When Sunni militants began seizing broad swathes of territory across northern Iraq last week, global oil markets shrugged it off. After all, instability in Iraq is nothing new.
But that all changed on Wednesday, when the insurgents swept into the oil refinery town of Baiji, says Robert McNally, president of the Rapidan Group, an energy consulting firm. The price of oil climbed nearly 4 percent in just a few short days.
"This jaw-dropping blitz assault ... and the threat it posed to the Baiji refinery, the Baiji electrical power plant, and really the stability of Iraq itself, just caused the market to panic," McNally says.
Insurgents surrounded the refinery, but were not able to seize it. For now, it remains under government control, guarded by Iraqi special forces. The refinery is the largest in Iraq, but it's used only for domestic purposes.
The Two-Way
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