Friction between the US and Iraq has left investors worried and the possible attacks on Iraq’s oil fields might drastically affect Asia’s crude oil supply. In OPEC, Iraq is the second-largest oil producer. Political risk consultancy Eurasia Group’s director for global energy and natural resources, Henning Gloystein stated that the disruption in Middle East’s output level will cause shortfall for the oil cartel and it is difficult to replace. Tensions are high after Iran’s attack on Iraq bases that house the US troops. The act was retaliation and it did not destroy any major infrastructure. But any attack on the oil infrastructure might’ve disrupted global supply. Following the news of the US’s attack on Iran’s general the oil prices surged by 4 percent.
The situation is still highly volatile and the likelihood of another attack is unpredictable. Few Asian countries like India, South Korea, Japan, and China depend primarily on the Middle East for oil. South Korea and Japan have large reserves of petroleum and China are also building reserves. The potential disruption will concern India because it receives almost 40 percent of Oil from the Middle East. India switched to Iraq for oil because when India signed the US sanctions they lost Venezuela and Iran.