US sees no 'major disruption' to Iraqi oil supplies

A large plume of smoke rises from what is said to be Baiji oil refinery in Baiji, northern Iraq, in this still image taken from an amateur video posted on a social media website June 18, 2014. -- PHOTO: REUTERS
A large plume of smoke rises from what is said to be Baiji oil refinery in Baiji, northern Iraq, in this still image taken from an amateur video posted on a social media website June 18, 2014. -- PHOTO: REUTERS

WASHINGTON (AFP) - Washington has not seen any major disruption in Iraqi oil supplies amid a militant assault on a large refinery, a US official said on Wednesday, but warned Iraq may have to import fuel for its own needs.

Oil markets were spooked on Wednesday as militants from the Islamic State of Iraq and the Levant (ISIL) attacked the Baiji oil refinery, north of Baghdad, as they pressed an assault which has already seen them capture a large swath of northern Iraq.

Iraqi officials said security forces controled the refinery, but clashes were ongoing and several tanks containing refined products caught fire.

“The refinery produces for domestic consumption,” State Department spokesman Jen Psaki told reporters, adding production had already been halted for a few days “due to a combination of technical and security reasons.”

The refinery was shut down on Tuesday and some employees evacuated due to a drop in demand caused by the militant drive which has caused hundreds of thousands of people to flee their homes.

Analysts said a takeover of Baiji by the rebels could pressure domestic fuel supply in northern Iraq.

“Iraqi authorities may need to import domestic fuel from neighboring countries,” Ms Psaki said.

But “there’s no impact on Iraq’s crude oil exports and we haven’t seen any major disruptions in oil supplies in Iraq,” she added.

World oil producers have cautiously watched the unfolding chaos in Iraq, which exports around 2.5 million barrels of oil per day, and said the country’s vast crude supplies, mostly in the south, were safe for now.

Washington was continuing to monitor “the global oil supply and demand situation,” Ms Psaki added.