Iraq fears Islamic State may be smuggling its oil to export markets

BAGHDAD - Reuters

A picture taken on August 10, 2014 shows a chimney at an oil field in Sheikhan, northeast of the city of Mosul in northern Iraq and near the Kurdish city of Dohuk, an area where Kurdish peshmerga forces are fighting to stop the advance of Islamic State (IS) fighters. AFP Photo

Iraq said on Aug. 20 it was troubled by reports that Islamic State militants were smuggling oil to export markets and warned the purchase of such supplies could help the group fund its operations.
   
Iraq reiterated that only the Ministry of Oil was authorised to carry out sales - an apparent swipe at the Kurdish region - and buyers who dealt with other parties risked punishment such as sanctions.
   
Islamic State has seized five oil fields in the north since it arrived in June from Syria, prompting Iraq's U.S.-funded soldiers to flee.

Iraq is the second-biggest crude producer within the OPEC cartel, and markets have been anticipating increased output from the country.

Asked about increasing ISIL control over oil fields in Iraq, Turkish Energy Minister Taner Yıldız recently said Turkey was continuing to see the Iraqi authorities as the sole addressee in the country.

“ISIL is not our addressee in any matters. We do our studies regarding the energy sector in this way,” he said.

“It is at the issue for some fields and blocs changing hands. There is a serious political instability, but this doesn’t change our perspective,” he added.

The fighting and sabotage on a pipeline to Turkey has halted exports from the north since March, making shipments of Basrah Light crude from the south the federal government’s sole source of exports.