The military conflict in Iraq will take oil prices roughly 10 percent higher than current levels, with Brent crude oil "headed for $120 in a straight line," CNBC's Jim Cramer said Friday.
The group known as the Islamic State in Iraq and al-Sham has now seized control of key cities, including Mosul, Ramadi, Falluja and Tikrit, raising fears it could take control of Iraq's oil wells and refineries, too.
In turn, West Texas Intermediate (WTI) hit a high of $107.68 in early trading Friday, a level not seen since Sept. 19, 2013. Brent hit a high of more than $114 a barrel, a level last reached on Sept. 9, 2013.
If the situation worsens in Iraq, a major oil-producing country, the price of oil could continue to push higher. The U.S. produces large amounts of WTI, but lacks refining capacity.
"We can't refine it. We ... set up our refineries for the Keystone pipeline and for so-called heavy crude. We have to export our oil. We don't have a place to put all the Permian," said Cramer, referring to the Permian Basin, an oil-rich area that stretches from western Texas to the southeastern part of the state of New Mexico.
Three new pipelines will soon help ease the "logjam" at the Permian, but a lack of refineries still means "we can't put it in our tank."
"It's got to be sent to other countries. Otherwise, they're going to shutdown Permian production," he said. "We've got the wrong crude and the wrong refineries. So it will not affect or lower the price of gasoline, which is still priced off of Brent."
—By CNBC's Drew Sandholm.