For Immediate Release
Contact: Ellen Carey
June 17, 2014
New Report: Continued Iraq Fragmentation Could Send Global Oil Prices Skyrocketing
Latest SAFE Analysis Finds that despite Domestic Oil Boom Iraq Outages Could Impact the U.S. Economy and National Security
Washington, D.C.–Securing America’s Future Energy (SAFE) released a report today finding that further turmoil and fragmentation in Iraq could potentially lead to higher prices on the global oil market. Combined with rising global demand in the second half of 2014, the loss of even one third of total Iraqi production would essentially eliminate global spare capacity and would generate an oil price increase of up to $40 per barrel.
Over the long term, Iraq is central to most projections for meeting future oil demand growth in countries like China and India. If Iraq enters a period of protracted instability, the consequences are likely to include sustained higher oil prices and slower global economic growth.
“The situation in Iraq has the potential to inflict serious damage on the U.S. and global economies,” said SAFE President and CEO, Robbie Diamond. “The short-term risk is of further violence and a damaging price spike. But the turmoil in Iraq contributes to a broader, long-term outlook of underinvestment, violence, and corruption in key oil producing countries, particularly within OPEC.”
The United States has increased domestic oil production each year since 2008 and now ranks as the world’s second largest oil producer. Nonetheless, oil spending by American households, businesses and public agencies approached a near-record $870 billion in 2013, equal to more than 5 percent of GDP.
“America’s leaders have to act,” added Diamond. “Now is the time to commit to policies that will end oil’s monopoly over the U.S. transportation sector, bolstering our economy and reducing its exposure to the high and volatile oil prices generated by events beyond our control.”
The full report, “Further Social and Political Fragmentation and Descent into Civil War in Iraq Could send Global Oil Prices Skyrocketing,” can be found here.
Members of SAFE’s Energy Security Leadership Council (ESLC) and Commission on Energy and Geopolitics are available to speak to this report and how latest developments in Iraq can impact U.S. national and economic security.