Oil Prices Go Up as Iraq Goes Down

Crude leaps past $106 a barrel on Iraqi uncertainty.
5:09 | 06/12/14

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Transcript for Oil Prices Go Up as Iraq Goes Down
It is. Thursday June 12 and the New York markets are open for trading at this hour in today's big number. 106. Dollars all of the unrest in -- has that price of oil now above a 106 dollars a barrel. The insurgency is moving closer to Baghdad and those crude prices are soaring. Now it appears the market is worried the crisis could spread toward the oil producing fields in the southern part of Iraq. Hi everyone I'm Michelle Franzen in New York here with the details on all that crude businesses Yahoo!'s finances -- centrally. Might give -- an exaggeration to say that Iraq has -- the world oil markets on edge. -- not much of exaggeration at all you know it's been a bit of a delayed reaction actually -- markets did not really. Take much -- of what was happening in Iraq until really yesterday last couple of days. And even with that it's been kind of an orderly rise in nine world oil prices even though it's up -- -- -- two dollars a barrel. I'm both in the US and in Europe. Today or overnight. That really -- -- huge -- at these levels so it's definitely kind of a Welling up of anxiety about the possibility for disrupted production or transport down there but not yet. Something that's really I got people panicky I will say though it comes at a time when demand is pretty strong especially in the -- US gasoline so there's concern over the course in the summer any disruptions means tight supply that's. Right Summers when the prices go up due to all the refineries. -- -- formulating there. Oil and gas and all that stuff -- -- though trying to quell some of -- concern Iraq's oil minister says he doesn't expect fighting. To reach the oil rich south but do investors believe that. It's not so much that they disbelieve that but they're just not gonna wait around and see if that that that's the way it plays out I wouldn't expect ago minister to say yes we fully expect the insurgents -- -- basically march across the entire country. But there was expectation now there that Iraq was going to be increasing its production to secede from 3.3 million -- -- -- four million. That might be in jeopardy right now and so we have kind of we had pretty pretty much of a good balance in terms of world oil supply and demand for months now you know that the prices have been hovering right in the same range. OPEC's happy because. You know basically it's -- high enough price to make plenty of money but not so high that it cuts off. I demand so. I think this could disturb that balance and that might be the concern now and you mentioned OPEC of course OPEC ministers met yesterday what was their take on how to handle this situation in Iraq. No change for now essentially they're gonna keep production steady obviously there's always a lot of give and take in terms of whether in fact they hold to their production targets but. Right now it does seem as if -- willing to let this play out for a -- until May be prices get out of hand one way or another it's important realized too though there's an oil production boom. In nonopec parts of the world so they don't feel as if they have the ability. Really to turn the the spigot on and off that -- the way they used to. Of course in the US being being a prime example of that -- local oil price screwed -- prices are much lower than they are. On the world markets are right now it doesn't seem as if OPEC has moved -- -- provide any extra production or any relief. Until prices get further out. -- little competition and resource is helping quell about a little bit but how soon could this instability hit US pump prices of course summer is that. Peak driving season and we know that any hint of oil prices going up. Often hits at the -- It should be you know most likely if we keep prices at this level or higher you know within the next couple of months you would expect to see. Some kind of reaction at the retail price as -- mentioned you know we already had seen. A reduction in gasoline supplies stockpiles in the US because demand has been -- -- economy's recovering truckers are on the road. -- all these things are playing into the idea that maybe they'll be some upward pressure over the course of the summer on gasoline prices. Again at this point we're not really out of this range that we've been in for awhile so maybe it's going to be kind of a slow ratcheting increase for the moment. But definitely it seems like the risk is to -- -- knocked down. And then what sort of ripple effect could this create of course you know -- people have to shell out a little bit more for gas that gives him a little less spending money in their monthly budget. You know to be honest -- if these magnitudes it probably doesn't have enough of an impact really slow down the consumer economy that much miles driven it's really overlooked but it's really weighed down since before the financial crisis -- we're still not consuming nearly as much. On a per gallon basis we have a a -- new. Fleet of of cars on the road so I don't minimize the impact and how that feels when we're talking about five and ten cents a gallon it really doesn't start to squeeze -- -- -- Well above that I think you have to be you know above four bucks a gallon for awhile -- big parts of the country before you really have to be. Two concerned well about four months. Very good -- and -- from Yahoo! finance thanks as always for joining us. You can of course keep up with the latest headlines right here on abcnews.com. Even watching the big number I'm Michelle Franzen in New York.

This transcript has been automatically generated and may not be 100% accurate.

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