Three days of violent clashes between Iraqi security forces and Sunni demonstrators have left 179 (AFP) people dead and are sparking concerns that the key Middle Eastern oil producer could descend into another round of serious sectarian unrest. The immediate catalyst for the crisis was Tuesday’s raid by security forces on a Sunni protest camp in the northern village of Hawija, which left dozens dead.
A series of gun battles have ensued in northern and central Iraq and in a particularly worrying development, several prominent Sunni leaders have called on their followers to take up arms to protect their communities.
Prime Minister Maliki today appealed for calm, but it is unclear whether his pleas will end what has already become the most widespread eruption of violence since the US troop departure. While the Hawija raid was the trigger for the current crisis, relations between Iraq’s Sunni community and the mainly Shiite government have been on a distinctly downward trajectory for some time.
Iraq has witnessed widespread protests in Sunni communities since the arrest of the Sunni Finance Minister’s bodyguards in December on terrorism charges. The action came nearly one year after the Sunni Vice President, Tariq-al-Hashimi, was charged with running death squads and fled to Ankara, Turkey; Hashimi was subsequently sentenced to death in absentia. The Hashimi affair produced a sharp rift between Maliki and the country’s Sunni political class and helped sour relations between Ankara and Baghdad.
A number of high-level Sunni government officials have resigned this year, including the Finance minister, citing Maliki’s increasingly authoritarian tendencies as well as his heavy-handed response to the protests. The conflict in neighboring Syria has also exacerbated sectarian tensions, with the Maliki government widely seen as siding with the Assad regime and Iraq’s Sunni opposition leaders with the Syrian rebels.
If the security situation deteriorates further, some oil exports could be at risk of disruption. There were reports today of an explosion on the Kirkuk-Ceyhan pipeline in the city of Shirqat, near the scene of some of the fiercest fighting between demonstrators and security forces. The pipeline has since been repaired and the flow of crude through the 600-mile pipeline has been restored.
Attacks on Iraq’s energy infrastructure were common following the US occupation and the subsequent civil war. From 2003-2007, there were more than 400 attacks on Iraq’s pipelines, refineries, and workers, leading to a sharp fall in output. The energy security situation improved quite substantially after the US Department of Defense embarked on a $1.76bn effort to restore, build and protect Iraq’s oil and gas infrastructure.
The Pipeline Exclusion Zone Project, which was launched in 2007 and provided new security perimeters around the pipelines, proved to be particularly effective in thwarting insurgent attacks.
Though the number of security incidents has sharply declined, vulnerabilities persist and pipeline attacks do continue to occur on a sporadic basis. Moreover, international oil companies could prove reluctant to make new investments in the country if the security environment becomes more challenging, especially in light of the fact that the fiscal terms for the main southern fields are widely viewed as sub-optimal.
Currently, Iraqi crude production is hovering just above 3 mb/d, on a declining trajectory since peaking at 3.2 mb/d in November last year. Crude exports had already fallen slightly to 2.48 mb/d in March, with those flowing through the Mideast Gulf affected by bad weather (as has been the case since the start of the year), while the KRG halting exports through the federal pipeline system has also weighed, stated London based Barclays in its recent market analysis.
While the effects of the former have now eased, KRG exports through the federal pipeline system remain closed, and these recent developments on the geopolitical front add further downside risk to output increases, in Barclays view. On a longer-term timeline, these geopolitical developments put Iraq’s export targets to a more rigorous stress test. The government’s 2.9 mb/d export target includes 0.25 mb/d from the North, and with these flows already shut, the starting point is already one that is moved further back.
Source: Barclays