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Iraq - Kurdistan Tension Peaks over Kirkuk Oil Flows


Clashes were reported by newswires over the weekend, between Iraqi military forces and Iraqi Kurdish fighters, after Baghdad deployed troops towards Kurdish-held sites in Kirkuk province, with State TV reporting an exchange of artillery fire south of Kirkuk city. Baghdad reportedly wants to retake bases and oil fields taken by the Kurdish fighters in 2014 when militants belonging to the so-called Islamic State marched across Northern Iraq disrupting the national army that was protecting these territories. Recent rising tensions between the two sides are a result of Iraqi Kurds voting for independence in a September referendum, and Kurdish leaders refusing Iraqi government demands to reject the referendum result.

On Monday, tensions escalated as Iraqi forces entered the oil city of Kirkuk which accounts for 200,000 b/d out of the 600,000 b/d produced in the Kurdish region, while the government stated its troops had taken control of Iraq's North Oil Company, Reuters reports. Iraq's Kurdistan has at present shut down some 350,000 b/d of production from major oil fields of Bai Hassan and Avana, while a senior Iraqi oil official stated earlier in the day, that the national army is set to regain full control of the whole Kirkuk oil area and surrounding fields and restart the lost production within a very short time. According to analysts, the escalation in Northern Iraq is the main reason behind the jump in oil prices as it puts the oil supply from this region at risk, with Brent and WTI futures trading at $58.07 and $52.07 per barrel at 1338 GMT, up 90 cents and 62 cents respectively from their previous closures. SSY Suezmax desk reports no disruptions for tanker loadings in the region for the time being.