With economic instability and currencies devaluing globally an individual may ask themselves is there any good future prospects in the marketplace? I answer this by saying although the ship may seem to be sinking the lights will remain on. Iraq has begun to produce oil at a rate seen during the late nineties, that being about 2.2 to 2.6 million barrels of crude. After several decades of war, which has hindered economic development, Iraq has reached a time of relative stability that has promoted an increase in oil production. With this increased production Iraq has the ability to makes its name as one of the leading heads in OPEC in the foreseeable future.
The International Energy Association (IEA) has stated Iraq is expected to be a "very important element for future [oil] supply". The fear of dwindling oil supplies and increased pricing have been softened due to Iraq's ascension back into oil production. What this means to the energy industry as a whole would be that with this increase of supply, regardless of economic turmoil, the energy industry will be able to weather rougher financial times due to the fact that oil is such a crucial section of the industry. Iraq is expected in the next two to three decades to produce about 4 to 7 million barrels of oil per year. Adding additional reserves to a market that is already somewhat unstable. This increased supply will lighten the fear of rising prices.
War and insurrection are the two main problems that should be taken into account with this new development. Although, Iraq is stably producing oil at this point there are still militant factions who will try to interrupt the production process, and the country itself is still in a fragile state. The news from Iraq is exceptional for the volatile market of oil production, but as any good businessman would promote look at all the facets of a forecast before grabbing your umbrella.
- Timothy D. Vallario
Source- Wednesday, October 13, 2010 - VOL. CCLVI NO. 88, A16 World News, "Iraq Oil Is 'Game Changer' " by, Guy Chazan
This is a very interesting article. It is cool to see that Iraq is back to producing oil as it was before the war. It will also be interesting to see if this trend continues, because, as you stated in your blog, the country is still in a fragile state. It seems as this recent increase in the production of oil holds promise for the United States as well. Hopefully, with the increase in the supply of oil, the price of oil will drop; thus dropping gas prices.
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