Oil politics could be a force for peace in Northern Iraq, that’s the view of WH Ireland analyst Brendan Long, who sees the potential that Gulf Keystone Petroleum PLC (LON:GKP) and Genel Energy PLC (LON:GENL) could now see lower risks.
In a note, the analyst notes the latest developments in Iraq where the Kurdistan Regional Government has issued a statement calling for de-escalation in the conflict following an independence referendum that was not recognised by Baghdad.
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The KRG statement said: “The fighting between the two sides will not produce a victory for any, it will take the country to total destruction.”
Moreover, the KRG proposed an immediate ceasefire, a ‘freezing’ of the results of the referendum, and to start an open dialogue regarding the Iraqi constitution.
London-listed, Kurdistan-based oil stocks, Genel and GKP were both trading higher on Wednesday - up 3.5% and 1.3%, and changing hands at 117p and 94.25p respectively.
WH Ireland analyst Brendan Long said: “Oil politics are creating tremendous pressures for peace in a region where otherwise the geopolitical context has all the seeds of war.
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“Although early days, macro oil supply risks are abating and a more benign political backdrop for oil companies operating in the region (listed in Europe: Genel; GulfKeystone; DNO) is now more likely than not to emerge as Iraq is likely to take the peace offering that would allow it to produce more oil in the Kirkuk region.”