Fungible means it goes into one big pot and the goods can't be separated out. Remember, there is basically only one price for oil in the market. When the sanctions are lifted, and Iraqi supply comes fully on stream, the supply of oil to the world is going to increase. That means the price will drop. If Iraq could somehow keep American buyers away from their oil (and I'm not sure that is even possible), the US would still benefit from the fact that the overall oil price would be lower.

As for OPEC, it is a cartel that has been in serious decline for decades. This isn't 1973 any more. There are too many supplies outside of OPEC for OPEC to control the price in the way it did in the 1970s. There are also two problems if OPEC were to try to do today what it did in the 1970s. First of all, OPEC's lever is to restrict supply. But that hurts the seller more than it does the buyer since most OPEC country's sell oil and almost nothing else.

Secondly, and relatedly, it is inherently hard to keep a cartel in line. There is too much temptation to cheat and sell a little more in secret. This is called the prisoner's dilemma. So for these reasons, it is unlikey that OPEC could do what it did in the 1970s, even if Iraq were to join.

So I stand by my "so what" statement.

(Note: apologies to finboy, I'm not an economist, but I think this is basically the right anaysis).