Opec under siege as Isil threatens world's oil lifeline
As the bloc’s 12 oil ministers meet in Vienna, the march of Isil jihadists in the Middle East is putting Iran and Saudi Arabia on a collision course with explosive consequences
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Oil markets are wrong to ignore Isil's march across the Middle East
1:00PM BST 30 May 2015
1505 Comments
Thick black smoke rising from the Baiji oil refinery
could be seen as a dirty smudge on the horizon as far away as Baghdad
after fighters from the Islamic State of Iraq and the Levant (Isil) set
fire to the enormous processing plant just over 100 miles north of the
capital last week.
The decision to
torch the refinery, which once produced around a third of Iraq’s
domestic fuel supplies, was made as the insurgents prepared to pull out
of Baiji, which they captured last June in a victory that sent shock
waves across world oil markets.
A
year on from the start of the siege and a shaky alliance of the Middle
East’s major Arab powers, with the limited support of the reluctant US
government, has failed to contain the expansion of Isil.
The problem for the US and the rest of the industrialised world is that
the Middle East controls 60pc of proven oil reserves and with it the
keys to the global economy. Should Isil capture a major oil field in
Iraq, or overwhelming the government, the consequences for energy
markets and the financial system would be potentially catastrophic.
Many of the countries most threatened by the onslaught of the extremist
group, which has grown out of the chaos of Syria but was initially
dismissed as a wider threat to regional stability, will gather at the
end of this week in Vienna for the meetings of the Organisation of the Petroleum Exporting Countries (Opec).
Iraq, Saudi Arabia, the Gulf states and Iraq – which together account
for two thirds of the cartel’s production – are all now affected by the
inexorable march of the Isil jihadists but appear powerless to prevent
it due to the widening sectarian schism between the Sunni and Shia
Muslims across the region in the wake of the Arab spring uprisings five
years ago.
Oil ministers gathering to decide on production levels at Opec’s secretariat building in Vienna will normally stay clear of wider geopolitical issues during their deliberations in the Austrian capital. However, the threat posed by Isil and its brutal brand of Islamist extremism is likely to force politics onto the agenda. It certainly can no longer be ignored.
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Oil ministers gathering to decide on production levels at Opec’s secretariat building in Vienna will normally stay clear of wider geopolitical issues during their deliberations in the Austrian capital. However, the threat posed by Isil and its brutal brand of Islamist extremism is likely to force politics onto the agenda. It certainly can no longer be ignored.
CLICK TO READ MORE
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