Mosul, Iraq and risks for the oil industry

Recently the 2nd largest city in Iraq, Mosul, has been the new epicentre of fresh violence in the sectarian field between shiites and sunnis where ISIS has been trying to deploy what could be one of its last massive strategy to stay alive in Iraq, Libya and Syria, and where the West has launched an important campaign to root out and eliminate the positions of elements of this radical extremist group, in a country already facing a threat of disintegration between a Kurdistan in the north with an important percentage of iraqi overall production, a sunni central part and a shiite southern part and where all across the country since the 2003 intervention, multiple clashes between sunni and shiite have been going on up until now, just about when Iraq has been stepping up efforts to raise its oil production, in a country which holds the 4th largest oil reserve within the OPEC.

But it looks like that all these positive efforts by Iraqi government to raise its oil production (notwithstanding many previous problems with the Kurdish Regional Government in terms of contracts and blocks offerings by kurdish authorities to foreign companies without permission from Baghdad) might find an important obstacle after the eruption of violence in Mosul and which so far has been affecting even if in a small extent some oil wells which have been burnt by ISIS militants not just in Mosul but also in Kirkuk, a larger oil producing city, this could really if not properly managed hit a blow not just to iraqi oil production but also causing an important impact to world oil prices. And because of this situation, iraqi oil authorities just pledged to OPEC for an exemption of any oil cut deal to be confirmed in November, citing the war on ISIS and the recent situation in Mosul, and after the recent rout Baghdad had with OPEC also due to mishandling of iraqi oil production data by the organisation.

Important to consider the timing of this recent resurgence of violence in Iraq after a period of relatively small stability, but stability after all, and all the linkings and connections with all the situation in Libya and Syria where ISIS has been striving to survive, and also the interests of the many foreign players involved in all the chaotic situation in the MENA region, and where the most important stake holders might seem to be Iran (a key ally of the current shiite government of Iraq) and Saudi Arabia, which is also undergoing important issues in its own soil as well as in the regional level with a war in Yemen which has been importantly draining its state funds pushing to carry out massive economic and financial reforms to prevent a financial collapse in the medium run. 

In this sense, what happens in Mosul in the next days or weeks might be determinant for the future not just for Iraq but also for the entire MENA region, and on this is important to mention an ongoing discussion forum held and sponsored by the crowdsourced consultancy firm WIKISTRAT which pursues to envision and forecast the future of Mosul and Iraq after this sudden eruption of violence and which so far has been discussing many angles and aspects of this current hotspot, showing the importance and relevance of this issue.