Turmoil in Iraq 'certain to affect China oil prices'

A weapon is checked in the southern Shiite Muslim shrine city of Najaf on Sunday as Iraqis volunteer to fight alongside the security forces against jihadist militants who have taken over several northern cities. [Photo/China Daily]

The security crisis in Iraq will affect oil prices in China and change the mix of the country's overseas oil supply sources in the long run, energy industry experts say.

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Iraq is China's fifth-largest crude oil supplier.

Lin Boqiang, director of the China Center for Energy Economic Research at Xiamen University, said on Monday it is almost certain that the situation in Iraq will drive up oil prices in China.

Iraq is the second-largest producer in the Organization of the Petroleum Exporting Countries, after Saudi Arabia.

China depends on the world market for nearly 60 percent of its annual petroleum use.

Lin said the changing picture of Iraqi politics will also affect Chinese oil companies' investment strategies in the Middle East.

Li Li, research and strategy director at ICIS C1 Energy, an energy information consultancy in Shanghai, said China may increase imports from other oil producers such as Russia, Iran and Oman if the Iraqi crisis lingers.

However, Li said the security crisis is unlikely to drastically affect China's supply.

China National Petroleum Corp, the country's largest oil producer, is operating four projects in Iraq, making the company the largest foreign investor there.