Intelligence Briefing: 06.16.14
Summary: Situation: ISIS has clearly demonstrated over the past several days its ability to take territory and create terror. It is also clear that it has grown in size and strength despite local and international efforts. It is not clear, however, that ISIS has the capacity and the organization to hold the territory it has taken and then to establish an effective form of governance over those who remain. As a result, concerted effort on the part of the Al-Maliki government perhaps with the assistance of the U.S., Iran or other countries could disrupt ISIS’ effectiveness.
Implications: ISIS’ successes in recent weeks have underscored the fragile situation in Iraq and raised the potential for protracted civil war. Many stakeholders, however, believe there is far more at stake in Iraq than Syria or Yemen or other unstable countries in the region. The Kurds, Turkey, Iran, the U.S. and other Gulf countries all want a stable Iraq. As a result, we expect steps will be taken to quell the violence wrought by ISIS and to secure oil facilities. Ironically, if the current crisis can be attenuated, this threat to the Shiite denominated government of President Al-Maliki may yield medium term changes that will serve to help Kurdish output, and maybe even temper President Al-Maliki’s recent anti-Sunni policies.
Oil Market: The price of Brent already reflects some of the concerns over supply from Iraq as well as other countries. That said, the paper markets could take Brent higher as traders buy on news from the region. Of course, a real disruption to Iraqi production could have a very bullish outcome.
Founded with the name Energy Security Analysis, Inc, ESAI has been a thoughtful commentator on energy security issues for 25 years. ESAI has remained focused on geopolitical factors that shape energy markets and influence energy security decisions. In 1987, ESAI published SPRO-Watch, a Guide to Strategic Stock Drawdowns in the Persian Gulf Crisis of 1987. In early 1991, ESAI published The Crude Oil Market after the Iraq Crisis, which provided a detailed analysis of the longer term implications of the Gulf War. From 1990-1995, ESAI published a quarterly journal entitled Petroleum Politics, which analyzed any kind of political development which affected petroleum. ESAI remained engaged in the energy security debate, publishing Energy Security Revisited: New Approaches for a Global Petroleum Market in 1999. Since then ESAI has conducted proprietary studies on energy security policy for the U.S., Japanese and Indian governments. In 2003, ESAI published After Saddam: Stability in the Persian Gulf, and in 2006, ESAI President Sarah Emerson published When Should We Use Strategic Stocks? in the journal, Energy Policy. More broadly, ESAI’s analytical team covers a wide range of geographic expertise and provides monthly analyses of Russia, the Caspian countries, China and the countries of Latin America. From 2001 to present, ESAI has collaborated with faculty members at the US Naval War College to produce the biweekly Intelligence Briefing, which covers a wide range of geopolitical issues, but with particular focus on the Persian Gulf.