The unexpected outcome of Iraq's recent parliamentary elections has sweeping implications for the country's agreements with international oil companies and OPEC.
A recent study [indicates that] for every million barrels of oil taken off the market, the world oil price will rise by about $5 per barrel, given a baseline oil price of around $60 per barrel. This suggests…a large-scale disruption in Saudi Arabia could cause an upswing of 50 percent or more, and that a catastrophic regional disruption could result in the doubling of oil prices.” A 100 percent increase in oil prices could reduce U.S. GDP by around 5 percent.
Libya's oil production has the potential to rise now that there’s been a merger of the two national oil companies and a likely re-opening of two major ports. But a swift rebound will be difficult, not least of all because of competing groups vying for control of the country and oil facilities remaining vulnerable to attack from ISIS.
Between terrorism attacks on soft targets around the world, the struggle against ISIS, Syria’s civil war, and broader instability throughout the Middle East, the situation today is, in many ways, worse than post-9/11.