The US government’s Energy Information Agency (EIA) has cut estimates of Iraqi oil output growth in 2014 and 2015 in its latest short term energy outlook. Although operations in Iraq’s southern oil hub have so far been spared from rapid jihadist advances, the EIA sees production stagnating at around 3.3mn b/d during the forecast period. Iraq’s Oil Minister ‘Abd al-Karim al-Laibi insists capacity expansion plans are proceeding as planned. Yet with the situation in Iraq still unfolding, the minister’s optimism may prove premature.

Sunni Islamist fighters have carved out a large chunk of Iraqi territory in the northwest and center for their self-declared “Islamic State,” which also encompasses parts of neighboring Syria (see p16). They are entrenched in the areas they control, including the surrounds of the 310,000 b/d Baiji oil refinery. For the jihadists, previously known as the Islamic State of Iraq and Greater Syria (ISIS), the seizure of oil fields and infrastructure has been a strategy, both in Syria and now in Iraq, to help fund their campaign amid reports that they are now smuggling Iraqi oil, some of which is going through the semi-autonomous Kurdistan region. (CONTINUED - 1370 WORDS)