overall market conditions.

Supply Chain Expert John Caltagirone is working with an increasing number of large companies that need help addressing key issues that “keep them up at night.” Here’s what Caltagirone recommends supply chain managers do right now to prepare for the future.

What will it take to find, train, and retain talent going forward? Three supply chain experts dust off their crystal balls and discuss the top ways to build the workforce for 2025.

Article Topics

News · Energy · Oil Prices · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA