Escalating protests in Iraq have led to a halt in production at the Al Ahdab oil field, which pumps some 70,000 bpd, Bloomberg reports, citing an unnamed source from the Iraqi government. Another field is at risk of shutting down starting today as well.
Al Ahdab is operated by China's CNPC, but it has been blockaded by security guards who are protesting against the absence of permanent employment contracts. The other field at risk of closure, Badra, produces about 50,000 bpd. Russia's Gazprom Neft is the operator of that field.
Iraq is the second-largest oil producer and exporter in OPEC. It has been hit by a series of economic protests that started last year and are not showing any sings of ending any time soon as disgruntled citizens demand better public services and economic reforms and protest against widespread government corruption.
Al Jazeera reports that on Sunday, protesters closed several large roads in cities around the capital Baghdad and demonstrated on the street in anticipation of the deadline they had set for the government to respond to their demands for a new Prime Minister and a new government. The demands were initially made by protesters in the city of Nasiriya, but others soon joined in, Al Jazeera's Gareth Browne reports.
Oil prices trended higher early on Monday following the news of the escalation, supported also by news from Libya, where oil exports were suspended after forces loyal to General Khalifa Haftar blocked the export terminals in the Oil Crescent.
The events in Iraq and Libya are lending quite an upside potential to prices in the immediate run. The Iraqi protests are particularly bullish for prices: field outages are something of a norm in Libya and traders have more or less gotten used to them.
Serious supply disruptions from Iraq, on the other hand, have not happened recently, and therefore have the potential to push prices a lot higher.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More