Energy

Fears that events in Iraq will send global oil prices soaring have abated. Yet, the crisis has potentially huge implications for oil. Under any conceivable outcome to the current situation, oil production from Iraq will fail to meet recent expectations. The reason for this dire prognosis is that politics – not security or logistics – will be the biggest determinant of Iraq’s oil trajectory in the years ahead.

Iraq could be poised for a dramatic transformation in which it finally escapes the political and technical constraints that have kept it producing less than 4 percent of the world’s oil, writes Meghan L. O'Sullivan. Should Iraq meet its ambitions to bring nearly 10 million more barrels of oil on line by 2017, it would constitute the largest ever capacity increase in the history of the oil industry. Even half this much would represent a massive achievement.