Of perhaps greater concern is that the growing instability in Iraq and the unrest in other big petroleum-producing countries could alter the geopolitical dynamics that have kept oil prices remarkably stable although relatively high for the last three years. The Russian annexation in Crimea and the chaos in Libya “point to a systemic and seismic shift geopolitically,” Edward L. Morse, head of commodities research at Citigroup, wrote in a note to clients on Friday. 
 
 Amid the uncertainty, oil prices have been rising modestly in recent days. On Friday, Brent crude, the international benchmark, rose about 0.25 percent to $113.32. West Texas Intermediate, the standard in the United States, was up 0.1 percent to $106.66. 
 
 Until recently, market participants have been expecting that the supply from Iraq, which is now producing about 3.3 million barrels a day, would continue to grow, as a result of international oil companies’ investments in the country’s rich but battered oil fields. In a benign world, Iraq could eventually produce about 6 million barrels a day, analysts estimate. If Iraq did attain that level, it would be about 60 percent of the roughly 10 million barrels a day that the leading oil-producing countries, Russia and Saudi Arabia, each produce. 
 
 “The longer the insurgency lasts, the more difficult it will be for Iraq to reach its potential,” Mr. Morse wrote. The change in outlook on Iraq “has radical implications for oil markets at a time of growing lost production worldwide due to intensifying disorder in a growing number of petroleum-producing countries,” he added. 
 
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 Chaos in Libya has reduced oil production there to around 10 percent of the 1.3 million barrels a day the country produced in 2012. Iran’s output has been trimmed by international sanctions. Syria’s civil war has severely diminished the country’s oil production. And the industries of two other key exporters, Nigeria and Venezuela, are facing their own difficulties. 
 
 Market jitters may increase during the summer, when travel season increases demand for gasoline and jet fuel. The big Gulf Arab producers — Saudi Arabia, Kuwait and the United Arab Emirate — are expected to increase oil production to cope with increased demand, but analysts say their buffer of unused, or spare, capacity is likely to be trimmed to about 2 million barrels a day. Reducing that buffer means it could be difficult to compensate for any further problems in oil-producing countries. 
 
 In the near term, concerns about Iraq are likely to remain paramount. Even if the Islamic fighters pause and try to consolidate their gains, the fighting has implications for Iraqi production. 
 
 For instance, one of Iraq’s major export pipelines runs from Kirkuk in Iraq to Turkey’s Mediterranean port of Ceyhan. This pipeline has been frequently closed by sabotage and other problems for years and has recently been shut for several months. Because it runs through the conflict zone, its reopening now looks delayed for the plannable future. 
 
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 The British oil company BP had been discussing investing in the giant Kirkuk field, where production has been about 200,000 barrels a day but could be substantially higher given the field’s estimated 1.8 billion barrels of reserves. BP’s plans now seem unlikely to go ahead anytime soon. A BP spokesman, Toby Odone, said that the company was advising North Oil Company, the Iraqi entity that operates the field, but that a decision on whether to move ahead with a major project was probably at least a year off. 
 
 Paradoxically, the unrest may help increase exports from the oil-rich northern Iraqi region of Kurdistan. The Kurdish government has recently opened a pipeline directly linking oil fields in the enclave to Turkey, raising the possibility of substantial exports in the range of 400,000 barrels a day of Kurdish oil though Turkey. 
 
 Oil sales from Kurdistan have been hampered by the central government in Baghdad’s insistence that Kurdish oil falls under its purview and must be sold through Baghdad’s oil marketing arm, SOMO. Companies like Genel Energy, which is run by the former BP chief executive Tony Hayward, have been limited to trucking their oil out or selling it to local refineries. 
 
 But the fighting may increase the bargaining power of the Kurdistan Regional Government, analysts say. Citigroup predicts that now that the Iraqi government of Prime Minister Nuri Kamal al-Maliki is in trouble and in need of the share of revenue it could gain from Kurdish oil, Baghdad may prove more flexible. ||||| WASHINGTON (MarketWatch) — The following is President Barack Obama’s speech on a secure energy future, as prepared for delivery: 
 
 “We meet here at a tumultuous time for the world. In a matter of months, we’ve seen regimes toppled and democracy take root across North Africa and the Middle East. We’ve witnessed a terrible earthquake, catastrophic tsunami and nuclear emergency batter a strong ally and the world’s third largest economy. And we’ve led an international effort in Libya to prevent a massacre and maintain stability throughout the broader region. 
 
 As Americans, we are heartbroken by the lives that have been lost as a result of these events. We are moved by the thirst for freedom in many nations, as well as the strength and perseverance of the Japanese people. And of course, it’s natural to feel anxious about what all this means for us. 
 
 One area of particular concern has been the cost and security of our energy. In an economy that relies on oil, rising prices at the pump affect everybody – workers and farmers; truck drivers and restaurant owners. Businesses see it hurt their bottom line. Families feel the pinch when they fill up their tank. For Americans already struggling to get by, it makes life that much harder. 
 
 But here’s the thing – we’ve been down this road before. Remember, it was just three years ago that gas prices topped $4 a gallon. Working folks haven’t forgotten that. It hit a lot of people pretty hard. But it was also the height of political season, so you had a lot of slogans and gimmicks and outraged politicians waving three-point-plans for two-dollar gas – when none of it would really do anything to solve the problem. Imagine that in Washington. 
 
 The truth is, of course, was that all these gimmicks didn’t make a bit of difference. When gas prices finally fell, it was mostly because the global recession led to less demand for oil. Now that the economy is recovering, demand is back up. Add the turmoil in the Middle East, and it’s not surprising oil prices are higher. And every time the price of a barrel of oil /quotes/comstock/21n!f:cl\k11 (CLK11 108.31, +1.22, +1.14%) on the world market rises by $10, a gallon of gas goes up by about 25 cents. 
 
 The point is, the ups and downs in gas prices are usually temporary. When you look at the long-term trends, though, there will be more ups than downs. That’s because countries like India and China are growing at a rapid clip. And as two billion more people start consuming more goods, and driving more cars, and using more energy, it’s certain that demand will go up a lot faster than supply. 
 
 So here’s the bottom line – there are no quick fixes. And we will keep on being a victim to shifts in the oil market until we get serious about a long-term policy for secure, affordable energy. 
 
 We’ve known about the dangers of our oil dependence for decades. Presidents and politicians of every stripe have promised energy independence, but that promise has so far gone unmet. I’ve pledged to reduce America’s dependence on oil too, and I’m proud of the historic progress we’ve made over the last two years towards that goal. But we’ve also run into the same political gridlock and inertia that’s held us back for decades. 
 
 That has to change. 
 
 We cannot keep going from shock to trance on the issue of energy security, rushing to propose action when gas prices rise, then hitting the snooze button when they fall again. The United States of America cannot afford to bet our long-term prosperity and security on a resource that will eventually run out. Not anymore. Not when the cost to our economy, our country, and our planet is so high. Not when your generation needs us to get this right. 
 
 It is time to do what we can to secure our energy future. 
 
 So today, I’m setting a new goal: one that is reasonable, achievable, and necessary. When I was elected to this office, America imported 11 million barrels of oil a day. By a little more than a decade from now, we will have cut that by one-third. 
 
 I set this goal knowing that imported oil will remain an important part of our energy portfolio for quite some time. And when it comes to the oil we import from other nations, we can partner with neighbors like Canada, Mexico, and Brazil, which recently discovered significant new oil reserves, and with whom we can share American technology and know-how. 
 
 But our best opportunities to enhance our energy security can be found in our own backyard. And we boast one critical, renewable resource the rest of the world cannot match: American ingenuity. 
 
 To make ourselves more secure – to control our energy future – we will need to harness that ingenuity. It is a task that won’t be finished by the end of my presidency, or even the next. But if we continue the work that we have already begun over the last two years, we won’t just spark new jobs, industries and innovations; we will leave your generation and future generations a country that is safer, healthier, and more prosperous. 
 
 Today, my Administration is releasing a Blueprint for A Secure Energy Future that outlines the comprehensive national energy policy we’ve pursued since the day I took office. And here at Georgetown, I’d like to talk in broad strokes about how we will secure that future. 
 
 Meeting this new goal of cutting our oil dependence depends largely on two things: finding and producing more oil at home, and reducing our dependence on oil with cleaner alternative fuels and greater efficiency. 
 
 This begins by continuing to increase America’s oil supply. Last year, American oil production reached its highest level since 2003. And for the first time in more than a decade, oil we imported accounted for less than half the liquid fuel we consumed. 
 
 
 
 Reuters 
 
 
 
 To keep reducing that reliance on imports, my Administration is encouraging offshore oil exploration and production – as long as it’s safe and responsible. I don’t think anyone’s forgotten that we’re not even a year removed from the largest oil spill in our history. I know the people of the Gulf Coast haven’t. What we learned from that disaster helped us put in place smarter standards of safety and responsibility – for example, if you’re going to drill in deepwater, you’ve got to prove that you can actually contain an underwater spill. That’s just common sense. 
 
 Today, we’re working to expedite new drilling permits for companies that meet these standards. Since they were put in place, we’ve approved 39 new shallow water permits; and we’ve approved an additional 7 deepwater permits in recent weeks. When it comes to drilling onshore, my Administration approved more than two permits last year for every new well that the industry started to drill. So any claim that my Administration is responsible for gas prices because we’ve “shut down” oil production might make for a useful political sound bite – but it doesn’t track with reality. 
 
 In fact, we are pushing the oil industry to take advantage of the opportunities they already have. Right now, the industry holds tens of millions of acres of leases where it’s not producing a drop – sitting on supplies of American energy just waiting to be tapped. That’s why part of our plan is to provide new and better incentives that promote rapid, responsible development of these resources. We’re also exploring and assessing new frontiers for oil and gas development from Alaska to the Mid- and South Atlantic. Because producing more oil in America can help lower oil prices, create jobs, and enhance our energy security. 
 
 But let’s be honest – it’s not the long-term solution to our energy challenge. America holds only about two percent of the world’s proven oil reserves. And even if we drilled every drop of oil out of every one of those reserves, it still wouldn’t be enough to meet our long-term needs. 
 
 All of this means one thing: the only way for America’s energy supply to be truly secure is by permanently reducing our dependence on oil. We have to find ways to boost our efficiency so that we use less oil. We have to discover and produce cleaner, renewable sources of energy with less of the carbon pollution that threatens our climate. And we have to do it quickly. ||||| White House chief of staff Bill Daley on Sunday said the Obama administration is considering tapping the Strategic Petroleum Reserve to help ease the soaring price of gasoline at the pump. 
 
 
 
 “We’re looking at the options,” said Daley, speaking on “Meet the Press.” “The issue of the reserve is one we are considering. It is something that only is done — and has been done — in very rare occasions. There’s a bunch of factors that have to be looked at. And it is just not the price.” 
 
 
 
 “All matters have to be on the table when you see the difficulty coming out of this economic crisis we’re in and the fragility,” Daley added. 
 
 
 
 The price of a barrel of oil has climbed past $100, the highest since September 2008, as political unrest rages in the Middle East and North Africa, including Libya, which controls 10 percent of the world’s oil supply. Pump prices have reached $3.39 a gallon on average nationally, an increase of about 30 cents in the past month, and have gone over $4 a gallon in some places. 
 
 
 
 Since January, anti-government protests have swept through the region, toppling the governments of Egypt and Tunisia, and sparking the rebellion in Libya. Pro-reform demonstrators have taken to the streets in Saudi Arabia, a kingdom which produces a majority of the world’s oil. 
 
 
 
 Economists, oil experts and the White House worry that rising gas prices could stall the still-slow U.S. economic recovery — especially if the political upheaval spreads to other oil-producing countries in the Mideast. Higher oil prices could increase costs for home heating, airline tickets and groceries, digging further into workers’ pay. Less discretionary income, in turn, would hammer consumer confidence and constrict spending. 
 
 
 
 There’s been widespread disagreement over whether the reserve’s 727 million barrels of oil should be used to combat oil price increases or saved for more urgent disruptions in the nation’s fuel supply. It was most recently tapped in 2005 after Hurricane Katrina, when the disaster disrupted oil and gas production in the Gulf Coast. 
 
 
 
 Despite calls from some lawmakers to tap the reserve, at least one Republican, Tennessee Sen. Lamar Alexander, does not support the drawdown. 
 
 
 
 “I’m buying an electric car tomorrow,” said Alexander, speaking on CNN’s “State of the Union” on Sunday. “And that’s going to give me the patriotic pleasure of plugging in and not sending money overseas to people trying to blow us up. What we need to do is find more of our own energy, and that means explore offshore. That means explore in federal lands for oil and natural gas and means explore in Alaska.” 
 
 
 
 But pressure is building for the White House to access the strategic reserve, which was created in the wake of the 1970s Arab oil embargo. On Friday, six Senate Democrats urged action, calling for profits from the sale of the reserve oil to go toward advancing electric cars and reducing the deficit. 
 
 
 
 Higher gas prices “are putting a significant dent in the budgets of families across the country,” the lawmakers wrote in a letter to President Barack Obama. Signers included Democratic Sens. Sheldon Whitehouse of Rhode Island, Robert Menendez of New Jersey and Barbara Boxer of California. 
 
 
 
 They join Sen. John Rockefeller (D-W.Va.), who asked the president to prepare for a “limited drawdown” of reserves. And Sen. Jeff Bingaman (D-N.M.) has said Obama should be ready to tap the reserve in the event of “turmoil spreading from Libya to Algeria, or from Bahrain to Saudi Arabia.” 
 
 
 
 But Energy Secretary Steven Chu has thus far ruled it out, saying increased production in Saudi Arabia would lower the price of crude and ease the strain at the gas station. 
 
 
 
 “That’s going to mitigate the price increase,” he told reporters Wednesday. “We’re hoping market forces will take care of this.” 
 
 
 
 On Thursday, Treasury Secretary Timothy Geithner played down the risks that Persian Gulf instability might damage the economy, saying there was “considerable” spare oil production capacity around the world. 
 
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 Technorati ||||| Benchmark U.S. oil prices dropped below $50 a barrel for the first time since April 2009 as surging supply signaled that the global glut that drove crude into a bear market will persist. 
 
 West Texas Intermediate slid 5 percent in New York while Brent fell below $55 in London for the first time since May 2009. Russia’s output rose to a post-Soviet high while Iraq, the second-largest producer in OPEC, plans to boost crude exports to a record this month. The price drop accelerated as the dollar climbed against the euro amid investor concern Greece might leave the currency union 
 
 “The market is continuing to price in weak fundamentals in the first half of this year,” Mike Wittner, head of oil research at Societe Generale SA in New York, said by phone. “There’s also been a return to risk aversion because of Greece, something we haven’t seen in a while.” 
 
 Brent slumped 48 percent last year, the most since the 2008 financial crisis, as the Organization of Petroleum Exporting Countries resisted calls to cut output amid a battle with U.S. shale producers for market share. The 12-member group pumped above its target for a seventh straight month in December, according to a Bloomberg survey. 
 
 WTI Futures 
 
 West Texas Intermediate for February delivery dropped $2.65 to $50.04 a barrel on the New York Mercantile Exchange. It was the lowest settlement since April 28, 2009. Prices slipped as much as 5.5 percent to $49.77 during trading. The volume of all futures traded was 11 percent higher than the 100-day average at 2:54 p.m. 
 
 Photographer: Mario Proenca/Bloomberg Oil storage tanks, left, stand beyond pipework at an oil refining plant in Sines, Portugal. Close Oil storage tanks, left, stand beyond pipework at an oil refining plant in Sines, Portugal. Close Open Photographer: Mario Proenca/Bloomberg Oil storage tanks, left, stand beyond pipework at an oil refining plant in Sines, Portugal. 
 
 Brent for February settlement declined $3.31, or 5.9 percent, to end the session at $53.11 a barrel on the London-based ICE Futures Europe exchange. It was the lowest close since May 1, 2009. Volume for all futures traded was 40 percent above the 100-day average. The European benchmark closed at a $3.07 premium to WTI. 
 
 “Everyone is looking for the bottom,” Sarah Emerson, managing principal of ESAI Energy Inc., a consulting company in Wakefield, Massachusetts, said by phone. “We’ve already dropped below what would be justified by fundamentals. Brent should find support around the $58 to $60 area given supply and demand.” 
 
 Iraqi Exports 
 
 Iraq plans to expand crude exports to 3.3 million barrels a day this month, Asim Jihad, a spokesman at the Oil Ministry in Baghdad, said by phone yesterday. The country exported 2.94 million a day in December, the most since the 1980s, he said. 
 
 Russian oil production rose 0.3 percent in December to a post-Soviet record of 10.667 million barrels a day, according to preliminary data published Jan. 2 by CDU-TEK, part of the Energy Ministry. 
 
 “This bearish market is being fed by a combination of surging supply and shaky demand,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone. “We now have Russian production at a post-Soviet high and the Iraqis planning to add even more supply to the market. This just adds to negative market sentiment.” 
 
 Saudi Discount 
 
 Saudi Arabia narrowed discounts in its official February crude selling prices to buyers in Asia to $1.40 a barrel below the average of Middle East benchmark Oman and Dubai grades. 
 
 The world’s biggest oil exporter offered its Arab Light grade at the greatest discount in at least 14 years for January. That move was followed by Iraq, Kuwait and Iran, prompting speculation that Middle East producers were protecting market share. 
 
 The oil market is set for “more problems” this year as increasing supplies add to the global glut, according to Morgan Stanley. Output may rise in West Africa and the Americas in addition to more shipments from Russia and Iraq, offsetting concerns of reduced Libyan production, analysts including New York-based Adam Longson said in an e-mailed report today. Iran may boost exports by about 500,000 barrels a day if western sanctions against it are lifted, the analysts said. 
 
 Revised Projections 
 
 Brent will trade at $80 a barrel this year, down from an earlier estimate of $104, amid gains in global spare capacity and rising inventories, Sanford C. Bernstein said in an e-mailed report today. 
 
 U.S. crude output rose to 9.14 million barrels a day in the week ended Dec. 12, the most in Energy Information Administration weekly data that started in January 1983. Production will climb to an average 9.32 million this year, the EIA said Dec. 9 in its monthly Short-Term Energy Outlook. 
 
 “We’re still focused on U.S. production,” Kyle Cooper, director of commodities research at IAF Advisors in Houston, said by phone. “Production is going to rise during the next six months as projects that are already underway reach completion.” 
 
 Dollar Strength 
 
 The euro dropped as far as $1.1864, the lowest in almost nine years. A stronger U.S. currency usually reduces the appeal of commodities as a store of value. 
 
 “The euro is getting trounced on the Greek news today,” Stephen Schork, president of the Schork Group Inc. in Villanova, Pennsylvania, said by phone. “There’s a very strong correlation between dollar strength and oil prices. The dollar is very strong right now.” 
 
 The EIA is projected to report Jan. 7 that U.S. supplies of crude, gasoline and distillate fuel, a category that diesel and heating oil, rose last week, according to a Bloomberg survey. 
 
 Fuel Prices 
 
 Gasoline futures declined 5.2 cents, or 3.6 percent, to $1.3814 a gallon, the lowest settlement since April 1, 2009. Diesel decreased 4.65 cents, or 2.6 percent, to close at $1.7492, the least since Sept. 29. 
 
 Regular gasoline at U.S. pumps fell to the lowest level since May 2009. The average retail price slipped 1 cent to $2.199 a gallon yesterday, according to Heathrow, Florida-based AAA, the nation’s biggest motoring group. Pump prices were around $2.05 a gallon when oil was last below $50 a barrel. 
 
 “This bearish syndrome will continue until the drop in prices either stimulates economic growth or there is a supply response,” Kilduff said. 
 
 To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net 
 
 To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net Stephen Cunningham, Charlotte Porter ||||| Here's a traffic jam that will actually make drivers smile. 
 
 It's no secret that a massive supply glut has caused global oil prices to crash this year. Ferocious production from OPEC and near-record U.S. output is adding to sky-high oil inventories around the world. 
 
 But what's less widely known is that the oversupply problem has gotten so bad that oil tankers waiting to be offloaded are piling up off the U.S. Gulf Coast because there's nowhere to put the crude. 
 
 So-called "floating storage" of crude oil soared to nearly triple the normal level last week, according to ClipperData, which tracks global shipments of crude. 
 
 It's a "super tanker traffic jam," said Matt Smith, director of commodity research at ClipperData. 
 
 Not enough buyers 
 
 Smith first noticed the maritime congestion popping up a month ago off the coast of Singapore. That was alarming because Asia accounts for one-third of global oil demand. 
 
 "It was kind of strange to see. The ships didn't have any buyers," he said. 
 
 And then ClipperData discovered a similar phenomenon off China and even the Arabian Gulf. 
 
 "There just appears to be more oil than can be dealt with. They haven't got anywhere to put it," said Smith. 
 
 Related: $2 gas coming soon for most of the U.S. 
 
 $2 gas coming soon 
 
 That, of course, is great news for American drivers. National average gasoline prices have dropped to $2.10 a gallon, down by 75 cents from a year ago, according to AAA. U.S. prices could slip below $2 by Christmas nationwide for the first time since 2009, AAA said. 
 
 Oil prices are also heading south. The latest evidence of the lingering glut helped cause oil prices last week to briefly tumble below $40 a barrel for the first time since late August. Over the past year and a half, oil has lost more than 60% of its value, an epic crash that has thrown the energy industry into disarray. 
 
 The problem is OPEC producers, led by Saudi Arabia and Iraq, are pumping oil aggressively despite depressed prices. U.S. output is also near record highs, though it has slowed a bit. 
 
 Related: How to make money AND help the planet 
 
 Inventories as high as they've ever been 
 
 There is a "massive cushion" of crude oil around the world, with global stockpiles sitting at a record 3 billion barrels, according to the International Energy Agency. 
 
 A stunning 487 million barrels of crude is sitting in U.S. inventories, levels unseen at this time of the year in the last 80 years, according to the U.S. Energy Information Administration. 
 
 "We've been through a low-price environment all year -- yet the world is still awash with crude here," said Smith.
– Wonder whether gas prices will hold at their incredible $2.20 national average? Based on today's news, filling up the tank won't get harder over the next few weeks, the Wall Street Journal reports. US oil prices dipped below $50 a barrel for the first time in nearly six years, breaking a psychological barrier and sending a message: the high-supply, low-demand, low-price perfect storm will only continue. Here's more: Why: Plentiful worldwide oil production—including historic US highs, reports Bloomberg—ran into a weak global economy last year, lowering oil prices. Saudi Arabia, which produces oil more cheaply than many rivals, opted to maintain its market share by keeping the oil pumping. Prices dropped by 50%. What it may mean: "[It] is very plain for all to see that oil supply growth exceeds oil demand growth and from a producer point of view this imbalance has to be rectified," says the CEO of broker PVM, the Financial Times reports. Upshot 1: The number of US rigs drilling for oil has dropped for the past month. Many say US shale-oil drilling stopped being profitable at roughly $60 per barrel: "We’re certainly in new territory here," says a portfolio manager. Upshot 2: Analysts say we're near bottom but could hit $40 a barrel before a rebound in a couple of months. Some traders are even betting on $20 oil, Marketwatch reports. Upshot 3: Cheap oil could cause geopolitical disruption in nations like Venezuela and Libya, and limit Vladmir Putin's global ambitions, an analyst tells Fortune.