Iraq’s political crisis is far from over

The political crisis in Iraq is far from over. There is more violence to come, despite protesters pulling out of Baghdad’s Green Zone earlier this week after two days of violence that killed 30 people and injured hundreds more. On Thursday, the violence moved south into Iraq’s oil-producing Basra governorate. Four had been killed at the time of writing after gunmen attacked government buildings housing security forces in the city of Basra.

The violence in Baghdad is one thing and has the potential to shake markets slightly as fears grow over threats to the oil industry in OPEC’s second-largest producing nation. The violence in Basra – Iraq’s oil heartland – is something else entirely.

This is not a separate incident from what happened in Baghdad, and it is significant. It is an extension of political unrest in Baghdad as rival Shiite groups vie for power. Clashes in Baghdad and Basra pit al-Sadr supporters against pro-Iranian Shia factions. Two of the dead were members of the Peace Brigades militia loyal to al-Sadr. Baghdad and the south are dominated by Shiites.

Meanwhile, oil prices have fallen significantly this week, disregarding the situation in Iraq so far, or last week’s renewed violence in Libya, although instability at both sites may exert upward pressure on prices in a tight market. Oil prices rallied last week on comments…

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