Surging U.S. oil production was expected to drive oil prices lower this year, but a confluence of geopolitical events—particularly a Sunni militant uprising in Iraq—could now drive already high prices even higher and keep them there.
The situation in Iraq has become increasingly tense and violent with Al Qaeda-linked groups seizing control of two key cities, Mosul and Tikrit, in the past two days. The group, the Islamic State of Iraq and Syria, so far has targeted a northern pipeline—the Kirkuk-Ceyhan oil pipeline, but the activity has so far not spread to other energy infrastructure.
“On balance, what’s happening at the moment seems, at least so far, some ways removed from the major producing regions of Iraq,” said Citigroup analyst Eric Lee.
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