Iraqi government forces regained full control Thursday of the country’s biggest oil refinery following heavy fighting as the country scrabbles to contain the Sunni militants which still threaten further advances in northern Iraq.

Insurgents pressing the major offensive were repelled from the 320,000 b/d-capacity Baiji plant after clashes Wednesday and early Thursday, according to reports. Fighting began at the refinery early on Wednesday, when some storage tanks for oil products were set ablaze.

OIL SECTOR IMPACT

  • ICE Brent crude continued to trade near an earlier nine-month high amid market concerns over the escalating violence in Iraq.
  • Oil exports from Iraq’s two southern oil terminals remain unaffected by the violence. During the first half of June exports were loading at normal rates of 2.5-2.6 million b/d, Iraqi oil sources said Thursday.
  • The 320,000 b/d-capacity Baiji plant remains shutdown after its workers were evacuated on Tuesday sparking further queues for fuel at retail pumps.
  • Baiji produces approximately half of Iraq’s refined products, including 7 million liters/day of gasoline. It also supplies gas feedstock for a northern gas processing plant, which has also been forced to close. This will cause a shortfall of around 1,300 mt/day of LPG in addition to reducing gas feed to power stations around Baghdad.
  • Turkey says it will continue to export disputed oil supplies from the autonomous Kurdistan region despite escalating violence in Iraq.
  • Italy’s Eni has not evacuated any staff from the Zubair field in southern Iraq despite concerns of further advances by Sunni insurgents, Chairwoman Emma Marcegaglia said Thursday.
  • The Kurdistan Regional Government has proposed using its own pipeline system to enable the federal Iraqi government to continue exporting some crude from the Kirkuk oil field in the troubled north of the country.

POLITICS

  • US President Barack Obama is to make a statement on Iraq later Thursday as he faces rising pressure to respond to advances by Sunni militant.
  • Iraqi Prime Minister Nuri al-Maliki on Thursday ordered security officers back to active duty to bolster forces battling the militant offensive.
  • Saudi Arabia warned Wednesday of the risks of civil war in Iraq with unpredictable consequences for the region, after Sunni militants seized large areas from Shiite-led government forces
  • Militants seized three villages in northern Iraq on Wednesday during clashes with security forces and residents that left 20 civilians dead, a local official said
  • India said Thursday it knows the location of its 40 construction workers abducted in violence-torn Iraq, as several of their families said they have spoken with the captured men, AFP reported.