An increase of approximately EGP 10bn for fuel subsidies will be stipulated in the budget for the 2014/2015 fiscal year to offset the increase in global prices of oil, according to a senior petroleum ministry official. One barrel of crude oil reached $115 this year, in comparison to last year's $109, which the official attributed to continuing violence in Iraq, and said would lead to more price hikes for imported petroleum products. The official explained that the political situation and security issues in Iraq have influenced the price of a barrel of crude oil on world markets, and that with the Islamic State in Iraq and Syria (ISIS)'s control over oil production areas in Iraq, a barrel's cost would increase to around $140. A continuation of the current situation in Iraq threatens the entire oil market since Iraq is considered to be the second largest producer of crude oil in the Organization of the Petroleum Exporting Countries (OPEC) countries, the official said. He continued, saying that Iraq's production of crude oil amounts to 3.3m barrels daily, and that the International Energy Agency expects production to increase to 6m barrels by 2020. The escalation of violence in Iraq threatens investments in one of the world's most important oil reserves, as Iraq was expected to become the world's largest oil exporter, according to Medhat Youssef, former vice-president of the Egyptian General Petroleum Corporation (EGPC). Many of the world's most prominent oil companies operate in Iraq, including BP, Exxon Mobil, Shell, and Chinese companies China National Offshore Oil Corporation and China National Petroleum Corporation. So far, ISIS has closed Iraq's main refinery, but they have not yet reached the major oil fields in the South, which account for 90% of the country's oil exports, according to Youssef. The $6 jump in global oil prices has been mainly attributed to the crisis in Iraq, and according to analysts, the rates will continue to rise especially if Iraq ceases to export crude oil.
