Iraq Update: Kurds Take Kirkuk, Al Qaeda Surges Toward Baghdad

Tyler Durden's picture

Now that 25 year old math PhD HFT programmers have finally figured out what this thing called Iraq is, and why headlines around it should factor into algo trading signals - especially those of crude oil - here, for their benefit is a summary of the latest events in Iraq, and also for everyone else confused why crude is back to levels not seen since last summer.

In broader terms (via RanSquawk):

  • The situation in Northern Iraq continues to deteriorate as the extremist ISIS/ISIL group took control of Mosul and then moved into Tirkit, which was later recaptured, in the north of Iraq which is near the Ceyhan-Kirkuk pipeline, which carries 1.6mln bbls per day. ISIS/ISIL forces then seized the Baiji refinery, the main refinery in Iraq, from Iraqi forces. (BBG/RTRS)
  • Iraqi forces and militants have now clashed in Ramadi, 100km from Baghdad, as ISIL extremist forces push towards the Iraqi capital. (BBG)
  • However Iraqi Oil Minister Luaibi said US planes may bomb North Iraq and denied ISIL took Baiji refinery in the North. The oil Minister also said Iraq average crude exports 2.6mln bbl/d, Iraq crude production 3.166mln bbl/d, Kirkuk production 167,000 bbl/d and Iraq has stored oil products and won't increase imports. (BBG/RTRS)
  • Washington has vowed to boost aid to Iraq and is mulling done strikes amid fears that Iraqi forces are crumbling in the face of militant attacks. (RTRS)

And in detail:

As the WSJ reports, after hard core Al Qaeda spin off ISIS (no relation to Sterling Archer) took over Saddam's home town of Tikrit yesterday, Iraq edged closer to all-out sectarian conflict on Thursday as Kurdish forces took control of a provincial capital in the oil-rich north and Sunni militants vowed to march on two cities revered by Shiite Muslims.  Kurdish militia known as peshmerga said they had taken up positions in key government installations in Kirkuk, as forces of the Shiite-dominated government of Prime Minister Nouri al-Maliki abandoned their posts and fled in fear of advancing Sunni militants, an official in the office of the provincial governor said.

Reuters adds that "The whole of Kirkuk has fallen into the hands of peshmerga," citing Jabbar Yawar. "No Iraqi army remains in Kirkuk now."

This in turn has put the output of the key Kirkuk-Ceyhan pipeline, with a 1.6MM bbls/day capacity, at risk.

The militia were operating out of the headquarters of the Iraqi army's 2nd Division. The official said western parts of Kirkuk province were still under the control of fighters from the Islamic State of Iraq and al-Sham, or ISIS, an al Qaeda offshoot.

Abu Mohammed al-Adnani, a spokesman for the Islamic State of Iraq and al-Sham, said the al Qaeda-inspired group would advance on Karbala and Najaf, as well as the capital Baghdad, the Associated Press reported, citing an audio statement.

However, as we showed yesterday, the final ISIS target is none other than the city of Baghdad, and the overthrow of the Iraq government entirely.

In Tikrit, militants have set up military councils to run the towns they captured, residents said.

“They came in hundreds to my town and said they are not here for blood or revenge but they seek reforms and to impose justice. They picked a retired general to run the town,” said a tribal figure from the town of Alam, north of Tikrit.

“'Our final destination will be Baghdad, the decisive battle will be there,' that’s what their leader of the militants group kept repeating," the tribal figure said.

The powerful Shiite leader, Moqtada al-Sadr, urged his followers on Wednesday to form military units to defend the two cities, which along with Mecca and Medina in Saudi Arabia are considered sacred by Shiites.

Before he suspended its operations in 2008, Mr. Sadr's Mahdi Army, once estimated to have nearly 60,000 members, played a major role in the country's Sunni-Shiite sectarian conflict.

His call for military mobilization came after Mr. Maliki said the government would arm citizens who volunteer to fight militants, after the fall of Mosul on Tuesday.

Security was stepped up in Baghdad to prevent the Sunni militants from reaching the capital, which is itself divided into Sunni and Shi'ite neighborhoods and saw ferocious sectarian street fighting in 2006-2007 under U.S. occupation.

* * *

The Kurdish capture of Kirkuk instantly overturns the fragile balance of power that has held Iraq together as a state since Saddam's fall.

Iraq's Kurds have done well since 2003, running their own affairs while being given a fixed percentage of the country's overall oil revenue. But with full control of Kirkuk - and the vast oil deposits beneath it - they could earn more on their own, eliminating the incentive to remain part of a failing Iraq.

Maliki's army already lost control of much of the Euphrates valley west of the capital to ISIL last year, and with the evaporation of the army in the Tigris valley to the north this week, the government could be left in control only of Baghdad and areas south.

The surge also potentially leaves the long desert frontier between Iraq and Syria effectively in ISIL hands, advancing its stated goal of erasing the border altogether and creating a single state ruled according to mediaeval Islamic principles.

Maliki described the fall of Mosul as a "conspiracy" and said the security forces who had abandoned their posts would be punished. He also said Iraqis were volunteering in several provinces to join army brigades to fight ISIL.

In a statement on its Twitter account, ISIL said it had taken Mosul as part of a plan "to conquer the entire state and cleanse it from the apostates", referring to the province of Nineveh of which the city is the capital.

Militants were reported to have executed soldiers and policemen after their seizure of some towns.

* * *

And while all of the above explains oil's spike today, now that the world has yet another geopolitical hotzone to follow, following the China-Japan naval conflict, the China-Vietnam escalation, the Thailand martial law, the Ukraine civil war and now the Iraq collapse, expect the USDJPY rigging crew to ignite enough momentum to send the S&P 500 to fresh all time highs.

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New_Meat's picture

Joe Bite-me had talked about partitioning Iraq along ethnic lines.  And VOILA!

Oldwood's picture

The challenge of leadership is to affect their goals while placing the blame for its consequences on others. Obama and friends have been as good at this as just about any. We thought Clinton was Teflon but Obama has an extra black layer of protection to ensure nothing will stick.

Hippocratic Oaf's picture

No one is scared of us anymore with this HNIC and all his ass kissers. The dark side is moving in because of this.

The next 2 years is going to be a shit-show

max2205's picture

Too bad Biden Jr didnt get that Iraqi development CEO job.  We might actually care what a disaster thjs will

nopalito's picture

I suppose this might upset some of the Iraqi dinar revaluation gang.

philipat's picture

So, perhaps, Saddam was never such a problem? He provided a bridge between Al-CIAda and the multitude of multi-ethnic remants left behind when the British drew arbitrary borders in The ME before pulling out. And a "Bridge" to Iran. Saddam was NEVER an Al-CIAda supporter.

Where are "W" and "B-Liar" now. It's clear that US policy in the ME is collapsing under it's own weight. And lack of competence.

The US and UK never had any place in Iraq. Now, that is very clear... But, of course, The Military-Industrial Complex made another 1-2 Trillion Dollars, so it's all good....

MeMongo's picture

Winning the hearts and minds my friend!(:-(

Gaius Frakkin' Baltar's picture

They hate us fur our freedums!!!

stoneworker's picture

I would be greatful if someone could explain who exactly is supporting ISIS financially. Is this just an attempt by SA to place a Sunni government in Iraq?...que bono?

CrazyCooter's picture

I like to trot this out every so often for folks new to the subject. Caveat: it is old, but so are a lot of good observations.

I post this to highlight why pouring a lot of military hardware, money, and lives into MENA is generally speaking "fucking stupid".



Headbanger's picture



gh0atrider's picture

It's sad to see America lose it's 51st State.  Or is that Israel?

svayambhu108's picture

If they arrive in Basra, US will be there within hours

Manthong's picture

I wonder if they will go for the airport first.

..and who will be denying that they are there?

Raymond K Hessel's picture

Honestly, do you give a shit about what happens over there?

Pure Evil's picture

I sure do!

The shit heels running the shit show in D.C. may decide the humanitarian thing to do is bring all the refugees from the ME over to a neighborhood near you.

Just like they're allowing the flood of refugees to cross the US southern border and take up residence in the US.

It's for the children, you know, just not your children.

Your children will be pushed aside to allow all these oppressed 3rd world children the opportunity to succeed that rightfully belongs to them.

Miles Ahead's picture

@ Stoneworker:  cui bono.  Fixed it.

Hey Pure Stupid, The US may bring all the refugees from The Middle East?  Really?  Now?  Why not back in 2003-6 when Iraq was in full swing?  None from Libya yet?  Lebannon?  Syria?  Egypt, Tunisia, Bahrain?  Palestine?  Whew, lucky us... so far we've dodged a bullet!

Hey, those children from south of the border are not refugees; they're the kids of your migrant workers.  They "take up residence" with their Mom and Pops because Mom and Pops are needed for picking your strawberries.  And tomatoes.  It IS for your children (well not yours, obviously, but you know what I mean) so they will get tomatoes on their Taco Bells and strawberries in their milkshakes. 

If the opportunity to succeed rightfully belongs to the Oppressed 3rd world children (as you so succinctly put it) then why you bitchin?

G-R-U-N-T's picture

"I would be greatful if someone could explain who exactly is supporting ISIS financially."

Seems ISIS is now self supporting...'What difference at this point does it make' -Hillary Clinton

-Al-Qaeda Jihadis Loot Over $400 Million From Mosul Central Bank, Seize Saddam's Hometown-


stoneworker's picture

Thanks I have read this article while it explains that they may now become self supporting it seems obvious to me that somebody spoon fed, trained, and organized them to become this force. The way I see it this is in the interest of the Sunnis(SA, Qatar...), and ISIS has been fighting against Assad so it does not seem likely that this is a Russian or an Iranian operation. Idk if this is in the US interests.

y3maxx's picture

...Soon, Will be new Middle East.
No more Iraq.
Will be Kurdistan (from Iraq & Turkey)
Will be Sunnistan (from Syria, Hizballah & Iraq)controlled by S A
Will be Shiitestan (from Iraq) controlled by Iran
...Too bad many civilians will be killed but Oil & NG will flow and peace will come in the long run.
...and Soon will be no more Ukraine

stoneworker's picture

Who benefits from all of this?

CrazyCooter's picture

So, to translate ....  Shitistan ... Crapistan ... and Turdistan.

Got it.



Anusocracy's picture

You failed to mention the 800 lb. gorilla that created these shitstains on earth.

The United Sphincters of America.

Panafrican Funktron Robot's picture

Al-Qaeda/jihad thing is an ongoing part of the broader CIA op in the region that has been running pretty much since the end of WW-II.  The entire point of it is to control the oil.  There are other competing international players involved, esp. China/Russia.  My bet is that Iraq was starting to get cozy with competing players, hence the unleashing of "militants".  

stoneworker's picture

Yeah I was thinking about that, but may be there is more to the story. Perhaps there is a rift between the SA and the US and Qatar...hence two Al Qaedas...two Talibans...sadly I am not an expert on the middle east, so I am basically looking for the most logical conspiracy theory.

Raymond K Hessel's picture

ISIS is being supported by sales of cocaine back to the Colombian drug lords who sold it to the US in the first place.

TBT or not TBT's picture

ISIS owns oil fields, stoneworker.   Sorta like Saddam or the mullahs in Iran or Putin, their finances come from an oil spigot.

stoneworker's picture

I don't think they have held any refineries until recently...they may have provided "protection" for the existing refineries, but still I don't think any group of extremists that exists today can be independent they all need to rely on bigger world powers for protection. 

QQQBall's picture

They are following a Wall Sreet strategy. They are rolling up banks as their offensive moves forward. $1/2 billion buys a lot of burkas

Herd Redirection Committee's picture

Thats industrial-grade, right there.

cossack55's picture

Just ask April Gillespie about Saddam.

Tall Tom's picture

US Ambassador to Iraq April GLASPIE...during the George HW Bush presidency.


When it all boils down to it she was the direct cause of this whole quagmire.


Her quote to Saddam Hussien is as follows...


But we (the US Government) have no opinion on the Arab-Arab conflicts, like your border disagreement with Kuwait. I was in the American Embassy in Kuwait during the late 1960s. The instruction we had during this period was that we should express no opinion on this issue and that the issue is not associated with America. James Baker (US Secretary of State) has directed our official spokesmen to emphasize this instruction. We hope you can solve this problem using any suitable methods via Klibi (Chedli Klibi, Secretary General of the Arab League) or via President Mubarak. All that we hope is that these issues are solved quickly.


If the Bush Administration told Saddam that we do have an interest I am certain that Saddam would have reconsidered his plans as he was an ALLY before the Gulf War of 1991.

DaveyJones's picture

He wasn't a problem until he wanted to divorce the dollar from his black bride

I love that old clip of Cheney during the first Iraq war when asked why they didn't continue and take Baghdad. He goes on to explain how Saddam does just that, through an iron fist, keep an otherwise chaotic, rivaled, three part country under control. Things of course changed, peak oil started knocking at dick's door and Hussein stopped being their lap dog.  

mkkby's picture

Now that our idiot foreign policy has started the cold war again, watch as Putin sends the militants anti-aircraft missles to counter our soon to be arriving drones and bombers. 

This would be a replay of what we did to the Soviets back when they occupied Afganistan.  Fitting revenge, and warranted since we destroyed 20 years of decent relations with Russia.

Tall Tom's picture

"Without me there is no Iraq."


Last Words spoken by Saddam Hussien while on the Gallows

MopWater's picture

Well said.  Amazing really, strongarm dictator known in the west as a war monger, tyrant, and thug...replaced by US imposed war mongers, tyrants, and thugs, just to be overrun by even more war momgers, tyrants, and thugs.

It really is a Hydra isnt it?

CrazyCooter's picture

Saddam was trained, supported and armed by the US government, but he refused to play petrodollarball (twice) and got his life expectancy reduced.

This is all about oil, nothing else. Control the oil flow, to support a currency being ravenously debased by douchbags who like the power it gives them, and it all seems so much more clear.



BurningFuld's picture

There is no doubt the USA is behind the Kurds having their way.

TBT or not TBT's picture

The US was in about 18th place in the long list of countries supplying arms to Saddam, cumulatively, by the time he fell.   France was way up there.   Sold Saddam over a 100Billion of arms and infrastructure projects on credit.   The French were happy to have the easy business for their precious national, second rate arms makers.   They had also pre-sold a lot of projects and weapons systems to Saddam during the UN's corrupt food for oil regime, rubbing their hands greedily for when all such sanctions would be lifted from their client.   The US, for its part, had tied their own arms businesses hands, by law, for a very long time while less scrupulous internationall suppliers filled the gap.

Tall Tom's picture

He refused to play petrodollar ball ONCE. If he had not been given the "all clear" message from the US Ambassador to Iraq, April Glaspie, then he would have not invaded Kuwait.


Had he been allowed to take Kuwait then he'd have still sold those barrels of Oil in US Dollars.


The US Government SANCTIONED Saddam AFTER the first Gulf War.


The US Government REFUSED to buy Oil from Iraq AFTER the first Gulf War.


The children of Iraq were STARVING TO DEATH. So in 2000 he announced that he was going to sell Oil in Euros.


WE STARVED ONE HALF MILLION CHILDREN and Madeline Albright, US Secretary of State under the Clinton Administration BRAGGED ABOUT IT saying in a TeeVee interview with Katie Couric that " was worth it." That is the Death Toll of twice that suffered in Hiroshima and Nagasaki combined. ONE HALF MILLION CHILDREN!!! They never lifted any fucking weapons against anyone.


It was a slaughter of innocents.


When speaking of children Jesus Christ said that it is better that you'd have never been born than to harm one of these. Jesus said it is better that you place a Millstone upon your neck and cast yourself into the sea than it is to harm one of these.


That is right. Jesus suggested that it would have been better for you to be ABORTED than it is to harm a child.

Jesus suggested that it is better that you commit SUICIDE than it is to harm a child.


And you support it? Yes you did as you supported it FINANCIALLY by paying  taxes. Financial support is support.


Well we did not harm one child. We slaughtered ONE HALF MILLION CHILDREN.


Judgment is coming to America. There are none so deserving.


The atheist will say that there is no God.  But what is so funny is that they are hoping that as they are wagering on an infinitesimal. They are hoping that there is no God because there is going to be Hell awaiting.

Tall Tom's picture

You may downarrow my preceding post all that you want. But it will not change the Truth one iota.



Duffy Duck's picture

It's not just about oil.  It's also, for various actors, about gas pipelines, about private central banking, about war profits, and about Greater Israel (Israel's Lobby is not merely a pain in the ass because they lobby for a small foreign state, but for the bellicose right wing government of a small foregn state with hundreds of thousands of de facto agents in great positions of power in the US government, media, etc.] .


Oversimplification is the enemy of precision.   I leave it up to you to decide which politician is hawkish for what reason.

In any event, I stand in awe of Biden's kid being appointed to the board of a Ukrainian gas company (and a son in law to, maybe?] and there being basically no coverage of it in the press - that shit is impressive.

Chupacabra-322's picture

Shouldn't the headline read:

Iraq Update: CIA Surges Toward Baghdad.

TBT or not TBT's picture

The CIA recruited hundreds of thousands of fully tribal arab muslim nut jobs to their cause.    Wow.   We suspected the CIA were good, but that's really, really good.    James Bond sort of good.    No hot chicks in spandex in the final explodiating sequences though.   This is Islamland.    The chicks will be all wrapped up.

agstacks's picture

Wait, I thought it was "Mission Accomplished" over a decade ago, no?