Just for the record, this is not a factor. ISIS controls and sells very little oil. They were smuggling small quantities out via Turkey but we cracked down on that. Syria has never been a major producer. Most of the big oilfields in Iraq are in Kurdish and Shiite areas. The reason it is so critical to stop ISIS is to keep them from getting their hands on big oil revenue streams that could be used to finance future global terrorism. But ISIS has no influence on the oil market at the moment, except perhaps for market psychology (e.g. traders may worry about its ability to disrupt supplies, and this concern keeps prices higher than they would otherwise be).
Originally Posted by lustylad
But the psychology of it is a factor.
No, ISIS was/is not a major player but they were selling cheap for a little while and the world took notice because of who they were. Flooding the market was an obvious exaggeration since they were selling roughly 50,000 barrels per day from July to October when the air strikes took that revenue stream away from them.
50,000 barrels per day is about .06 percent of total production. The point I was making is that all of these factors put together affects supply and demand, even if it's just perceived.
ISIS did affect the market from a political standpoint because of who they were and the publicity they were getting. Turkey produces about the same amount of oil that ISIS was selling. I doubt it would have much affect at all on world prices if Turkey started selling some reserves below market rates. We all know their reserves are minute compared to the reserves of OPEC or any of the top 20 oil producing countries.
Much less turmoil has caused the price of gasoline to rise or fall. Take hurricanes Katrina and Rita for example. The perception of a shortage was much greater than the reality but prices still went way up because we were convinced that the supply chain was in worse shape than it actually was. I remember driving around town looking for open gas stations to get gas for my generator. The ones that were open were having no problems getting fuel. There was usually a tanker unloading as all the pumps were running and another tanker parked down the street waiting for the first one to move. The only gas stations that I remember running out did so only because the tankers couldn't get to the station because of the traffic jams of cars lined up waiting for gas due to everyone's fear that we were going to run out. Did prices go up. Damn right they did. But it wasn't because of short supply it was because of a perceived shortage on the part of the consumer and suppliers taking advantage of it.
