Turkey Warns Iraq Kurds It Can "Close the Valves" on Oil Exports
Comment of the Day

September 25 2017

Commentary by Eoin Treacy

Turkey Warns Iraq Kurds It Can "Close the Valves" on Oil Exports

This article by Onur Ant and Khalid Al-Ansary for Bloomberg may be of interest to subscribers. Here is a section:

The referendum isn’t limited to the three Kurdish governorates, or provinces, of Iraq; people in the disputed, oil-rich area of Kirkuk are also participating in the poll.

Iraq’s central government also condemned the KRG for including Kirkuk in its referendum and has threatened to retaliate.

Turkey and Iran, which also has a population of Kurds, have been among the most outspoken opponents of the referendum and were among the first to act. Iran’s Tasnim news agency reported that Iranian airspace bordering the Kurdish region had been closed at the request of Iraq’s government, and that the Iranian military was conducting exercises in frontier provinces.

The vote was “laying the ground for hot conflict,” Turkey’s Prime Minister Binali Yildirim said Monday. Turkey now considered the Iraqi government the sole counter party in its arrangement over oil exports to Turkey’s Mediterranean coast, he said.

Eoin Treacy's view

No one in the region wants a sovereign Kurdistan except of course the Kurds themselves. Today’s referendum is a landmark event but the fact it also included Kirkuk is almost certainly going to set the region up for additional disagreement and potentially conflict. Turkey, in particular, is ambivalent to the idea of a sovereign Kurdish state on its border. 

The direct response of the market has been a successful break above $50 for West Texas Intermediate and Brent Crude hit a new recovery high. There might be a short-term overbought condition but a clear downward dynamic would now be required to question potential for some additional upside. 

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