Iraq's potential contribution to the world oil market could fundamentally alter the outlook for long-term oil prices. Major uncertainties remain in Iraq's capability to sustain timely expansion in oil production, including political turmoil, regional rivalries, and pace of infrastructure installation and in what manner, if any, Iraq may decide to comply with OPEC production constraints.
If Iraqi output shifts the long-term price of oil from any number of base-case forecasts by $20/bbl—e.g., from $100/bbl to $80/bbl—it would yield a present value savings in import costs to the US economy of over $1 trillion.
Accompanying this saving would be substantial improvement in growth and expansion of the US economy.
In this respect, Iraq is a game changer.
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