The major news out of Iraq today is the battle over the Baiji oil refinery, a plant responsible for turning a full third of the country's crude into useful petroleum. The battle illustrates two important things about the Iraq conflict: first, don't come to quick conclusions about major developments. Second, there's a good reason the fighting hasn't yet rocked global oil markets — the Baiji refinery makes products for domestic consumption in Iraq rather than for export.
Different news reports have said different things about who controls Baiji. The New York Times reported that the Islamic State of Iraq and the Levant (ISIS) controlled the refinery, but also that "other Iraqi officials, including the commander of the garrison defending the Baiji refinery, asserted that fighting was still going on." Reuters quoted an Iraqi official saying that ISIS controlled "75 percent" of the refinery: "the production units, administration building and four watch towers."
As of 5 pm eastern, Iraq Oil Reports, a group with sources throughout Iraq, was reporting that the Iraqi government controlled the refinery, but were surrounded by rebels who controlled the territory around it. They note, however, that different people they've spoken to tell quite distinct pictures of the state of the fighting.
The point is that news out of Iraq right now is tentative at best. Sometimes it's because the situation is changing; other times, it's because people simply have limited ability to know what's happening in a war zone. What we hear is "not really news, it's rumors," Fanan Haddar, an Iraq expert at the National University of Singapore, told me. It's always good to be skeptical about immediate, major reports.
Perhaps that's part of the reason global oil markets didn't spike in response to the news out of Baiji. The Brent Crude Oil Index, a solid measure of oil prices, went up 77 cents today in response to the Baiji news. That's not nothing, but it's hardly a panic.
The most important reason for the minimal reaction is that Baiji isn't important to the global oil supply. As Steven Mufson explains, Baiji doesn't really export petroleum. It's mostly responsible for domestic supply, and largely within the areas contested by ISIS at that. Since Baiji doesn't produce for export, global markets aren't all that concerned.
Iraq's largest oil fields, in northeastern and southeastern Iraq, are largely sheltered from the fighting. But concerns about Iraq's ability to continue exporting amidst the crisis have already sent the Brent index up to its highest price since last September. So there's been a real effect on global oil prices — and a potential for more.