Oil production at risk as violent protests rock Iraq’s Basra province
Iraq’s oil-rich Basra province is being rocked by renewed violence as summer protests regain momentum, threatening oil facilities and the country’s leadership.
Thousands of Iraqis have been taking to the streets daily over the last week, torching government buildings and political party offices in a show of anger against abject living conditions, government corruption and foreign influence.
As home to most of the oil production facilities for OPEC’s second-largest producer, Basra in crisis could have a material impact on oil output and prices, analysts say.
It may also see Iraq’s Prime Minister Haider al-Abadi pushed from power, creating even more uncertainty for the war-scarred nation and its 15-year old democracy.
“We’ve seen protests around facilities and threats being made against oil companies. Some companies have taken their foreign workers out,” Helima Croft, global head of commodity strategy at RBC Capital Markets, told CNBC.
“Production hasn’t been hit yet, but if you were to have one facility go down, you could lose upwards of 700,000 to 800,000 barrels of production, so it’s a big story to watch.”
The protests, which began in July, kicked off again last week following a raft of hospitalizations due to contaminated drinking water. In August alone, 17,000 Basra residents were sent to the hospital with colic, diarrhea and symptoms of cholera, according to Basra’s directorgeneral of public health.
Southern Iraq, despite sitting on 80 percent of the country’s oil wealth and being home to its only deepwater port, Um Qasr, has long been a site of severe poverty and discontent. Instead of reaping the benefits of its natural resources, which include 70 percent of Iraq’s proven natural gas reserves, Basra suffers high unemployment, frequent electricity shortages, unsafe water and waste facilities and crumbling infrastructure.
Demonstrations during southern Iraq’s sweltering summer months have therefore become something of a ritual in recent years, as residents lament decrepit public services and rampant corruption amid daytime temperatures of more than 120 degrees Fahrenheit.