Oil Price Surges amid Iraq Turmoil

By John Cookson. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Traders will tell you the price of oil is a speculative market based on expectations. Most of Iraq’s oil production is from the mega fields in the south, far from any fighting. But in the world’s skittish bourses just a threat to exports is enough to cause market jitters.

Iraq was expected to contribute to 60 percent of OPEC’s crude production in the next 10 years so its output had become important for the long-term global energy market.

Small wonder, as country slides towards possible civil war, some analysts predict the price of a barrel of oil could soar by US$30.

The jihadists lightning assault in the north of Iraq last week caused Brent crude to spike to US$113, and the price could rise still further today with the news ISIS seized another town,Tal Afar, in the north west and still had their sights on Baghdad.

The US Embassy in Baghdad has relocated some staff to its consulates in Erbil and Basrah and to Jordan. The oil industry has reacted too with majors like BP at Rumaila and ExxonMobil in West Qurna evacuating all but vital expatriate staff.

The oil companies are playing down any sense of panic. ExxonMobil is not commenting on the crisis and BP said simply the violence in Iraq “has no impact,” on production at Rumaila. Royal Dutch Shell at Al Majnoon put a statement out saying safety and security of staff was: “an absolute priority.”

Despite Uprising, Kurdish Oil Exports Rise

By John Lee.

Reuters reports that Iraqi Kurdistan is ramping up independent oil exports, with a third tanker of crude scheduled to leave the Turkish port of Ceyhan on 22nd June.

The supply of oil through the Kurdistan Regional Government’s new pipeline to Turkey has continued uninterrupted, despite the escalating violence in northern Iraq.

Speaking to reporters on Monday, Turkish Energy Minister Taner Yildiz (pictured) declined to name the buyer of the 1-million-barrel cargo.

According to the Reuters report, the first exports via this route have still not been delivered to a refinery, as Baghdad’s threatens legal action and the black-listing of buyers.

Baghdad recently filed for arbitration against Turkey with the International Chamber of Commerce in Paris, claiming that, by facilitating the export of crude oil from Kurdistan without the authorisation from the Iraqi Ministry of Oil, Turkey has breached its obligations under the Iraq-Turkey Pipeline Agreement.

(Source: Reuters)

Video: Kirkuk Military Base Wrecked

From Al Jazeera. Any opinions expressed are those of the authors, and do not necessarily reflect the views of Iraq Business News.

Millions of dollars worth of US made equipment has been reduced to wreckage in the Iraqi town of Kirkuk after a rebel led advance on the city.

Sunni rebels captured Kirkuk’s largest military base and a swath of northern areas from the army, with a speed that shocked the government and the international community.

As they fled the violence, Iraqi troops left behind information and equipment that could be used by rebel fighters.

Al Jazeera‘s Hoda Abdel-Hamid reports from Kirkuk’s K1 military base:

Water and Wheat: ISIS Weapons?

By John Schnittker, Chief Economist at Schnittker Associates, and former Ministry Advisor at the US Embassy in Baghdad.

With much of Iraq’s wheat production coming from Northern Iraq and nearly all of Iraq’s water resources flowing through areas under ISIS control, Iraq’s food security may be facing a severe threat.

Iraq has about two thirds of this year’s wheat crop harvested, but this will not be adequate without additional imports, aside from the questions and logistical problems that are implicit given the current security and political crisis.

When and if the wheat harvest is completed in coming weeks across northern Iraq, around half of Iraq wheat crop will be in areas now under ISIS control. The remainder of the wheat crop will be stored in Ministry of Trade sites across southern Iraq. Iraq’s wheat production is blended with imported wheat, milled into flour and distributed as part of Iraq’s food ration or Public Distribution System.

Security concerns will likely severely impact the movement of wheat from storage sites to flour mills and ultimately to Iraq’s Public Distribution System (PDS) recipients. Regrettably those most in need of the PDS ration will be most affected. Imported wheat, used for blending with Iraqi wheat to improve both quality and appearance will also be affected, as it seems unlikely that the Ministry of Trade will be able to continue trucking shipments under current conditions into areas north and west of Baghdad. The potential exist that Iraqi citizens dependent upon the PDS across northern Iraq will face disruptions unless current situation is resolved.

The Euphrates and Tigris rivers enter Iraq in Anbar and Ninewa provinces respectively. Both of these provinces are under ISIS control. Dams on both rivers create the circumstances where the release of water can be severely cut back of cut off. It is also the case that water from both rivers can be diverted and stored before it reaches the major cities of Central and Southern Iraq.

Summer irrigation requirement s across Iraq are very high and could be disrupted. Drinking water will take priority over irrigation if water supplies are affected. Summer rice and vegetable crops stand the highest chance of facing irrigation water restrictions.

Water and wheat are the lifeblood of Iraq, ISIS control of the major rivers and dams and much of this season wheat crop has the potential to better define what currently is at stake.

Dijila Operations Command “Retreats from Kirkuk”

Lieutenant General Jabbar Yawar, Secretary-General of the KRG Ministry of Peshmerga Affairs and the Spokesperson of the Region’s armed forces, stated that Peshmerga forces (pictured) now control Kirkuk city after the Dijila Operations Command retreated from its position.

He said, “Peshmerga forces are in control of the majority of the Kurdistan Region outside of KRG administration.”

The Dijila Operations Command is part of the Iraqi Army under the direct supervision of Prime Minister Nouri Maliki and was deployed in 2012 in and around disputed territories. It has been a source of tension between Erbil and Baghdad since its establishment.

In a statement to, Jabbar Yawar pointed out that the KRG has in the past issued warnings that such events would occur in Mosul and parts of Iraq, particularly given the surge of terrorist activities in these areas.

He said, “Especially in Ninewa, Salahaddin and Anbar governorates, the Iraqi security agencies and ministries have been incapable and soldiers and employees were only interested in collecting their salaries.” He added that the collapse of these forces after their first engagement in battle had been predicted, but “Baghdad did not heed the KRG’s warnings and now, unfortunately, our predictions have come to pass.”

The Lieutenant General explained that during a number of military meetings between KRG and federal government delegations, the KRG proposed that “several military bases be built in Anbar, Salahaddin and Mosul – particularly at the desert border areas – but Baghdad incorrectly interpreted our proposals as politically motivated and not in the public’s interest.”

Yawar recalled that at the end of 2012, Peshmerga forces drew a line designed to protect the Kurdistan Region, including the areas of “Naftkhana, Khanaqin, Jalawla, Saadiya, Qaratapa, south and west of Tuz Khurmatu, and south and west of Kirkuk. This is in addition to the areas of Dibagah, Makhmour and as far as Fishkhabour.

This line, which is 1050 kilometres in length, has been protected by the Kurdistan Region’s 70th and 80th forces, rapid-response units, Asayish, and Zeravani. Over the past several days, as the Iraqi Army has abandoned its posts, including joint-force positions, Peshmerga reinforcements have been dispatched to fill their places.”

Yawar also revealed that Peshmerga are present in “Gwer and the areas surrounding Kirkuk city, including Taza Khurmatu and areas close to Hawija and Dibs.” To make these areas more secure, he reiterated that the Kurdistan Region remains open for all people fleeing their homes because of the threat of terror. “The Peshmerga will help them in every way that they can. In the meantime, security measures taken by Peshmerga forces will not cause conflict or disruption for citizens living in these areas.”

The Lieutenant General explained that no confrontation has taken place between the Peshmerga forces and the Iraqi Army. He said, “Peshmerga forces have helped Iraqi soldiers and military leaders when they abandoned their positions. We helped them to reach Baghdad via the Kurdistan Region, particularly three Iraqi military leaders: General Ali Ghaidan, General Abood Qambar, and Lieutenant-General Muhsin Mahmud, as well as the two pilots who abandoned their planes. They were all sent back to Baghdad via Erbil International Airport.”

Jabar Yawar also clarified that Peshmerga forces quickly reached the Rabia border crossing in order to establish military positions to secure the border area.

He emphasized that “no Dijila Operations Command soldiers are present in the city of Kirkuk, and all the units of the Iraqi Army’s 12th Division have retreated from the city. Asayish forces and Zeravani now control Kirkuk city and the surrounding areas.”

Yawar pointed out, “Peshmerga forces have thus far not received orders from the President of the Kurdistan Region to move toward the three governorates which are under the control of the Islamic State of Iraq and al-Sham (ISIS).” He added, “There is no need for Peshmerga forces to move into these areas. Iraqi Army forces are no longer present there, and the situation in these areas is highly unstable, as they are under ISIS control.”

KRG Spokesperson Minister Safeen Dizayee described the posture of KRG Peshmerga forces. He said, “We are fully committed to the defence of territory administered by the KRG as well as areas of the Kurdistan Region outside of KRG administration.” He added, “The KRG is currently a safe haven for approximately 250,000 Syrian refugees as well as hundreds of thousands of internally-displaced people fleeing the violence in Mosul and elsewhere. We are doing our best to cope with this humanitarian emergency.”

(Source: KRG)

And the Winners are? The Kurds

By John Cookson. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Checking back through e-mails I am amazed it was only 4 days ago on June 10th I messaged an editor pal of mine that something momentous was happening in Iraq.

ISIS had occupied Mosul! The city had fallen. I could not believe it then. Even now I remain stunned.

So much happened since – and at what breathtaking speed.

The jihadists have swept down a route carved by the Tigris River. Anyone standing in their way was dealt with by a bullet in the head.  Now they are within an hour’s drive of the gates of Baghdad.

Sources tell me even ISIS commanders are amazed how easy it was and they even plan to use the same route as the Americans in 2003 to enter the capital.

As the world waits to see what decisive plan Prime Minister Al Maliki has up his sleeve to retake almost a half of his nation, Shi-ite leader Grand Ayatollah Sistani has made a call to arms addressed not to only to Shias but ” all Iraqi citizens.”

President Obama meanwhile is weighing his options and moving the aircraft carrier USS George H.W. Bush to the Gulf, which probably means targeted air strikes on ISIS command and control centres, if anyone can identify them!

The potential for another bloody conflagration in a nation which has seen so much death and destruction – and a nation for which I have so much affection – is the stuff of nightmares. God help the Iraqis.

Small wonder when you talk to Iraqis they sometimes say they feel themselves cursed.

Fate my not be on their side but years of conflict has not damaged their incredible resilience to hardship and when I spoke to a Kurdish minister this morning in Baghdad he said: ” Don’t worry John, I will be alright. We have been through this before!”

The Wrong Time to Panic

By Mark DeWeaver.

Iraqi stocks held up surprisingly well for most of this week despite the dramatic loss of much of Northwestern Iraq to extremists. Even following the fall of Mosul on Tuesday, Rabee Securities’ RSISX index was down only 2.6% for the week by Wednesday’s close. And while the ISX index fell 3.3% on Wednesday, about half of that decline was due to a 10% drop in Asiacell on a mere US$ 659 worth of turnover.

Thursday, however, was a different story. Five of the top banks—BBOB, BCOI, BNOR, BROI, and BUND—were down by the 10% daily limit (or close to it) on heavy foreign selling. Net foreign buying, which had been positive every day since the start of the week, swung sharply negative. Having accumulated US$ 627,000 worth of Iraqi stocks from Sunday to Wednesday, foreigners ended the week by net selling US$ 415,000 in a single day.

While I don’t have any way of knowing for sure, it seems obvious to me that one of the foreign funds has finally panicked.

Should I be panicking too? I don’t think so. Orc-like hordes of invaders descending on the capital is undoubtedly a scary prospect, but ISIS has almost certainly reached the limit of its advance by this point. The Iraqi army is unlikely to melt away from the Shia areas in that way that it did in Mosul. It is already being backed up by Kurdish forces in the territories bordering Kurdistan and may quite possibly be able to call upon US airpower by as early as next week. Meanwhile, the enemy is stretched thin and vastly outnumbered.

The scenario to bet on is not the fall of Baghdad but rather a series of reversals for ISIS. Once that happens, the market should stabilize and, in the event of US airstrikes, will easily erase its losses. If one is going to sell at all, now is not the time to do it.

Video Profile: Islamic State in Iraq and the Levant (ISIL)

From Al Jazeera. Any opinions expressed are those of the authors, and do not necessarily reflect the views of Iraq Business News.

The Islamic State of Iraq and the Levant, (ISIL), is a jihadist group active in Iraq and Syria seeking to establish a Islamic caliphate.

With thousands of Arab and foreign fighters under its wing, it has emerged as one of the most powerful groups in the region.

An off-shoot of al-Qaeda, the group has attacked rivals and killed hundreds for violating its strict interpretation of Islam.

Despite the Iraqi army’s efforts to dislodge the fighters, the group controls parts of two Iraqi cities in Anbar province, most of Mosul and several neighborhoods in Kirkuk province.

ISIL also controls parts of northern Syria, including their stronghold the city of Raqqa, and are fighting rivals Al Nusra, for oil-rich city of Deir az Zor.

Al Jazeera‘s Omar Al Saleh reports: