Middle East crisis ramps up

The militant Islamic State of Iraq and al-Sham, known as ISIS, claimed to have killed 270 soldiers, guards and staff loyal to Assad when it captured Syria’s Shaer gas field east of Palmyrain mid-July. At the same time, despite recent fighting in the north and west of Iraq, Oil Minister Abdul Kareem al-Luaibi maintains current Iraqi oil production is running at 3.15mn b/d and expects exports to average 2.6 mn b/d, according to a Reuters report. The Minister claims production in the south of the country has not been affected by attacks in the north, and capacity of the oil export facilities has been expanded to 3mn b/d – the highest since 2003, when US forces overthrew Saddam Hussein.

 

A Platts report suggests that the continuing jihadist onslaught across the northern part of the country has eliminated any hopes of Baghdad resuming exports of Kirkuk crude via the Iraq-Turkey pipeline to Ceyhan. Northern exports, which averaged 293,000 b/d in February, have been suspended since sabotage shut the line in early March.

 

However, Reuters reports that Iraq’s Kurdish region had begun to pump oil from Kirkuk fields that were previously owned by Iraq’s central government. Kurdish forces took control of production facilities at the Kirkuk and Bai Hassan northern fields on 11 July. Apparently, a line that was used to send crude from Kurdistan has been reversed for use by the Kurdish region, and is now handling about 20,000–25,000 b/d.

 

The Kirkuk and Bai Hassan oil fields have a combined production capacity of 450,000 b/d but have not been producing significant volumes since March.

 

According to Platts, although oil production from OPEC dipped by 30,000 b/d in June to 29.94mn b/d, Iraq’s output plunge was largely offset by production increases in several other OPEC countries.