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Oil Spikes To Fresh 7-Year High After Key Iraq-Turkey Pipeline Explosion
Oil Spikes To Fresh 7-Year High After Key Iraq-Turkey Pipeline Explosion
Despite dollar strength today (and more worrisome ZeroCOVID actions from China), oil prices continued to rise but news after-hours that an explosion knocked out a major pipeline sparked more upside.
Little is known about the cause, but the explosion at a pipeline connecting Northern Iraq and the port of Ceyhan in the Mediterranean has taken 450kb/d of supply offline in an already very tight crude oil market.
The pipelines have been halted before: Back in 2012 blasts blamed on saboteurs halted the link for several months.
The headlines sent oil prices spiking with WTI topping $86 for the first time since Oct 2014 (Brent neared $89)…
This news follows a ballistic missile attack over the weekend, where Iranian-backed Houthi rebels in Yemen targeted oil infrastructure in the UAE.
Pipeline operator Botas said the fire has been brought under control and cooling operations were under way.
Botas said the it would reopen once the “necessary measures” had been taken, but gave no indication of timing.
ISIS Oil Trade Full Frontal: “Raqqa’s Rockefellers”, Bilal Erdogan, KRG Crude, And The Israel Connection
ISIS Oil Trade Full Frontal: “Raqqa’s Rockefellers”, Bilal Erdogan, KRG Crude, And The Israel Connection
“Effectively, we have been financially discriminated against for a long time. By early 2014, when we did not receive the budget, we decided we need to start thinking about independent oil sales” — Ashti Hawrami, Kurdistan’s minister for natural resources
In June of 2014, the SCF Altai (an oil tanker) arrived at Ashkelon port. Hours later, the first shipment of Kurdish pipeline oil was being unloaded in Israel. “Securing the first sale of oil from its independent pipeline is crucial for the Kurdish Regional Government (KRG) as it seeks greater financial independence from war-torn Iraq,” Reuters noted at the time, adding that “the new export route to the Turkish port of Ceyhan, designed to bypass Baghdad’s federal pipeline system, has created a bitter dispute over oil sale rights between the central government and the Kurds.”
A week earlier, the SCF Altai received the Kurdish oil in a ship-to-ship transfer from the The United Emblem off the coast of Malta. The United Emblem loaded the crude at Ceyhan where a pipeline connects the Turkish port to Kurdistan.
The Kurds’ move to sell crude independent of Baghdad stems from a long-running budget dispute. Without delving too far into the details, Erbil is entitled to 17% of Iraqi oil revenue and in return, the KRG is supposed to transfer some 550,000 bpd to SOMO (Iraq’s state-run oil company). Almost immediately after the deal was struck late last year, Baghdad claimed the Kurds weren’t keeping up their end of the bargain and so, only a fraction of the allocated budget was sent to Erbil during the first five months of the year.
This was simply a continuation of a protracted disagreement between Erbil and Baghdad over how much of the state’s crude revenue should flow to the KRG. For its part, Iraq has threatened to sue anyone that buys independently produced Kurdish oil.
…click on the above link to read the rest of the article…
