Friday, June 13, 2014

Iraq and the oil price.

The capture of Mosul by the forces of Islamic State of Iraq and al-Sham ( ISIS) could lead to the dismemberment of Iraq. Certainly, the authorities in Baghdad seem unable to respond to the advance of the radicalised Sunni militias in an effective manner. This dismemberment is not something Washington wants. So it looks as if the US will need to reverse its planned withdrawal and increase the level of support it provides the government of Prime Minister Maliki. This is a strange turn of events as it now means that Iran and the US will be working to defeat the Sunni militants and  prevent the collapse of the Iraqi government in Baghdad. Iran is already organizing the arming and transfer of Shia militants from their heartlands in the south to the northern combat zone.

Washington is deeply unhappy. It finds itself sharing goals with Iran in Iraq while at the same time opposing it in Syria . Washington is also making  soundings to Tehran to achieve a breakthrough on Iranian nuclear capabilities. Pity the poor US ambassador in Riyadh who has to reassure his host government that American policy is working.

Expect 1) more US arms sales to Iraq - Apaches, 2) the use of missile equipped US drones to attack ISIS military concentrations, and 3) growing alienation between the Obama administration and Riyadh and America's other allies in the region. To confuse matters further disenchanted ex-military leaders from Saddam Husseins army are said to be making common ground with ISIS in the Ninawa and Diyala provinces. Fragmentation of the country into Sunni and Shia regions is now a real possibility. To top it all the Kurdish Peshmerga forces now find themselves faced with a new threat .

Iraq is OPEC's second largest exporter. Is it any wonder that the oil price has firmed ?

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