Little Oil at Risk From Turkey-Kurdish Tension

Turkey has said its sole target would be militants of the outlawed Kurdistan Workers Party (PKK). PKK attacks on Turkish troops have led to heavy public pressure on Turkey's government to act.

Turkey's large-scale incursions in 1995 and 1997, involving an estimated 35,000 and 50,000 troops respectively, failed to dislodge PKK rebels from the Iraqi mountains.

The government and military have not commented on the troop level of a potential incursion, although many analysts believe if an operation is launched it would be considerably smaller than in the 1990s.

The largest piece of oil infrastructure in the area is a pipeline that travels from Iraq's Kirkuk oilfield, south of the Kurdish region, to Turkey's Mediterranean port of Ceyhan.

The pipeline has pumped around 300,000 barrels per day since late August, but an outage would be nothing new -- the line has been repeatedly hit by saboteurs further south in Iraq, keeping it out of action for most of the time since the U.S.-led invasion in March 2003.

"Damage to that pipeline would be unlikely to affect price movements significantly," London-based Exclusive Analysis, which assesses political and violent risk, said in comments e-mailed to Reuters.

"The volumes in question are ... not sufficient to affect the global balance of oil demand and supply in any significant way."

Turkey has little reason to do damage to the pipeline, as Turkish refiner Tupras often buys the oil when the pipeline is working. An Iraqi oil official said on Monday that Iraq was in talks with Tupras to establish a long-term supply contract for crude from the pipeline.

Turkey is also the transit route for around 700,000 barrels per day of oil from Azerbaijan pumped through the Baku-Ceyhan pipeline, but the route is to the northwest of the Turkey-Iraq border.

Some risk to Turkey's domestic energy infrastructure may come from any reprise attacks undertaken by the PKK in Turkey itself.

"We expect the PKK to target critical infrastructure such as the electricity distribution networks in southeastern Turkey," Exclusive Analysis said.