Syria’s president Bashar al Assad once flaunted his immunity from the wave of protest-driven unrest in the Middle East. Today, while the regime is unlikely to fall in the near term, there’s no doubt that instability is on the rise.
That has broad geopolitical implications for the Middle East. And while Lebanon and Israel are often mentioned, Iraq stands to lose the most. Syria could, for example, become a base for groups seeking to undermine stability in Iraq, increasing risks for the growth of oil production. Oil traders should watch closely how Bashar handles Syria’s political turmoil.
Iraq’s oil production capacity will be a key variable influencing energy markets in the next two decades. Oil minister Abdul-Kareem Luaibi has said recently that he expects to see an increase from 2.7 million bpd today to 8 million bpd by in 2017. While this is overly optimistic, if current political conditions persist Iraq could very well produce 4.5 to 5 million bpd in 2015 and 7-8 million bpd in 2020. But if instability flows from Syria, the story could turn out to be much less promising, putting additional upward pressure on the oil futures market.
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