Don’t panic over oil, former BP CEO says

It would be wise for investors not to panic over oil, and wait and see how the situation in Iraq develops, former BP CEO John Browne said Monday.

"The United States has done a superb job of bringing on more sources of oil, so there are more choices in the market, which I think is demonstrated by the fact that prices haven't gone up that much so far," Browne said in an interview with CNBC's "Power Lunch."

Read MoreWithout Iraq's oil, prices could hit $150-$200: Pickens

Oil prices floated near nine-month highs on Monday as the violence escalated in Iraq. Jihadists solidified their grip on the north after seizing a mainly ethnic Turkmen city on Sunday. However, the Iraqi government said it has stopped the group's advance on Baghdad.

Lord John Browne, former Chief Executive of British Petroleum.
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Lord John Browne, former Chief Executive of British Petroleum.

Browne said the crisis should serve as a reminder about the importance of fracking—which extracts natural gas and crude oil out of shale—and the controversial Keystone XL pipeline—which would carry oil from Canada to Texas refineries.

Read MoreHow the collapse of Iraq would affect America

"I hope that it reminds people that you have to find all sources and get them to market very efficiently," he said.

"The U.S., however big it is, is not isolated form the world. Europe is not isolated form the world. All these markets have to work together."

That includes continuing its long-standing partnership with Canada and getting more of Mexico's oil supply into the country, he said.

Read MoreMarkets 'on edge' over 'eerie calm' in oil prices

—By CNBC's Michelle Fox