ISIL seizure of refinery ‘has consequences’

Baghdad, Iraq – Approximately 200km from the city of Mosul, now controlled by the Islamic State of Iraq and the Levant (ISIL), one by one, Iraqi soldiers in the northern predominantly Sunni city of Baiji are giving up their arms and fleeing to safer parts of the country.

Hosam al-Rikaby, a former marine in the Iraqi military, believes it was the Iraqi government that urged its forces to surrender.

“They know they do not have the logistics capability to fight ISIL. They have only two options; fight them and get killed, or turn in their weapons,” Rikaby told Al Jazeera.

The army’s surrender of Baiji comes after 10 days of battle where forces gave up control of one of Iraq’s most vital oil refineries last Tuesday to ISIL, the group now calling itself the “Islamic State”.

The Islamic State wants Baiji’s tribal chiefs to take complete charge of the refinery to ensure a steady flow of oil in cities they already control, such as Mosul in the north, Iraq’s second largest city, as well as different parts of Kurdish Iraq.

But on the other side of the information-giving spectrum, government owned television station Al-Iraqiya believes the fight for the refinery is still ongoing, as announced on June 24 when forces started to surrender.

Control of Baiji’s oil refinery means Iraq could lose 30 percent of its oil supply (other sources of oil come mainly from the south of the country and from oil imports).

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MAP: Rebel’s path through Iraq

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An all too familiar scene of cars queuing at gas stations can be seen far away in the capital, Baghdad. At the city centre in Fardus Square, there are people like Dawoud al-Tamini, a 41-year-old mechanic, who is filling up extra containers of oil after hearing that ISIL could take over the city of Baiji as a whole.

Tamini wants to be prepared when the crisis comes. “If it’s true, there will be a massive shortage in oil, electricity and gas. But if they’re only rumours, at least I won’t be taking any risks,” he said, making friendly chatter with passersby in the long queue.

Judging by the ease in which the Islamic State seized major cities in recent weeks, the pressing question now is whether or not the Iraqi army will be able to cope with these rebels elsewhere.

Basem Anton, an economy expert and vice-chairman of the Iraqi Economists Association, fears that the Islamic State seizure of Baiji will have far-reaching consequences. “These rebels are capable of paralysing Baghdad. We have oil stocks, but sooner or later, our sources will be depleted,” Anton said.

Power cuts are almost regular in Baghdad. According to Anton, Prime Minister Nouri al-Maliki is to blame for the current turmoil the country is facing. “Maliki has been in power for eight years. There is more than enough oil in Iraq, but still there are power outages every single day,” Anton told Al Jazeera.

The Iraqi government so far, has failed to provide sufficient oil resources to its inhabitants, despite the ample amount of crude oil reserves in the country. This has been a long-standing issue: Iraq remains dependent on oil imports for domestic use since the war started in 2003.

Abdullah el-Badri, secretary-general of OPEC, believes the international market has nothing to worry about. He announced during a press conference on June 25 that the current crisis has not had and will not have any effect on the global stock market, even though the seizure of Baiji could have rippling effects throughout the country.

“Recent price hikes are the result of speculation. At this point there is no threat to the oil market,” Badri told Al Jazeera.

As for the country’s stock market, there has been no noticeable impact. “Iraq is the second biggest producer of crude oil after Saudi Arabia. The country holds more than 11 percent of the world’s proven oil reserves and produces around 3.4 million barrels a day and will continue to do so,” said Badri.

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IN PICTURES: Running on fumes in Kurdish Iraq

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Like every normal work day, the stock market in Baghdad opens its doors at 10am. Behind a high security fence and multiple security checkpoints, Jimy Afham Toma, a stockbroker sits at her desk.

“We see the usual fluctuations of course, but there is nothing alarming,” Toma told Al Jazeera. “There was a peak in oil prices last week for the first time in nine months and that closed one barrel at $115 each. But oil prices have started to decline again. So far, the turmoil here has had no significant damage on Iraq’s ability to export crude oil.”

But the tone of Toma’s voice suspected otherwise as she gulped the last few sips from a cup of tea. “Who knows what tomorrow could bring? But I hope, from the bottom of my heart, that everything will be resolved soon.”

The Iraqi soldiers’ surrender is more than a gain for the Sunni rebels of the Islamic State. It reaffirms the strength of the group and the weakness of the national Iraqi army.

At one of the numerous checkpoints set up across Baghdad, scores of soldiers are standing guard. “If ISIL [the Islamic State] reaches Baghdad, I’m fleeing,” one of them said.

Faith in the Iraqi army’s strength and numbers is reaching a new and low ebb, not just among the people in Baghdad – who are on edge due to recent events – but also throughout its own ranks.