Forget Iran, Iraq is threatening oil prices

[jpbaz1960]

Forget Iran, Iraq is threatening oil prices

By Steve Hargreaves@CNNMoneyJanuary 31, 2012: 5:28 AM ET

NEW YORK (CNNMoney) -- The deteriorating situation in Iraq is leading some analysts to worry that the country may not be able to meet its lofty goals for rapidly ramping up oil production.

Violence in Iraq is a big problem, especially for the people who live there.

But it's an issue for oil markets because increased oil output from Iraq is supposed to offset rising demand from places like India and China. Iraq's ability to deliver on that oil is one reason oil prices haven't jumped even higher than they are now.

But after U.S. troops left the country in December the number of attacks has increased. At least 63 civilians were killed in attacks in December, the highest amount in three months.

While attacks are still far below levels seen in the years after the U.S. invasion, there are also signs of rising instability within the central government.

Iraq oil starting to come on strong

There's a "potential for the insurgency to re ignite and even become a civil war...and oil infrastructure could be the target," Deutsche Bank analysts wrote in a recent research note. "To us, the rapidly rising tension in Iraq is more potentially damaging for world oil markets than the headline-grabbing situation in Iran."

Oil production in Iraq is expected to rise by nearly 2 million barrels a day over the next five years, according to Deutsche Bank. That, the bank said, would represent 70% of OPEC's production growth.

But in order for that to happen, Iraq's fields need extensive repairs following decades of war and under investment.

A host of international oil companies have been contracted for the job, including Exxon Mobil (XOM, Fortune 500), Royal Dutch Shell (RDSA) and BP (BP). But how effectively they can operate depends on conditions on the ground.

"People are worried about a spillover in violence," said Tim Daniel, an executive at International SOS, a company that provides medical services to international firms in unstable regions. "It could make it hard to move people in and out."

One immediate change for the international oil firms operating in Iraq is they no longer have the U.S. military to rely on in times of trouble.

"There's no medevac helicopters, no compatible hospitals, no rapid reaction force," he said. 'You're on your own now."

So the oil firms and others in Iraq now contract with company's like Daniel's, which stations a paramedic with groups of oil company employees and then has an airplane waiting to fly wounded workers to neighboring Dubai or Abu Dhabi for treatment in the event of a serious injury.

This situation is not an impossible one for oil companies to operate in -- they have been doing business in hostile environments for decades.

But the loss of the U.S. military combined with an increasingly unstable situation in Iraq is making people nervous.

"We haven't heard of people pulling out," said Daniel. "But they are making contingency plans."

For some, it's the increasingly dire political situation that's more problematic than the violence.

"The government is slowly fracturing," said Andreas Carleton-Smith, managing director of Middle East operations for Control Risks, a consultancy. "The political risks are far more serious than the security risks."

Of course, political risk could lead to serious security risks, especially in a worst-case civil war-type scenario.

But political risk can also manifest itself in a crushing bureaucracy, or simply the inability to get something done because the government office that's supposed to approve something no longer exists. This type of situation has also become more common in Iraq.

"It's becoming more difficult to work here," said Carleton-Smith.

Ultimately though, he's an optimist, preferring to believe the Iraqi's who are tired of years of war, will eventually get things together and develop their vast oil reserves.

That sentiment is shared by others in the country.

"The oil sector's infrastructure is in some of the best protected parts of the country," said Ben Lando, Baghdad-based bureau chief of the industry newsletter the Iraq Oil Report. The recent violence is "not going to impact it."

http://money.cnn.com/2012/01/31/news/international/Iraq_oil/index.htm?iid=Popular

[Luigi1]

Don't feel guilty cashing in after RV one iota. Your helping to pay for your own RV every time you top off your tank.

[powerpager]

YO, VIVO MALIKI !!!

[Realdinar]

Hopefully those guys can learn to play together!

We need a significant rv!

[jgreene]

the US pulling out of Iraq was the dumbest thing we have ever done....we have military bases in Europe staffed but will not set one up in Iraq to deter invasion or an insurgency??? what a bunch or morons...

[redsand]

the US pulling out of Iraq was the dumbest thing we have ever done....we have military bases in Europe staffed but will not set one up in Iraq to deter invasion or an insurgency??? what a bunch or morons...

George Bush's plan from the start. Obama was just following through.

[PacoTaco]

President Obama’s decision to pull all U.S. forces out of Iraq by Dec. 31 is an “absolute disaster” that puts the burgeoning Arab democracy at risk of an Iranian “strangling,” said an architect of the 2007 troop surge that turned around a losing war.

http://www.washingtontimes.com/news/2011/oct/23/key-general-calls-iraq-pullout-plan-a-disaster/

[jgreene]

George Bush's plan from the start. Obama was just following through.

is that what George Bush told you?? or are you just throwing darts blindfolded here??? I dont care whose idea it was. It is still extremely dumb...If i had invested a trillion or more into something I believe I would be protecting my investment a little more aggressively than this.

[redsand]

is that what George Bush told you?? or are you just throwing darts blindfolded here??? I dont care whose idea it was. It is still extremely dumb...If i had invested a trillion or more into something I believe I would be protecting my investment a little more aggressively than this.

He told the the gov't, the world, and written it in stone this could only be a 10 year war and then we have to get out.

[caughtinthecrossfire]

is that what George Bush told you?? or are you just throwing darts blindfolded here??? I dont care whose idea it was. It is still extremely dumb...If i had invested a trillion or more into something I believe I would be protecting my investment a little more aggressively than this.

I don't think Red is throwing darts. I was on the ground in Iraq as were many others here in DV land. The move out of country had been hanging over the troops since mid 2008. Obama simply moved the process forward. I'm honestly surprised the move out held off as long as it did.

No...no throwing darts...besides, he hit a bullseye if he did.

[redsand]

I don't think Red is throwing darts. I was on the ground in Iraq as were many others here in DV land. The move out of country had been hanging over the troops since mid 2008. Obama simply moved the process forward. I'm honestly surprised the move out held off as long as it did.

No...no throwing darts...besides, he hit a bullseye if he did.

+1 for crossfire and his service

[Carrello]

President Obama’s decision to pull all U.S. forces out of Iraq by Dec. 31 is an “absolute disaster” that puts the burgeoning Arab democracy at risk of an Iranian “strangling,” said an architect of the 2007 troop surge that turned around a losing war.

http://www.washingtontimes.com/news/2011/oct/23/key-general-calls-iraq-pullout-plan-a-disaster/

And just what decade, or century, do you think the Iraqis would get their act together to live in a civil society, rid themselves of corruption, and stop with the bigotry and hate? Iraqi needed to put on their training wheels and take a spin around the block. Should we have waited until 2015 to leave, would it be any different? NO. Should we have waited until 2050, would it be any different? NO.

What is your plan Paco Taco? If our military stayed in Iraqi, what would you have done to change the Iraqi society and their neighbor's? I know you have a plan that is not just an occupation, because that is just delaying the inevitable.

Edited January 31, 2012 by Carrello

[jgreene]

I don't think Red is throwing darts. I was on the ground in Iraq as were many others here in DV land. The move out of country had been hanging over the troops since mid 2008. Obama simply moved the process forward. I'm honestly surprised the move out held off as long as it did.

No...no throwing darts...besides, he hit a bullseye if he did.

if it was truley Bush's idea then it was a dumb one...you know George was capable of being a moron to. So many these days just like to lob Bush's name out there when we have a problem that it has really become old news. if this thing RV's with no lop I am going to name my new huge boat "Blame Bush"...

[Nelg]

George Bush's plan from the start. Obama was just following through.

The Bush plan was to leave 10,000 troops in Iraq as trainers and to make sure the military of Iraq knew what they were doing. The base would remain indefinitely. Problem: GOI said to remove them and the UN went along with the decision. It was a bad move on our part, but the pressure was on and the troops needed to get out. Blame needs to land at the feet of the GOI and UN and not on the USA (Bush or Obama).

[Darin]

The Bush plan was to leave 10,000 troops in Iraq as trainers and to make sure the military of Iraq knew what they were doing. The base would remain indefinitely. Problem: GOI said to remove them and the UN went along with the decision. It was a bad move on our part, but the pressure was on and the troops needed to get out. Blame needs to land at the feet of the GOI and UN and not on the USA (Bush or Obama).

Well said....

You have to think, when drawing up a plan that you would have to imagine that peace & prosperity is the goal and should or could be attained within 10 years. This however, was not what was achieved. Granted struggles and bumps occur along the way, but I think the U.S. planned accordingly to setup a permanent base + trainers. It appears that part of the plan was folded due to conflicts of interest or indecisiveness.

Conflicts of interest was immunity

Indecisiveness was on the GOI

[truthful1]

Whether we are there or not, the iraqis were always waiting and wanting us to leave. its like, the parents leaving home and theres three kids who are all 12, whos gonna be in charge. The political positioning was bound to happen as soon as we left the iraqis are going to have to stand up and confront there problems sometime, right ?

Edited January 31, 2012 by truthful1

[SgtFuryUSCZ]

President Obama’s decision to pull all U.S. forces out of Iraq by Dec. 31 is an “absolute disaster” that puts the burgeoning Arab democracy at risk of an Iranian “strangling,” said an architect of the 2007 troop surge that turned around a losing war.

http://www.washingtontimes.com/news/2011/oct/23/key-general-calls-iraq-pullout-plan-a-disaster/

***///

INCREDIBLY PROPHETIC !

The Bush plan was to leave 10,000 troops in Iraq as trainers and to make sure the military of Iraq knew what they were doing. The base would remain indefinitely. Problem: GOI said to remove them and the UN went along with the decision. It was a bad move on our part, but the pressure was on and the troops needed to get out. Blame needs to land at the feet of the GOI and UN and not on the USA (Bush or Obama).

***///

and BAM!...There it is.