Oil Production Elevated Despite Increasing Violence

BMI View: Despite increasing levels of political violence in Iraq, we believe that oil production will not be severely affected in 2014. That said, we cannot preclude a return to full blown civil war, a situation which would lead us to revise down our oil production forecasts.

Recent events highlight increasing political risks in Iraq. Iraqi special forces have clashed with hundreds of Sunni militants in the cities of Fallujah and Ramadi in the Western province of Anbar - a traditional stronghold of radical Sunni militants - since December 30. Members of al-Qaeda linked Islamic State of Iraq and the Levant (ISIS), a radical Islamist group which has become increasingly emboldened by the ongoing sectarian war in neighbouring Syria, have been heavily involved in the fight. At one point on January 2, ISIS reportedly controlled half of the two cities. Although the army subsequently re-entered areas of Fallujah, approximately a quarter of it has remained under the control of ISIS, as of January 3.

Violence was sparked by Iraqi security forces having taken down a Sunni Arab protest camp in Ramadi on December 30, reportedly killing at least 10 people. The move came after Iraq's Shi'a Prime Minister Nuri al-Maliki said the camp was "a headquarters for the leadership of al-Qaeda". Tensions also flared up as a result of the arrest on terrorism charges on December 28 of Ahmed al-Alwani, a Sunni member of parliament, after clashes during his capture killed at least six people.

Violence On The Rise
Iraq - Civilian Deaths

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This article is tagged to:
Sector: Country Risk
Geography: Iraq

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