The US launched military strikes on Islamist militant forces in northern Iraq on Friday in a move that substantially escalates its military involvement, as the worsening security situation prompted western oil groups to start pulling out.
F-18 fighter jets and drones struck troops and artillery controlled by the Islamic State of Iraq and the Levant, known as Isis, following Thursday night’s announcement by President Barack Obama that the US would intervene to halt the militant group’s advance and to prevent a possible genocide of religious minorities.
Mr Obama’s authorisation of air strikes returns the US military to a country from which he has been trying to extricate the US for his entire presidency and comes nearly three years after the final withdrawal of troops.
Before the air strikes, two US transport planes dropped dozens of pallets of water, medicine and food across a barren, mountainous stretch of northern Iraq to help 40,000 Iraqi Yazidis and other minorities fleeing Islamist insurgents.
US strikes coincided with the first signs that the fighting in northern Iraq is beginning to affect oil company operations in Kurdistan, an area that has become a huge draw for the energy industry in recent years.
London-based Afren became the first company on Friday to suspend output at one of its oilfields in Iraqi Kurdistan. Genel Energy, the oil group run by ex-BP chief Tony Hayward, joined Chevron and ExxonMobil in evacuating non-essential staff.
Concerns about growing instability in Opec’s second-largest oil producer had earlier sent Brent crude prices 1 per cent higher to $106.55 a barrel, although they later fell back to $104.72 in afternoon trading. The oil price is still lower than it was when the Isis insurgency took hold in June.
Although the largest share of Iraq’s oil is produced in the south, far from the clashes in the north, Sunni militants have seized more territory and crept closer to the semi-autonomous Kurdish region’s oilfields in the northeast.
Estimated to hold 45bn barrels of crude, Iraqi Kurdistan has become a magnet for small explorers and supermajors such as Exxon because of its abundant reserves and distance from the sectarian carnage that has blighted Baghdad and other Iraqi cities since the US invasion of 2003.
“Developments over the past few months will significantly undermine investor confidence in the Kurdish energy landscape,” said Ayham Kamel, a regional analyst at Eurasia Group.
But Olivier Jakob at Petromatrix said the news of the US air strikes could, in fact, send the price of oil lower because “the act finally draws a line [for Isis] not to cross and re-enforces both the stability in south Iraq and in Kurdistan”.
The combination of US air strikes and attacks on Isis positions claimed by Iraqi armed forces appears to have buoyed the spirits of Kurdish peshmerga forces and thrown the insurgents’ calculations in the north into disarray.
“The Kurds have gone through a very dark night of the soul, and they’ve come out the other end,” said Gareth Stansfield, of the University of Exeter.
Kurdish officials said US and Iraqi aircraft had struck Isis positions in a number of northern Iraqi areas directly to the west of the borders of the autonomous Kurdish region around Mosul and Kirkuk as well as in the area near Sinjar closer to the Syrian border.
Iraqi state media showed aerial footage described as government air strikes on Isis positions in the north, including enclaves near Mosul that recently came under the control of the insurgents.
Kurdish media described the strikes, shortly before 2pm Baghdad time, as relatively small in comparison to the larger attacks the night before, presumed to have been carried out by Iraqi forces.
Kurdish media reported that Isis militants had abandoned checkpoints and makeshift bases and that a large number had been killed or wounded and evacuated to hospitals in Mosul. Kurdish military officials said Isis forces appeared to have redeployed many of their remaining forces to Mosul, which is fully under their control.
Nickolay Mladenov, UN envoy to Iraq, announced that delivery of the relief supplies had paved the way for the organisation to begin preparing a humanitarian corridor along which Iraqis in contested areas could escape.
The importance of Iraq to the global oil market cannot be overstated. It is the world’s seventh largest producer, with proven reserves of 140bn-150bn barrels of crude that analysts say are among the cheapest to develop.
After rising to $115 in mid-June, the price of Brent crude has dropped more than $10, with oil production continuing in the southern fields.
Meanwhile, US regulators instructed its airlines on Friday not to fly over Iraq because of the “hazardous situation” created by the fighting between Isis and Iraqi government forces and their allies.
The order by the Federal Aviation Administration prompted British Airways to suspend flying over Iraq. Qatar Airways has followed suit. Many European airlines were flying over Iraq as part of routes between EU cities and Asia, but several – including Air France – had already stopped doing so in recent weeks.
Additional reporting by Guy Chazan and Andrew Parker in London
Get alerts on Isis when a new story is published