Islamic State fighters' seizure of the Mosul dam, three towns and an oilfield is their first major victory over Kurdish forces in Iraq - while in Libya, an eruption of fighting between militias has forced newly-elected legislators to abandon Tripoli for their first session. Both conflicts have investors wondering whether energy markets should brace for a new round of supply concerns. Sara Hemrajani reports.
Another weekend, another outbreak of violence. In Iraq, thousands are fleeing as Islamic State fighters seize control of the country's biggest dam, as well as an oilfield and three towns. Meanwhile in Libya, a fire continues to rage at a fuel depot near Tripoli airport - a key target in the battle between warring militias. Some surprise then that despite the latest wave of clashes, global oil prices are steady. Credit Suisse's senior advisor, Bob Parker. SOUNDBITE: Credit Suisse Senior Advisor, Bob Parker, saying (English): "We now have alternative energy as a major source of energy support, so this connection between geopolitical risk and spikes in the oil price, I think that connection or that transmission mechanism has now broken down." Several factors have overshadowed the escalating crises in the Middle East and North Africa. These include the shale gas revolution in the U.S., the prospect of looser sanctions on Iran, and Iraq's increased oil production in its relatively peaceful southern refineries. Iraq's semi-autonomous region of Kurdistan has also been pumping out more crude, but a dispute over ownership rights has kept that supply off the market for the time being. NAB's Head of Market Economics, Tom Vosa, says the resolution of that disagreement would further boost oil supplies. SOUNDBITE: NAB Head of Market Economics, Tom Vosa, saying (English): "If we have a political deal within Iraq about the Kurd's right to sell oil, then that would certainly increase the amount of supply that we see. So I think the politics certainly perhaps a bit of a driver. Yes, there should be some more risk but if the oil price goes up, I think the political agreements are far easier to be, will be made. So we'll see some downward pressure afterwards." But energy market traders may not be able to keep geopolitical tensions in the region on the back burner forever. Many analysts warn that the deteriorating situation in Libya is a cause for concern. SOUNDBITE: NAB Head of Market Economics, Tom Vosa, saying (English): "I think yes it's fair to say the disruption we're seeing in Libya with people evacuating Tripoli suggests that technically oil provision will be difficult if we see more attacks." Fighting between armed rival factions in Tripoli and Benghazi is the worst since the 2011 civil war. Newly elected Libyan lawmakers were forced to gather in the eastern city of Tobruk for their first parliamentary session because of safety fears in the capital. That's sparking worries that Libya is on the brink of becoming a failed state.