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Oil-Rich Kurdistan Capitalizes On Iraqi Chaos

Tyler Durden's picture




 

Submitted by Nick Cunningham via OilPrice.com,

In the rapidly unfolding events and chaos in Iraq, leaders of the semi-autonomous region of Kurdistan have capitalized on the situation to gain further leverage over the central government in Baghdad. As the militant Sunni group ISIS rolled up towns and cities and moved south toward the capital, the Kurdish Regional Government (KRG) seized Kirkuk, an oil-rich city whose control has long been in dispute between Kurds and the Iraqi government.

 

ISIS fighters, within a week, have pushed Iraq to the precipice. First was the fall of Mosul. Then, in quick fashion, ISIS moved south in pickup trucks and took Tikrit. Now, threatening Baghdad, the security situation is taking a turn for the worse. On June 13, the Grand Ayatollah Ali Sistani, Iraq’s highest Shiite cleric, issued a decree calling on his followers to take up arms against the Sunni ISIS.

This portends a violent struggle of an increasingly sectarian nature. As people are forced to choose sides, Iraqi Sunni and Shiite civilians will likely get swept up in the fight.

Meanwhile, Kurdistan has seized Kirkuk and other areas surrounding it; occupation now goes beyond the KRG’s official administrative area. In Kirkuk, with Iraqi security forces having abandoned their post, looters seized equipment and weapons from an Iraqi base.

The KRG insists that it sent the Peshmerga -- Kurdish security forces -- to Kirkuk in order to protect the city from ISIS fighters. While that is surely true to a certain degree, the ramifications of the Kurdish move to occupy disputed territory will reverberate more broadly.

In a press statement, the KRG assailed the Iraqi security forces and the Maliki government for incompetence and unwillingness to address militants. Lieutenant General Jabbar Yawar, spokesperson of the Peshmerga, said that for quite some time Kurdistan has pressured Baghdad to do more. “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 said, adding, “Baghdad did not heed the KRG’s warnings and now, unfortunately, our predictions have come to pass.”

Earlier, Iraq’s foreign minister, Hoshyar Zebari, said Iraq was facing a “mortal threat” and that there would be “closer cooperation between Baghdad and the Kurdistan regional government to work together and try to flush out these foreign fighters.”

But the hostile language directed at Baghdad by the KRG suggests that cooperation may not be at the top of the agenda for the Kurds at this stage. The KRG may be trying to shore up defenses against ISIS, but they are also likely eyeing the longer game.

The seizure of Kirkuk would have been unthinkable before this week, but with Iraqi security forces not only displaying its inability to control large population centers from ISIS fighters, they have little appetite to confront Peshmerga forces – who are considered the best trained and most disciplined soldiers in Iraq – from consolidating territory beyond the Kurdish borders. When the smoke clears, the result could be a permanent territorial gain for Kurdistan.

The developments will impact Kurdistan’s oil prospects in that the violence and political upheaval could bring investment in Iraq’s oil sector to a standstill. “All the oil companies are on alert,” Daniel Yergin, an oil historian, told The New York Times. “They are going to worry about the security of their people and installations. Obviously, no one is going to do anything new. Confidence about the growth of Iraqi oil output becoming a key element of stability in the world oil market is now in question.”

Moreover, the violence will delay oil exports from Kurdistan. A major pipeline that carries Kurdish oil to Turkey has been offline due to an act of sabotage that preceded ISIS’s gains last week. But the violence will doom attempts to repair the pipeline anytime soon, delaying major Kurdish oil exports.

Still, Kurdistan has clearly strengthened its hand vis-à-vis Baghdad. Up until now, Maliki’s government has hampered Kurdistan’s efforts to directly export oil while the two sides argue over oil governance.

But Kurdistan has strengthened its hand by occupying territory, a move that Baghdad is obviously unable to roll back. And as the Maliki government grows more desperate, it may be willing to make significant concessions to the KRG over oil exports for its cooperation against ISIS.

Finally, Kurdistan’s aggressive moves in the face of Maliki’s weakness could bring the goal of Kurdish independence much closer. It has long had enough oil to build an independent economy, but the KRG has now demonstrated it has enough political and military strength to defy Baghdad.

 

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Mon, 06/16/2014 - 18:51 | 4863091 DaddyO
DaddyO's picture

Peak World Control, Bitchez!

Oil, Oil, Oil and moar Oil...equals Woar by any other name.

DaddyO

Mon, 06/16/2014 - 19:03 | 4863112 ACP
ACP's picture

The Kurds should take it and keep it. Must like in the US, if you don't have representation in government, you gotta take care of yourself.

After being screwed over for so long, and with a deep connection to the land, they'll be more motivated to slaughter the shit out of any of those 0bombya-loving ISIS fuckers who try to barge into their territory.

Mon, 06/16/2014 - 19:07 | 4863145 knukles
knukles's picture

Whaddd ess theees Baghdad of wheeech you speeek?

Mon, 06/16/2014 - 19:14 | 4863167 ACP
ACP's picture

Not sure, but I saw it on a Bugs Bunny catoon once...

Mon, 06/16/2014 - 19:28 | 4863206 CrashisOptimistic
CrashisOptimistic's picture

So, Wall Street, hows that Abundance Narrative going?

 

BTW Turkey has said no to any Kurdistan, and they have more tanks.

Mon, 06/16/2014 - 19:30 | 4863219 Rusty Shorts
Mon, 06/16/2014 - 20:43 | 4863440 teslaberry
teslaberry's picture

so you are saying its not in the americna interst that oil be traded in dollars? 

because that is what american support for sunni shia infighting is all about . it's not petro-shekels , it's petrodollars. 

 

jsut because something benefits a 3rd party, doens't mean that is the primary reason it is happening. 

but truth of goepologics is irrelevant. cause fuck jews, am i right?

Mon, 06/16/2014 - 19:36 | 4863244 Flakmeister
Flakmeister's picture

CIO, they are already making noises about the Kurds quadrupling production by the end of 2015 from ~250 kbpd to 1 million or so...

Didn't we hear that story before? And by my calculation that is still 2 million bpd short of where we were...

Mon, 06/16/2014 - 19:55 | 4863309 CrashisOptimistic
CrashisOptimistic's picture

Probably.  I do specifically recall the Iraqi oil minister predicting 15 million bpd by 2017.

Mon, 06/16/2014 - 19:59 | 4863319 Thirtyseven
Thirtyseven's picture

If you've ever met Kurds, you'll know they don't tolerate Arab shenanegans, neither from Sunnis (which most Kurds are) nor Shiites.

The non-Kurdish populations of Mosul (when they take that too, but Mosul is mostly on the western bank of the Tigris and will be harder to take) and Kirkuk will tolerate Kurdish governance.  Why?  Because people LOVE stability and minimal violence, both of which Kurds will ensure.

 

Mon, 06/16/2014 - 21:48 | 4863661 defender1be
defender1be's picture

Please don't call Shites arabs, Shites are mostly Persians. arabs are geneticly stupid and violent while Persians are more intelligent. Look at history before shitlam, Persia was a advanced civilization. While arab was mostly just trible groups.

Tue, 06/17/2014 - 21:55 | 4867597 EscapingProgress
EscapingProgress's picture

The Kurds are fucking savy. They are 10 steps ahead of ISIS and Baghdad and 20 steps ahead of Washington.

Mon, 06/16/2014 - 18:50 | 4863102 NOTaREALmerican
NOTaREALmerican's picture

As long as Badastan stays bad everything is good.

Mon, 06/16/2014 - 18:52 | 4863107 midtowng
midtowng's picture

The Kurds have been fucked for at least a century. I hope they gain something permanent out of this

Mon, 06/16/2014 - 19:12 | 4863111 news printer
news printer's picture
Iraq blocks Facebook and Twitter in bid to restrict Isis

http://www.bbc.com/news/technology-27869112?ocid=socialflow_twitter

ISIL insurgents capture Tal Afar; Turkmens call for Turkey's help

http://www.todayszaman.com/news-350545-isil-insurgents-capture-tal-afar-...

Baghdad's boy army: Teenagers rush to join the call to defend city from ISIS militants who are fighting just 45 miles away - and Iraq's last Christians say they fear being wiped out Read more: http://www.dailymail.co.uk/news/article-2658858/ISIS-jihadists-tighten-grip-Iraq-capture-Tal-Afar-UN-hits-deeply-disturbing-soldier-massacre-pictures-shocking-world.html#ixzz34qMfvGzu

New massacre; this time in Tal Afar

Warning Graphic content

https://twitter.com/IrakTurkmenleri/status/478638727510904832/photo/1

https://twitter.com/TURK_GENCLIGI/status/478447123047124992/photo/1

https://twitter.com/TURK_GENCLIGI/status/478444317590441985/photo/1

https://twitter.com/TURK_GENCLIGI/status/478159042284888064/photo/1

https://twitter.com/TURK_GENCLIGI/status/478453022989643776/photo/1

When Turkey will intervene to protect their ppl; there will be no Kurdistan.

Update

Turkey’s Ministry of Foreign Affairs recommended Turkish nationals to leave Basra immediately.

http://www.aa.com.tr/en/news/345926--turkey-issues-security-warning-for-iraqs-basra

 

Mon, 06/16/2014 - 19:10 | 4863158 Salah
Salah's picture

WHAT GEORGE W. BUSH HATH WROUGHT.  

BEST DECRIPTION EVER FOR THE BUSHES: LIKE HARVEY KEITEL'S CHARACTER IN "PULP FICTION"....THEY'RE THE "CLEANERS" FOR THE GLOBAL ELITE.

http://www.youtube.com/watch?v=wWmRTjLRMfU

Mon, 06/16/2014 - 19:32 | 4863221 CrashisOptimistic
CrashisOptimistic's picture

Dood, he's been painting pictures for 6 years.  There have been 6 years to carve out the present Administration's own mark.

Truth?

IT DOESN'T FUCKING MATTER WHO DID WHAT.  THE OIL IS RUNNING SHORT, OR EVEN OUT, AND THAT TRUMPS ALL DECISIONS MADE BY ANY GOVERNMENT.

So forget this Bush hatred or Obama hatred.  Billions are going to die.  Soon.  And horror of horrors, it's not going to be anyone's fault when most reading this are among them.

Mon, 06/16/2014 - 19:11 | 4863159 NOZZLE
NOZZLE's picture

oil rich Texastan capitalizes on chaos in rest of the United States as EBT cards cradh, demands absolute autonomyand forms security pact with Arkansas Oklahoma Mississippi and Louisiana.   hey I can dream can't I

Mon, 06/16/2014 - 19:11 | 4863160 max2205
max2205's picture

This is embarrassing. ...These guys in pickup trucks take Iraq in a week.

It took usa 3 months and 200k army guys.

Mon, 06/16/2014 - 19:30 | 4863217 walküre
walküre's picture

It could have been done in a week but the cost would have been much lower, therefore creating less debt and less destruction. We don't just fight wars, we fight expensive wars.

Nobody on Wall Street or in Vichy, DC cares for an American Blitz.

Tue, 06/17/2014 - 19:17 | 4863258 JuliaS
JuliaS's picture

Partial transcript on Robert Newman's standup routine regarding the war in Iraq:

If the countries of the world stop selling oil in dollars, it’s the collapse of US capitalism. You’ve gotta nip that in the bud and to stop it catching on, you’ve gotta make an example of someone. Therefore I believe we may begin to imagine the War in Iraq as a very public punishment beating.

You have to imagine the world’s a Bronx housing project and the US is the number one crack-dealing mafia don on the block.
US: anybody wants to buy rock they’d better come to me. Otherwise you gonna end up like that fucking guy over there.
Everyone’s watching as Iraq comes limping back to his first day of work at the petrol station and he lifts the drop lock shutters and he gets to the PA system in the forecourt and he says: Ok everybody! Come to me. I sell rock and crack to everybody.
And leaning out of the Andes Tower blocks on the third floor balcony, Venezuela, Bolivia and Peru are looking down.
Venezuela: Hi companiero, I thought you said you had this neighbourhood under control?
US: Hey, don’t make me come up there and deal with you!
Venezuela: You tried it last week my friend, you could not get up these stairs! Maybe I come down there to you!
US: You do that! Right now I got business to take car of.
And he gets the boys and the baseball bats. And they get hold of Iraq and they drag him by the hair into the petrol station forecourt.
US: Ok everybody take a good look at this guy. Iran, Syria are you watching? Brazil? maybe you’re thinking about not implementing the IMF austerity packet. Take a good look at this guy.  See what happens next.

Wham! And they trample him into the dirt, cut off his ears. And when the dust settles, the US is leaning on his bloody bespattered splintered baseball bat, getting his breath back.
Venezuela meanwhile has come down to the petrol station forecourt and is walking around America.
Venezuela: that fight took it out of you companiero. Ten years ago, you break this guy, you don’t even break sweat. This time, I got to tell you. I don’t think you could have taken him at all if it was not for the help of your little friend (pointing at Britain).
US: Shut up! I got this neighbourhood. I’m in control!
At which point a car driven by North Korea speeds past shouting “Death to America!”
Venezuela: You were saying companierio? About control...  I could not hear because someone was shouting “death to America” very loudly in my ear.

Mon, 06/16/2014 - 20:23 | 4863389 Thirtyseven
Thirtyseven's picture

Those mid 80's Toyota Hiluxes are no joke!

Mon, 06/16/2014 - 20:38 | 4863431 JuliaS
JuliaS's picture

No laughing matter, actually. Unlike our tanks they don't require an olympic pool of fuel per day to crawl 10 miles, while waiting for the supply colums to keep pace. Toyotas are an equivalent of Russian T-34's going against Panzers in WW2. Mobile, efficient, cheap and lighting fast.

Part of the reason we suffered defeat in Iraq (safe to call it that by this point) was our inability to keep the flow of highly specialized fuel across the region. Abandoned tanks and helicopters captured by ISIS were probably out of ammo and fuel.

Waging wars and maintaining occupation takes tremendous amount of resources.

Our so-called allies in Europe have abandoned us. There's very little naval presense in the region by conventional standards. Land lines are getting re-drawn on daily basis and people are getting killed left and right.

The war has starved us. You got to remember that our base of operation remains half way across the planet while "their" base of operation is right there. It's their home. Home of their fathers, gradfathers and grand-grandfathers.

They'll dig resources our of sand with their bare hands and make pistols in caves with a bunch of rocks and fist full of iron ore, if they have to. Our soldiers will die, if any of the lifelines are interrupted. No intel (no radio communication)? They're dead. No water? They're dead. No gas? They're dead. No ammo? They're dead. No armor? They're dead.

It was a huge mistake to go into Iraq, Afgranistan, Syria, Egypt, Pakistan etc. It was a huge mistake to ally ourselves with the Israelis. A sneeze later their small region may get wiped off the face of the planet. It doesn't even have to be Iran. They've got as many enemies as we do. We've got a bullseye for bowing to Israel. Israel's got a bullseye for collaborating with us. We're in it together now and it's a no-win scenario.

Mon, 06/16/2014 - 21:11 | 4863548 Thirtyseven
Thirtyseven's picture

I didn't realize JP-8 was highly specialized.

Besides, it couldn't cost much with KBR spending perhaps $3 each per day on legions of Bangladeshi migrant workers with the sole task of pumping fuel into columns of uparmored M1151s and MRAPs

Mon, 06/16/2014 - 19:19 | 4863177 earleflorida
earleflorida's picture

the 'KRG' are setting themselves up for a mercurial misery-index fulmination...

the KRG are a divided?state already, WTF     http://en.wikipedia.org/wiki/Iraq_Kurdistan

Mon, 06/16/2014 - 19:37 | 4863247 SmittyinLA
SmittyinLA's picture

Heh, we're supposed to believe the Kurds aint affiliated with the head loppers, they're financing and supplying them, chaos for Turkey, a firehose of new Muslim immigrant refugee tenants for the EU landlords, who might that be? 

UKIP should propose an EU wide rent revenue and bond interest revenue tax to pay for MENA refugees, conscript the tribe to pay for war, they'd hate that. 

Mon, 06/16/2014 - 20:09 | 4863352 disabledvet
disabledvet's picture

The Kurds are the real Peshmerga. And this article is total bullshit.

The Big Oil lies on the border of Iraq and Kuwait...and Iran...not in Kurdistan.

http://en.wikipedia.org/wiki/Majnoon_oil_field

CRAZY OIL! MAJNOON!

"This is a war aim" and...so far at least...ISIS is a long way from that.

But not Iran or Kuwait.

The war aim for ISIS near as I can tell is to cause Baghdad to explode thus causing Iran to intervene and these oil fields to be "part of the war zone." (this production of a million plus barrels a day was just starting to come online last year.) If instead Big Baghdaddy regains control then launches a massive counter offensive then that production will remain secure under regime control.

Peshmerga will respect this.
http://en.wikipedia.org/wiki/Peshmerga
http://en.wikipedia.org/wiki/160mm_Mortar_M1943

Mon, 06/16/2014 - 20:46 | 4863449 teslaberry
teslaberry's picture

you could not have said it better. 

 

the point of this operation is to both setup a base of operations for syria, and to bait iran into open hostilities that could justify either u..s or direct saudi arabian/gulf state intervention. 

many think the gulf states will keep quiet forever because it serves u.s. interests for them only to participate by funding the conflict with mercenaries and money . no, they have more than enough young hungry wife-less men who want a REAL FIGHT and they have the fighter planes and armor to get involved. 

the point is to set the middle east on fire and to use the larger conflict to take control over petrodollars by undercutting persian oil exports directly to china and non-aligned parties to gehemonist western goals. namely, the shanghai cooperation council members.

Tue, 06/17/2014 - 02:05 | 4864125 Jano
Jano's picture

Sorry guys, but if something weakens and wrecks US interests, US companies, then this something is very good vor the rest of the world.

Nobody in the world likes US (except UK, NZ AU).

Tue, 06/17/2014 - 07:52 | 4864324 Bogdog
Bogdog's picture

So now we get to watch the religion of peace EAT itself on a grander scale than usual. They've always been at it. Now they just do it in bigger groups with better weapons. All this because of archaic strictures against girls and boys doing what comes natually. All that pent up frustration has to have an outlet. So here we go. Fussy old men dressed in sheets telling Ahmad he can't do this and can't do that. But you CAN smite the neck of your enemy! Fatwah! God is Great! Nihilism writ large as payment due for the fears and prejudices of generations distilled to a death cult masquerading as religion.

Fuckwads, all of them. 

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