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Why the uprising in Iraq could cause oil prices to spike

Part 4
Why the uprising in Iraq could cause oil prices to spike (Part 4 of 7)

Why ISIS’s land grab in Iraq could affect companies like Chevron

ISIS seizes territory

Syria’s minister of information, Omran al-Zoabi, said, “What is happening in Iraq is dangerous and threatens the security of the entire region. It threatens the security of the Gulf, of Iran, Turkey and the entire Middle East. It also touches directly the security of Europe and international security.”

Iraq Population (million persons)Enlarge Graph

Mosul, Tal Afar, and Tikrit

On June 10, ISIS occupied the northern Iraqi city of Mosul. The city of 1.8 million people, which was under the protection of the U.S.-trained Iraqi military force of about 30,000 stationed in the region, was claimed by close to 800 ISIS militants. Mosul’s force was equipped with sophisticated U.S.-made military equipment costing billions of U.S. dollars. However, the city fell with no apparent resistance against the military power of the ISIS group.

Similarly, ISIS militants have also gained ground on the strategic city of Tal Afar close to the Syrian border and Saddam Hussein’s birthplace, Tikrit. The Iraqi army’s mass desertions in Mosul and Tikrit allowed ISIS to establish a foothold in the two key northern Iraqi cities. From there, ISIS has continued to advance on the capital, capturing a number of key border crossings recently.

Who’s supporting ISIS?

Aiding this parade of ISIS victories has been the supposedly extensive support of the local Sunni population, which previously supported the Sunni regime of Saddam Hussein that had been overthrown by U.S.-led forces.

Moreover, with years of experience on the Syrian battlefield, ISIS group boasts training camps producing well-prepared fighters, and it has been joined by scores of professionally trained overseas mercenaries.

Read on to the next part of this series to find out what happened in Kurdistan and how ETFs like the SPDR Energy Select Sector ETF (XLE), the Vanguard Energy Index Fund (VDE), and the iShares Dow Jones US Energy Sector Index Fund (IYE)—which are heavily invested in companies like Exxon Mobil (XOM) and Chevron (CVX)—stand to gain or lose in the event of an oil price hike in Iraq.

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