Kurdistan’s referendum vote has brought its booming oil industry into the spotlight, the region is rich in oil resources. The controversial referendum, opposed locally and internationally, has prompted Turkish President Erdogan to threaten to cut off region’s oil exports and collectively asked Baghdad to declare a boycott of Kurdish exports.
Referendum for Kurdistan has not been welcomed by her neighbors as the Kurds would’ve wanted it. The region with its perennial turmoil has become a source of instability not for the Middle East but for the entire world.
The region demarcated for Kurdistan is rich in oil, the major shipments for Iraqi oil have been through the region via Turkish ports. With Kurdish independence, all that is about to change as both Turkey and Iraq declare a boycott of Kurd oil, in protest of referendum which they deem to be against the constitution of Iraq.
How this affects the International Oil Markets?
Brent crude is at its highest in more than two years, as uncertainty looms over crude exports from the region, the investors are confident that with the new state becoming the political hotspot is surely going to make an impact on global oil prices.
Futures rose 3.8 percent in London, and the US benchmark (WTI) has already risen to its highest since April, 2017. Meanwhile, OPEC informed that it has currently implemented 100 percent output cuts, prompting outlook for global demand to improve.
The global benchmark’s 50-day moving average crossed above its 200-day moving average for the first time since 2016. West Texas Intermediate for November delivery added $1.56 to settle at $52.22 a barrel on the New York Mercantile Exchange. Brent traded at a premium of $6.80 to WTI.
Kurdistan’s Regional Government exports is crude from Turkey’ Mediterranean Port of Ceyhan. Erdogan, who is opposing the referendum, has said that ports will be closed for any Kurdish exports.