Takes it one step further saying the central bank is barking up the wrong tree. It is, in my view, not the discussion in my view is irrational. And, can the thrill of victory soothe the anger on the streets of brazil . Fans celebrate the home teams 31 win against croatia after demonstrations break out in the major cities. Youre watching Worldwide Exchange, Business News from around the globe. Well, a warm welcome again to Worldwide Exchange. Weve just got the monthly all Market Report out. Opec oil supplies inched up by 85,000 Barrels Per Day to 29. 99 million Barrels Per Day. In may, they are raising the call on crude oil by 150,000 Barrels Per Day for the second half of 2014 to an average of 30. 9 million Barrels Per Day. Theyre saying that Global Oil Demand is set to increase sharply from a low of 91. 4 million Barrels Per Day in the First Quarter. So they are expecting to see an increase, sharp increase, in fact, in oil as far as iraq is concerned, theyre saying the latest defense in iraq may not for now put additional iraqi oil supplies immediately at risk. So thats the latest from them. Theyre also forecasting demand for oil in the second half of 2014 to 30. 9 million Barrels Per Day. Now, Neil Atkinson joins us now. Neil, a quick comment there. Obviously, weve got the situation with iraq right now, that supercedes to some degree this iea report. But theyre saying were not seeing a risk of supply damage. Yeah, morning, julia. Well, most of the capability in the certain part of the country, that remains under the control of the baghdad authorities. This is a fastmoving situation with, however it turns out, iraq is clearly not going to remain the same political entity that it is today. There is a severe danger itll fracture into three pieces, the kurds, sunnis and shias. Today, theres no indication itll fall sharply. But as the weeks unfold, that could change. And even though if were not expecting any kind of supply restriction as far as the situation across the area is concerned, talk to me about the oil markets right now. How much higher do you think sentiment can push prices . Well, if theres a severe escalation of the iraqi crisis, skys the limit. Weve got brent up to 120 barrels a day. The potential for it to rise significantly higher to 120 or even higher if iraqi exports were to be severely restricted. That is a very strong possibility. But events will foretell. Ive been with the opec Ministerial Conference this week, and even before the escalation of the iraqi crisis, which happened as we were all sitting in vienna. We were looking at a higher requirement of production from the opec member countries, as you mentioned a second ago. And even without the escalation in iraq, we were looking towards the possibility of Higher Oil Prices in the rest of 2014. So message that the iea are suggesting perhaps here, too, given the increasing demand theyre expecting. Well leave that there and ill bring viewers up to speed of what were hearing as far as the iraq situation is concerned. President obama said hes not ruling out air strikes to aid the fight against insurgents. Marking a potential u turn after pulling u. S. Troops out two years ago. I dont rule out anything because we do have a stake in making sure that these jihadists are not getting a permanent foothold in either iraq or syria, for that matter. Republican senator john mccain criticized the Obama Administration saying there was a lack of foresight in troop withdrawal. It is clear that this decision of a complete pullout of the United States troops from iraq was dictated by politics and not our National Security interests. I believe that history will judge this president s leadership with the scorn and disdain that it deserves. Tensions have escalated across northern territories as radical Jihadist Group isys continues the push into the iraqi cities. Launching air strikes, but reports suggest insurgents are steadily advancing toward baghdad. Now, speaking to us on the phone from dubai. First, yousuf, give us the latest on the situation and what youre hearing. Well, julia, thats lets start off, the city of kirkuk which is a Strategic Oil hub, as well. You have the pipeline that goes to turkey, which is offline at the moment, but its important in terms of refinery and other infrastructure. That town is in the hands of the forces which are kurdish fighters. And the Central Government has pulled out of that town. Now, as you mentioned, still on the offensive is what weve heard from ihs, that they would continue to exploit the momentum to seize new territory. And we understand that a smaller town outside of baghdad going by was captured, as well. Again, some of the reports are sporadic and not all of them line up necessarily. So all the information at this point we are taking with a grain of caution. The head of the Political Mission in iraq, the u. N. Security council just hours ago, he said that fe helt that the Central Government was Strong Enough and in force in the capital to prevent any loss of baghdad. Now has been on the defense since the beginning of the year end. This is not an organization thats very pr savvy, julia. Its a faceless Organization Led by a name by a man, if you look him up on google, you wont find but one pixlated image of him and no real video of him speaking, either. And his spokesperson only released an audio message asking followers to march on to baghdad, even though cnbc could not independently verify that. And just to pick up, as well, on what neil said in terms of the Oil Infrastructure in the south near export terminals near Major Oil Field and said that any disruption should be contained. But if you think of the example of libya where you had the collapse of state sovereignty and state control, you quickly had Oil Infrastructure becoming the target. And that could be a scenario if it continues to march forward to other parts of the country, which at the moment is still not happening. And then you have the minister looking, security council, looking for the International Community to take action. And there is a precedent. Earlier in the year, we had islamist threatening the government, put through a resolution and the and it has happened before, it can be done. But you have to round all the Political Parties around one table and get everyone to agree. And what is a multifacetted complex proxy conflict happening now in the very heart of iraq. Julia . Thanks so much, yousef. Stay right there, i want to come back to you on that, but first, i want to ask neil about the libyan situation and the parallels. Its a very good point. Yes, at first in libya, after gadhafi fell, Oil Production fell for a while, but it rebuilt quite strongly before eventually collapsing again. Its a question of who has control. I know the moment there isnt a threat to the southern export infrastructure. Yes, yousef is quite right. Yes, we could have a libyan situation. Were probably going to have a libyan situation anyway with a division between the kurds and the shias and the sunnis. And the Prime Minister of iraq is in danger of ending up becoming the mayor of baghdad. Moving from a failing state to a failed state. Quick question. Weve obviously seen quick comments from president obama overnight suggesting nothing is off the table in terms of potential support. Ive also seen reports that iran could be sending up to 10,000 troops, special forces to potentially help iraq with the situation right now. Whats the risk this actually escalates . Well, there is the risk of escalation for sure. You have to keep in mind that the iraqi Central Government under Prime Minister maliki is very close to iran, theyve gotten a lot of support over the last few years, and they are at odds, though. Not, lets say with the american administration, but the rich powers in the oilrich gulf. Ive been following that story very, very closely. Any increase in support to the Central Government might be met with resistance from other parts of the middle east who are not necessarily in agreement with the dominated Central Government in iraq. They may make a stand or increase their support to other factions opposing the Central Government there. Any increase in support. The only way to resolve this, i think thats what analysts are making very, very clear, you have a change in the way you approach the political situation within iraq to create a really inclusive government thats a lot easier said than done because its not just a Central Government thats pushing away the other faction. The other faction, they dont want to have anything to do with the Central Government. So you have your semiautonomous kurdish in the north and the sunni heartland of the province on the adjacent region, as well. Unless you resolve that, any solution is going to be very shortterm. Yousef, thank you so much for your points there. And neil, i know you were nodding vigorously there, but we have to wrap up. We have to finish here. Thank you so much for your input. And, in the northeast of iraq, as we were mentioning there, Kurdish Forces have taken control of the oil city of kirkuk saying the Government Forces have fled. Later in the show, well talk to the high representative to the uk off the Kurdistan Regional government to get her take, too. Well, as we were just talking there, of course, key element of the caution that were seeing in sentiment right now in the markets is because of the situation in iraq. Weve also had reports of tanks crossing the border from russia into ukraine, too. That going on, of course, while the world eyes are looking out for us. In addition to what else comes up next week, of course, weve got the fed meeting next week also. Right now, stoxx 600 around. 2 . Not so excessive right now. I guess it is also friday, low volume trading, too. Weve got the german and uk markets losing around. 5 . In the uk, its the Home Builders losing ground. Were going to be talking about that very shortly in particular. Let me give you a look at how bond rates are going right now. All the focus, as always on the u. S. Markets in particular. We saw the u. S. Tenyear breaking down, just shy of 2. 60 yesterday in trading. Thats the level right now. Portugal, too, another interesting one. The bailout yesterday afternoon saying, look, were not going to add further austerity as per the constitution. We dont need the cash. It was 2. 6 billion euros. The dollar on the back foot after the retail sales data yesterday, no change there. Weve got euro dollar slightly higher, 1. 3574 the level there. Ill mention sterling. Were talking about this 1. 6840 yesterday, following the speech yesterday, and were seeing the markets pulling forward the likelihood of rate hikes for the uk in particular, too. And that market, obviously, the sterling rate significantly higher, 150 picks over 24 hours. Ill bring you up to speed completely with that. The governor of the bank of england has given his strongest indication yet that the era of record low Interest Rates may be coming to an end. Mark carney warned those betting on a rate increase around april, q2 of next year, may be in for a surprise. Theres already great speculation about the exact timing of the first rate hike. And this decision is becoming more balanced. It could happen sooner than Financial Markets currently expect. But to be clear, the mpc has no preset course, the ultimate decision will be driven by the data. And at this point, its safest to conclude as the mpc has, that the remain scope for the Spare Capacity to be used up before policy is tightened and that a host of labor market capacity utilization, pricing and wage indicators should be watched closely to determine how that slack is evolving. This comes as concerns grow over a house price bubble with mark carney calling it, quote, the greatest risk to the domestic economy. The uk government has responded with new powers to the central bank to restrict mortgage lending. George osborne told the audience Financial Stability could be at risk going forward. If london prices were to continue growing at these rates, that would be too fast for comfort. And the rates of price rises is now beginning to spread beyond london. Across the country, the ratio of house prices to incomes is high by historical standards. And while average loan to value ratios fought, new lending well below normal. Average earning to income ratios have risen to new highs. Let me spell it out, does the Housing Market pose an immediate threat to Financial Stability today . No, it doesnt. Could it in the future . Yes, it could. Especially if we dont learn the lessons of the past. Shares in britains Home Builders slipping into the red following the chancellors comments on curbing mortgage lending. Two of the biggest decliners in europe. This is osborne and london mayor Boris Johnson reportedly set to unveil new measures to ease housing pressure in london including addressing supply. Now joining us to tell us the details. Whoever said carney was a dove, the ultimate pragmatist, isnt he . Yeah, hes a good politician. And in the middle of a very, very long speech came this bullet about Interest Rates for the last year, hes been telling us, actually, the markets are getting it wrong. Were going to keep Interest Rates low. The banks own forecast, suggestions from the Inflation Report was that Interest Rates wouldnt begin to rise from these historically low levels until april of next year. Now, people are talking about november. Now, why is this . We have had data for the last six to eight months, increasingly good. We know that gdp is now at levels that surpass the precrisis peak. So weve recovered much of the momentum in the economy in the british economy. Employment has picked up massively. We dont have things like wage inflation. Which is a very strange thing to have on the one hand, you have huge employment pick up, on the other hand, you dont have wage inflation. Thats a strange data mix. But you have got increasing pressure about the Housing Market. Right. So we knew that they were going to do something in the fpc, theyre meeting next week. And the the chancellor of the uk said was were going to give the bank of england new powers to limit the way how much people can borrow. Whether its in relation to their incomes or in relation to the value of the home, were going to put in these massive macro prudential tools to make it harder. Thats why youre seeing House Builders crash this morning a bit. Not only because the governor has raised the specter of Interest Rate rises much earlier than people predicted, but because were going to see changes in the Mortgage Market already, as soon as a couple of weeks time, when the announcement for the allimportant meeting will be made. As far as Forward Guidance is concerned in doing what exactly. What Forward Guidance. More Forward Guidance. That went out a long time ago. Yes, the hes guiding on rates. Look at the move in the markets. 15 basis points, from the curve, thats still guiding the market. And therell be lots of people saying, look, sterlings a problem in the ux k economy because we have this massive deficit, massive trade deficit, hurts our exports. But yesterday, he said doesnt matter. And as you said, very turn around policy. Im getting in front of the curve. Thank you. Well see you a little bit later on in the show. Rating agency fitch has reiterated the doublea plus rating. Pointed out that the fiscal deficit review. Now, on todays show, the world cup craze begins. Well give you the roundup of brazils opening games as the country gets off to a winning start. How unexpected. Now, if the world cup hasnt gripped you, then maybe superstition will. Its friday the 13th. The market is full of dark magic, as well. Are you also a china bull or bear . Well discuss whether reform will happen despite skepticism from investors. And finally, how many smartphones do teenagers go through . I bet its more than you think. We speak to teen vogue who says its more of a birthright and not a privilege. Stay with us, well be back in two. Croatia threatened to spoil the party in brazil. After a lengthy Opening Ceremony featuring j. Lo and pit bull. They took an early lead through an open goal. Then turned the game, equalizing from the distance after half a