Spain fears oil crisis as war deepens in Iraq

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The cost of oil has spiked after the mounting tensions between the US and Iran. Credit: File Image.

IN the wake of the growing tensions festering between the United States and Iran, oil prices across the world have jumped to their highest level in more than three months, sparking concern across Spain.

On the orders of President Donald Trump, US forces had carried out a targeted air strike on Major-General Qassem Soleiman at Baghdad airport in Iraq, the man considered to be one of Iran’s most influential figures.

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Traders were then evidently alarmed by Iran’s Supreme Leader Ayatollah Ali Khamenei’s vow of revenge, which heightened fears that escalating conflict in the region would disrupt global oil supplies.

Matters were made worse as American oil employees were also reported to be leaving Iraq, a troubling signal for oil costs which have spiked due to the tensions mounting in the region, where Spanish businesses reliant on oil are now fearing the worst over the valuable Middle Eastern supplies.

Figures indicate that international oil has already jumped by more than 3% per barrel since the Iranian assassination, a troubling signal for oil costs. In fact, on Friday, January 3, brent crude jumped a whopping 3.5% to more than $68 (€60.93) per barrel, putting the price of international oil on its way to its biggest increase since the mid-September attack on the Saudi oil facilities. West Texas Intermediate (WTI) crude was also up by a staggering 3.1%, the highest level garnered since April of last year. 

Andy Lipow, the President of Consultants Lipow Oil Associates who has vast experience in the European stock market stated:

“The market is trying to assess whether we’ll see a supply disruption, if any. Iran has already seen their exports cut to minimal volumes; they have little to lose in the way of crude oil exports.”

Europe as a whole has become highly dependent on importing fossil fuels from the Middle East over the last 25 years. As Spain is increasingly dependent on imported oil, the country is made economically vulnerable to world oil price fluctuations as oil plays a major role in the Spanish energy sector.

Due to there being virtually no domestic production of liquid fuels in Spain over the last few decades, the country lacks significant deposits which means that practically all fossil fuels consumed need to be purchased abroad to meet its growing demand.

Speaking to a business head at one of the leading Spanish oil companies, which last year reportedly processed thousands of metric tons of crude oil at refineries across Spain, they said: “The situation is particularly worrying for the European levels of crude oil, which are highly reliant on the supply from the Middle East. In fact, Iraq is the fifth-largest proven oil reserve in the world, with the crisis certain to hit businesses and citizens in Spain.”


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