By now almost all of us are familiar with the militant group called Islamic State of Iraq and Al- Sham (Syria) commonly known as ISIS and the terror they have created all over the world within a matter of few months. One cannot begin to explain the atrocities this group has inflicted upon people of mainly Syria and Iraq. Even Al Qaeda which was probably the biggest terrorist group (well, up until ISIS came and stole their thunder!) stated that the practices of ISIS are “too extreme” even for them. Many international lawyers, politicians and analysts now believe that due to the recent battlefield accomplishments of ISIS, which has gained them many jihadist followers all over the world, it has now eclipsed Al- Qaeda in being the No.1 terrorist “brand”.
This Al Qaeda offshoot militant group has a clear goal, that is, to establish an Islamic state in the very heart of the middle east which would directly affect the Persian gulf stability, politics and economic activities specially those related to oil production and processing. Such settlement of a state would provide as a “safe harbour” for expanding the borders of the Islamic state and conduct future terrorist activities which most nations fear.
In today’s time the world practically runs on the basis of trade and economics. Every act of every man on the planet is directed towards money and there is no doubt that the world today is closely- knit due to globalisation. Thus, where even the smallest of incidents affect the day- to- day world economy, one cannot even imagine the kind of economic revolution ISIS could bring to the world.
ISIS started its quest for a purely Islamic state by taking over the 4th largest state of Syria, Aleppo then went through to cross the border between Syria to Iraq, took over Iraq’s key regions of Mosul, Tikrit and Baiji and is now fighting for the capital Baghdad. The matter regarding ISIS turned grey when they reached Mosul. But how is this territorial capture important to the world economy? Mosul is one of the most important Oil cities of the world. Iraq is the second largest producer of oil after Saudi Arabia and Mosul alone produces about 2,00,000 barrels of oil per day. The Baiji refinery, the largest refinery in Iraq, has a capacity of processing up to 3,10,000 barrels of oil per day. ISIS taking over Mosul will affect the energy supply security pushing the global oil prices to increase. The worst affected till now is Turkey where ISIS has halted all cross border oil flow. The effects of this have already shown signs in neighbouring countries and will soon be seen throughout the world.
The worldwide consumption of oil is 92.8 million barrels per day compared to 88.5 million until 2010 and up until last week, Brent Crude, the most widely traded oil, was selling over $113 a barrel compared to $91 in January. Ole Hanson of Saxo Bank spoke on this oil shock and said that “In that scenario, the entire economic recovery, which is still fragile, could stall, and we could even slip back into recession in some regions.”
Amidst all the economic and geopolitical turmoil in Iraq, we can easily guess who may end up being the biggest looser. The current situation of Iraq makes United States of America look terribly weak. In 2011, the Obama administration withdrew all its troops from Iraq ending almost a decade long war and trusted the Nouri Maliki’s government to run the country smoothly for a few years. The trust was severely misplaced. Four army divisions of Iraq had already melted before the ISIS onslaught. According to the Pentagon, several trillion dollars have been spent in Iraq and tens of billions of dollars have been given to the Iraqi government as aid by the United States. But the importance of the money lost almost fades in front of the loss of humans during the Iraq war. About 4,424 Americans died fighting whereas about 32,000 people are now suffering from chronic physical disabilities.
Oil, as we know, is one of the most essential non- renewable resources present in the nature. The recessions in the past have directly or indirectly been related to the politics created by oil production. Thus, giving a clear in sight to the fact that if such trauma continues USA will be affected very soon despite the fact it produces its own oil. The unraveling of the American-installed political structure of Iraq may be a harbinger to a return to oil scarcity and elevated oil prices, with all the negative effects on the global economy.
100 years on since World War I, many may argue that the world has a greater desire for peace today than ever before, as there are fewer conflicts and wars. But one may ask a resident of Syria or Iraq where the political and military environment is so fragile that the lives of these people is highly unsettling as death looms large over them every single day.
About the Author
A student of Symbiosis Law School, Noida she has an aptitude for public speaking and likes reading. She has an inclination towards International Law, affairs and economics. When she manages to get spare time she is daydreaming about travelling all over the world. She is a big novel and movie buff. She has a special interest in taxation law and wants to pursue the same in the future.