After capturing a large swath of northern Iraq, ISIS rebels are continuing their push into the southern regions of Baghdad, capturing oil refineries along the way.
If Iraq oil becomes restricted or taken off line, oil prices are expected to hit $200 per barrel.
Reuters reports that "Sunni militants have 75% of the biggest oil refinery in Baiji [Iraq] under their control." The attack came just hours after a British security company was able to evacuate Western oil workers from the refinery.
President Obama will convene with Congressional leaders today, but air strikes are not in the plans. Earlier this week Obama ordered 275 military personnel to Baghdad to assist U.S. embassy personnel there.
At best, the ISIS rebellion guarantees that any potential additional Iraqi oil output gains are not going to materialize in the near future. No oil companies are going to invest in Iraq until and unless the situation stabilizes.
This means that Saudi Arabia will have to account for 100% of the hoped-for additional oil supply that the IEA is calling for. There’s quite a bit of uncertainty among oil analysts as to whether Saudi Arabia can even do this, as that’s over 1 million barrels per day more than the country has ever pumped in its entire history.
U.S. oil companies are always on the lookout for a reason to jack up gas prices. Expect $6 gas this summer.