Turmoil in Iraq certain to affect China oil prices

BEIJING - According to the China Center for Energy Economic Research at Xiamen University, the security crisis in Iraq will drive up oil prices in China and change its mix of overseas oil supply sources in the long run. China, which is increasingly dependent on energy imports, is now Iraq’s largest foreign customer, taking an average 1.5 million barrels a day, almost half of Iraq’s production.

China National Petroleum Corp, China’s largest oil producer, is operating four projects in Iraq, making the company the largest foreign investor there. However, Chinese investors are concentrated in southern Iraq, and their operations may not yet be affected because the fighting is taking place in northern areas of Iraq.

However, the changing picture of Iraqi politics is seen as likely to affect Chinese oil companies' investment strategies in the Middle East, and they may increase imports from other oil producers, such as Russia, Iran and Oman, if the Iraqi crisis lingers.