NEW YORK (TheStreet) -- I was talking to Jim Cramer about the fall of Mosul in Iraq and whether this military turnaround would have a destabilizing effect on the oil market.

The truth is that only 17% of the oil production from Iraq comes from the North where all the fighting has been going on, and the largest single producing field there is the Kirkuk "superfield." But Kirkuk is very far north, near the Turkish border and so far not being threatened by insurgents.

What is more important about the quick fall of Mosul has been the weak response from the Iraqi military and the relative ease with which the Iraqi/Syrian Islamic forces (ISIS) retook grounds the U.S. military fought so hard to capture. The political question is whether Iraq is now on the precipice of falling totally apart and about to revert to full-scale civil war and a total fall of the Al-Maliki government.

What will happen first, and what will have an impact on the oil markets, will be the extent of further activity of the insurgents and response from the government. If further ground begins to be lost in the South threatening the major oil fields there, we could see a real reason for rocketing oil prices.

What is immediately true is the strong production growth from Iraq that had been expected to emerge is now on a far back burner. Total Iraqi production had only recently increased above 3.5 million barrels a day threshold with hopes of a further increase of 1.5 million barrels a day over the next year and a half. Those hopes are now entirely dashed as no further capital investment is likely in an environment as incendiary as the one in Iraq right now.

If you liked this article you might like

IPOs That Should Be on Your Radar

Time to Play Equifax?

Energy M&A Weekly: More Midstream IPOs Expected in 2017

Time to Play Equifax?

Here's Where Wall Street Stands