Lots of oil

Iraq could hold almost twice as much oil in its reserves as had been thought, according to the most comprehensive independent study of its resources since the US-led invasion in 2003.

The potential presence of a further 100bn barrels in the western desert highlights the opportunity for Iraq to be one of the world’s biggest oil suppliers, and its attractions for international oil companies – if the conflict in the country can be resolved.

This would not seem to be a good development for the price of oil. Of course, as this article from FT.com points out, the "conflict" in the country will have to be resolved before most of this oil sees the light of day.

So far the only new contracts for developments by foreign companies are the five signed by the Kurdistan regional government in the relatively peaceful north of Iraq.

The new supply seems significant:

The study from IHS, a consultancy, also estimates that Iraq’s production could be increased from its current rate of less than 2m barrels a day to 4m b/d within five years, if international investment begins to flow.

Adding 2m b/d to world supply would certainly have an effect. Considering as well that the only way this comes to market is if the violence in Iraq is greatly reduced, the potential drop in price could be significant. Maybe, just maybe, is it possible that Iran might want to prevent such a drop in price? And if that is true, what could they possibly do to make sure it doesn't happen? Hmmm, let me think. I know! They could try to stir up a civil war in Iraq!

Or maybe its just about bragging rights down at the Arab League?

If confirmed, it would raise Iraq from the world’s third largest source of oil reserves with 116bn barrels to second place, behind Saudi Arabia and overtaking Iran.

The Iranians will not help us stabilize Iraq. It's not in their best interests to stabilize Iraq. Their economy is already in a shambles; they can't afford a big drop in the price of oil. The mullahs very survival depends, at least in part, on maintaining a high price for oil.