(Updates with economist comment in 13th paragraph.)
June 12 (Bloomberg) -- Iraqi forces sought to check the rapid advance of Islamist militants who had seized major cities, as Prime Minister Nouri al-Maliki responded to the greatest threat to his government since taking power.
The military attacked fighters of the Islamic State in Iraq and the Levant in Saddam Hussein’s former hometown of Tikrit, about 80 miles (130 kilometers) north of Baghdad, state- sponsored Iraqiya television reported. In Mosul, the air force struck ISIL positions after they seized the largest city in Iraq’s north earlier this week, Iraqiya said. Al-Sumaria television reported heavy clashes as the army fought for Tikrit backed by air support.
The surge in violence across northern and central Iraq, three years after U.S. troops withdrew, has raised the prospect of a return to sectarian civil war in OPEC’s second-biggest oil producer. Al-Maliki’s Shiite-led government is struggling to retain control of Sunni-majority regions, and his army units in northern Iraq collapsed in the face of the Islamist advance.
“This can’t be looked at as anything other than a comprehensive failure by the Iraqi army,” Crispin Hawes, managing director of the research firm Teneo Intelligence in London, said in a phone interview. “If the army can’t protect Mosul, how are they going to protect other cities?” he said. “Moving southward would be the logical thing to do for ISIL.”
The advance of ISIL fighters has rattled oil futures and markets in both Iraq and Turkey. Brent crude oil rose to the highest since the start of March and West Texas Intermediate to an eight-month high amid the violence.
Kurdish authorities, who control the territory to the east of Mosul, have fortified defenses around their borders and also dispatched their armed forces to take control of Kirkuk, home to the biggest northern oilfield, the semi-autonomous Kurdish government said on its website.
There were conflicting reports from Baiji, a town north of Baghdad that’s home to the nation’s largest refinery. Output at the 310,000 barrel a day plant stopped after militants seized the facility overnight, according to a police statement today.
Oil Minister Abdul Kareem al-Luaibi said in an interview in Vienna that the government was still in control of the refinery, speculating that U.S. jets may play a role in the government-led offensive.
State of Emergency
The U.S. has yet to respond to a request from Iraq made last month to mount air attacks against militant training camps in western Iraq, according to two American officials who asked not to be identified discussing internal deliberations. One of the officials said President Barack Obama is reluctant to revisit a war that he opposed and has repeatedly declared over.
Iraq’s parliament delayed a session to debate the imposition of a state of emergency as it lacked the number of members needed to vote on the decision, Iraqi state-sponsored Al-Baghdadia TV reported. Al-Maliki had asked parliament for emergency powers to battle ISIL.
The premier’s office also said that in response to popular demand, volunteers will be enrolled at national security offices to help in the fight against ISIL.
Brent rose as much as 2.2 percent to $112.34 a barrel. WTI, the U.S. benchmark, advanced 2 percent as the al-Maliki government fails to end the fighting.
“While there are concerns over the impact of the crisis on the oil market, any disruption should be contained,” Jason Tuvey, assistant economist at London-based Capital Economics Ltd., said in a report today. “Most of Iraq’s major oilfields are located in the south of the country, far from where the current turmoil is taking place.”
Saudi Arabia, the world’s largest oil supplier, has the spare capacity to offset a decline in Iraqi oil production, Tuvey said.
Iraqi stocks fell 1.7 percent, the sixth day of declines. The yield on $2.7 billion of government securities due January 2028 fell 11 basis points to 6.79 percent, according to data compiled by Bloomberg. In Turkey, stocks and bonds pared losses after a report that Turkish hostages captured during a raid on the country’s consulate in Mosul would be freed.
The swift seizure of Mosul suggests that ISIL probably colluded with “disenfranchised” army units in the city, Hawes said. The advance was made easier by an “extremely antagonistic” relationship between the government armed forces and the population of Mosul, a Sunni majority town, he said.
The New York Times reported that army commanders from the Saddam era joined forces with the Islamists to rout the government. Many senior ex-officers, including General Sultan Hashim who was defense minister during the U.S. invasion in 2003, were from Mosul, and The U.S. also faced stiff resistance in the city during its occupation.
ISIL rose to prominence as one of the mostly Sunni groups fighting to topple Syria’s President Bashar al-Assad, and has used the desert areas of western Iraq as secure bases for its fighters.
--With assistance from Zaid Sabah, John Walcott and Mike Dorning in Washington, Khalid Al-Ansary in Baghdad and Nayla Razzouk in Dubai.