Will Big Oil Remain Despite Iraq Violence?

Your next video will start in

Recommended Videos

  • Info

  • Comments


June 13 (Bloomberg) –- In today’s “Global Outlook,” Bloomberg's Peter Cook and Alix Steel take a look at what the unrest in Iraq means for markets. Trish Regan reports on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Iraq is edging closer to civil war as islamic militants have swept through the north of the country.

President obama says he is willing to help but only if iraqis resolve to solve their own political differences.

I think some kind of help should be provided, airstrikes or drone attacks i think would be entirely appropriate, and soon.

As quickly as possible.

Every day, every hour, it seems, that time is lost.

Hopefully, that decision will be forthcoming right away.

Joining me with more on this crisis and the president's options, peter cook and alix steel.

We look at what it means for companies operating in the region.

The president has been pretty clear in terms of his message today to the iraqi government, a sickly telling them they need to do this alone.

Does that mean that the u.s., at least in the foreseeable future, should take a backseat?

Backseat is probably the right word for the moment.

The president said any action would take several days.

It's not an imminent decision.

He ruled out the possibility of troops on the ground automatically.

We knew that was coming.

His options are limited at this point, but his message was clear.

You have to solve this on your own.

We might be able to help at the fringes but this will ultimately be a political resolution, not a military resolution.

Don't be looking to the united states to ride to your rescue.

It almost looks like he will face criticism for whatever he decides.

There will be a group that feels strongly that we need to be there to protect what we started and we need to protect our oil interests in the region.

On the flip side, look at what 47% of americans would like to keep us out of any international conflict.

And a whole host of u.s. congress who does not want to see any military action in iraq.

We got out of there in 2011 and there is no appetite to go back.

But as you said, there are hawks in the congress very critical of the president for not doing more already and very critical of the decision in 2011 to have troops leave iraq.

The president is not going to win either way politically.

I think that's why he is taking a long time to make a decision and he is not rushing to airstrikes.

He needs to think this through.

Alix steel has been spending some time looking at what it means for companies operating in the region.

This can't be good.

Any kind of civil unrest is obviously going to have an effect on the company.

Analyst tell me if security gets worse, companies will want to pull out.

The northern part of a rack only produces about 200,000 barrels of -- of iraq only produces about 200,000 barrels of oil per day.

The oil really comes from the southern region, which is not yet under attack.

There are companies though that work in the northern region like exxon and chevron.

It's easier to do is missed there.

That's why they are there.

They have been there since 2011 and there are not yet reports that they have pulled out.

So they have not been terribly affected by this?

It does not sound like as of yet.

Keystone petroleum is a key asset in the region and they came out today and said everything is proceeding as planned with that key asset.

You could argue that if security forces have to move south to help with the situation, that might make companies in the south like bp or show skittish.

How much is this playing into the white house cost -- white house's decision-making?

They are clearly concerned.

The president was asked about it directly as he boarded marine one and he said there is no sign of a disruption, but in conversations with other gulf countries about who is going to step up to fill the gap if there is a disruption, you can imagine the conversation with the saudi's is already happening.

There is disagreement in iraq between iraq and the kurds about who owns the oil and the exports.

The kurds are sitting on tankers.

Countries are afraid to buy it.

It is not like there is a buyer right now, meaning if you disrupt 200,000 barrels a day, maybe the market could handle that in the short term.

Longer term, analyst are looking at stronger demand globally, and that is going to put a lot of strain on the world market considering that yemen and libya still have oil -- still have conflicts there.

Iraq is the biggest producer in opec.

It was going to give opec a big run for its oil money.

It would be very difficult to recoup if it collapsed altogether.

You would have to have reduction from strategic reserves and saudi arabia pumping at full capacity.

We will see if this affects decision-making from the white house in the coming days and weeks.

We have to leave it there.

This text has been automatically generated. It may not be 100% accurate.


BTV Channel Finder


ZIP is required for U.S. locations

Bloomberg Television in   change