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Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

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ISIS Still Hampering Iraqi Oil Industry Progress

The U.S. military is helping Iraqi forces pushback ISIS at a vital oil refinery.

The Baiji refinery is located between Kirkuk and Mosul, and it has been the target of ISIS militants since the extremist group first made major advances last summer. Baiji is Iraq’s largest oil refinery, and as such, is strategically important to the country for revenues and for domestic fuel supplies.

“It actually also sits on a corridor that runs from the Tigris River valley to the Euphrates River valley. And so it's geographically significant as well as significant economically,” the chairman of the U.S. Joint Chiefs of Staff Martin Dempsey said at a press conference, offering up an explanation as to why the U.S. finds it so important to intervene. The U.S. is conducting air strikes on ISIS in order to aid Iraqi forces, but have thus far been unable to fully repel the attack. Related: Oil Price Recovery May Be Too Much Too Soon

ISIS had wrestled control of the refinery when Iraq was caught off guard in June 2014. They were subsequently pushed back with the help of U.S. airstrikes. Once again, however, ISIS is advancing. CNN reported on May 7 that Iraqi security forces only controlled about 20 percent of the facility, with the remaining 80 percent in the hands of ISIS. “The enemy has entered the Baiji refinery. They do control parts of it,” Pentagon spokesman Colonel Steven Warren told the press. Related: Oil Sector May Not Cause Financial Apocalypse After All

The refinery has been offline for several months due to prior attacks. Its closure nearly halted the production of refined petroleum products in northern Iraq, not counting the semi-autonomous Kurdish region, which has fended off ISIS militants. The Baiji refinery, before its closure, was producing 200,000 barrels per day of refined products. Related: How Shale Is Becoming The .COM Bubble Of The 21st Century

The advance of ISIS was largely halted in recent months, as combined attacks from Iran, Iraq, and the United States have taken their toll on the militant group. Aside from the Baiji refinery, Iraq’s oil production has not been affected. In fact, Iraq has managed to increase oil exports in recent months – hitting a record high of 3.08 million barrels per day in April.

Still, the Baiji refinery is crucial to Iraq’s future. The loss of control to ISIS would leave the country’s largest refinery in the militant group’s hands. If ISIS decided to sabotage the facility, it would amount to a massive setback for Iraq’s economy.

By Charles Kennedy of Oilprice.com

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