Iraq oil shock could kill world economic recovery, experts warn
The Telegraph | June 11
As violence threatens Iraq’s oil industry, experts fear crude at $130 per barrel would damage the global economy.
Open warfare between the government and rebels in Iraq would pose a threat to the global economic recovery should oil production from the war-torn Middle East state suffer a serious disruption, analysts have warned….
“The worst case scenario is that we see production from Iraq slip down to levels in the last Gulf war, then oil could spike $20 a barrel very quickly,” Ole Hansen, vice-president and head of commodity strategy at Saxo Bank told The Telegraph.
“In that scenario, the entire economic recovery, which is still fragile, could stall and we could even slip back into recession in some regions.”
Iraq strikes defiant tone on oil output
Financial Times | June 11
Iraq’s oil minister struck a defiant tone at Wednesday’s meeting of Opec, where the oil-producing cartel left its output target unchanged, saying the country would raise production to 4m barrels a day by the end of the year.
The government in Baghdad asked parliament to declare a state of emergency on Tuesday after extremists took control of the northern city of Mosul.
Concern is growing that escalating unrest in the oil-rich region could threaten production and also exports from Iraq, currently the second biggest Opec producer.
Fighting in North Iraq to Delay Return of Region Oil Exports
Bloomberg | June 11
The seizure of Iraq’s second-largest city by militants from a breakaway al-Qaeda group is hobbling the OPEC producer’s effort to fix its main pipeline for crude exports and boost output at one of its biggest oilfields.
Quiet So Far, Oil Prices Could Rise as Insurgents Gain in Iraq
The Wall Street Journal | June 12
Military advances by Islamic insurgents in northern Iraq have had a negligible impact on global oil futures so far – but that’s likely to change if Baghdad doesn’t re-establish its authority soon.
Iraq may evolve as a “significant wild card,” oil-trading advisory company Ritterbusch & Associates commented overnight, following the loss of a second major city to insurgents. Prices are likely to climb if tensions continue to rise, the firm said.
The Islamic State of Iraq and al-Sham Captures Mosul and Advances toward Baghdad
Institute for the Study of War | June 11
Iraq’s territorial integrity is in question. The Iraqi Security Forces have fractured in the northern provinces. The Islamic State of Iraq and al-Sham (ISIS) is putting military pressure on Kirkuk and the Kurdish region and may be trying to drive a permanent wedge between Kurdish and Arab Iraq.
There is now an Islamic State controlled by an al-Qaeda splinter in the heart of the Middle East….
Iraq’s security forces will not be able to retake all of the ground they have lost. They may not even be able to hold what they still have. The best-case scenario is a stalemate in which Iraqis manage to contain the ISIS state and army for now. The more likely case is the creation of another Syrian-style conflict pitting ISIS with increasing international support against desperate and increasingly brutal Iraqi Shi’a militias and ISF elements. The two civil wars, which have now completely merged, will continue to expand, destabilizing an already unstable Middle East and inviting further intervention by the Sunni Arab states and Iran. In the very worst case, the fall of Mosul could be a step down the path to outright regional war. It is likely to result in the meaningful creation of an al-Qaeda state straddling the Iraq-Syria border (and erasing that border), giving al-Qaeda a secure base of operations such as it has not had since the fall of the Taliban.