What does a ship bound for nowhere have to do with the oily, violent mess in Iraq? This particular ship is a key player — and it’s currently idling off the coast of Morocco. Today I’ll tell you why.

The ship’s name is United Leadership. Ironically, “united leadership” is exactly what Iraq is missing this week.

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The map above is more legible than the one I ran yesterday. Bloomberg helpfully color-coded the territory controlled by Sunni Arab, Shia Arab ad Sunni Kurd forces, along with oil fields and pipelines.

Iraq’s messy political situation is not improving. The competing groups have their own internal tensions. We may well see Iraq break up into three or more rival governments in the next few weeks.

If so, a prime issue will be who owns the oil?

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Not surprisingly, the various parties are squabbling over this question. Both the al-Maliki government in Baghdad and Kurdish separatists claim the oil in Iraq’s northern fields. The Kurds are trying to gain influence with a new strategy — with help from their friends in Turkey.

The Kurds last month shipped at least 2 million barrels of oil through the pipeline pictured above to Turkey’s Ceyhan energy terminal on the Mediterranean. The oil was then loaded aboard the United Leadership, which set sail on May 22 — but didn’t get far.

Baghdad said it owns the oil aboard United Leadership and threatened legal action against any companies that bought it. The ship then tried to stop in Morocco, but authorities there ordered it out of the country’s territorial waters.

(Note: Joe Biden was visiting nearby Cyprus when this ship left Turkey on May 22. Coincidence or connection?)

According to Bloomberg (which tracks global commodity shipments), the United Leadership is now sailing aimlessly in the Atlantic just outside Moroccan jurisdiction. Here is an image from our Bloomberg terminal today.

I apologize for the tiny print. The green arrow points to the United Leadership’s present location. The legend says its destination is “Awaiting Orders” and its current speed is 0.20 knots.

This ship — loaded with over $100 million worth of crude oil — is apparently going to sail in circles until somebody decides what to do with it.

I hope the crew has plenty of food aboard. They could be out there a long time.

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After writing the section above, I learned a second ship, the United Emblem, also left Turkey with additional Kurdish oil in the last few days. It has dropped anchor near the island of Malta.

The U.S. government objects to both Kurdish oil shipments, at least officially. Washington also wants to keep Ankara happy, so I’ll bet some delicate negotiations are under way … even if the ships are not.

This UPI story contains a photo of the United Leadership, credited to the U.S. Navy. In the global picture, these two tankers may not be critical — but they’re apparently important enough that our Navy is watching them.

I’ll watch Bloomberg to see when these ships start moving again, and where they go. Stay tuned.

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Today I asked our Uncommon Wisdom Daily analysts to give me their quick thoughts on the Iraq situation’s market impact. Here’s what Tony Sagami had to say.

When you reveal the precise timing of your military actions to an enemy, you should expect disastrous results. Nonetheless, the problems in Iraq are short-term problems, which will drive oil prices and oil stocks higher, but the bigger picture is the ongoing powder keg of instability that characterizes much of the Middle East.

It may be next month or next year, but the next major move for oil will be a return to the $150 level we saw in 2008. That means U.S.-focused energy stocks/ETFs deserve a significant allocation in your portfolio. My International ETF Trader subscribers have a 50% allocation to energy ETFs.

Geoff Garbacz says …

Technically, the U.S. equity market is blowing off the Iraq conflict. Stocks are not being sold off hard. A key saying that I live by is pay attention to how stocks react to news rather than the news.

Stocks are telling you that this is another overblown geopolitical event just as the Russia/Ukraine event was earlier this year. That being said, the price of crude oil has spiked to a level from which volatility has gotten VERY excessive and should begin to abate.

We note the Russell 2000 just turned positive for the year last Friday and as such should begin to see a nice advance. Clearly, greater attention needs to be paid with this developing story but the theme for right now is steady as she goes.

Here is what our resident oil expert James DiGeorgia thinks …

A large region of oil production has now fallen in the hands of the Kurds. It’s not likely that the Sunni extremists including ISIS will be able to seize back these rich oil regions from the Kurds.

It’s also not likely that the ISIS or any of the Sunni groups have the ability — even with weapons and supplies seized from abandoned military bases and fleeing Iraq soldiers — to capture either Bagdad or the oil-rich fields in the south of Iraq, controlled by the Iraqi Shiite government.

As a result, I expect oil prices to remain at the currently high levels on pure apprehension and fear until Iranian and U.S. military support starts to reverse the land gains made by the ISIS and other radical Sunni groups like al-Qaeda.

I expect WTI to flirt with $110 a barrel and Brent crude $120 a barrel for the next several weeks. Once it becomes clear that Iran is committed and successfully engaging ISIS and the other radical Sunni extremist groups, the current Iraqi premium being added to the price of oil, will fade back to pre-Iraq crisis price levels.

This is from Dan Hassey:

The Kurds in the North have lots of oil and are relatively independent. They recently sent 2 million barrels to world markets through Turkey. [Brad note: This is the oil aboard the two ships mentioned above.] This may not be as bad as some think, and that’s probably why markets are settling down.

We are always looking for opportunities. If oil supplies are secure in the North and South, the current risk premium in oil prices could shrink.

By the way, China receives about 50% of Iraqi oil. As major investors in Iraq, the Chinese are the main beneficiaries of Gulf War II.

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That’s what our editors think; what about you? Click here to send me your thoughts and forecasts for Iraq. I’ll share some of your insight with other readers next week.

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As Dan said, markets did seem to calm down today, so maybe this will all get resolved soon. Here are the headlines as we go into Father’s Day weekend …

• U.S. stock benchmarks rose, recovering at least part of this week’s lost ground. The Dow, S&P 500, and Nasdaq Composite all had almost the same percentage gains.

• The Intel (INTC) news I noted in my Thursday afternoon edition seemed to help, as did the easing of concerns about Iraq.

• President Obama said he won’t be sending American troops to Iraq, but might consider limited air strikes.

• Clothing retailer Express (EXPR) strutted 21.4% higher after a private equity group said it intends to buy the chain.

• U.S. wholesale prices contracted -0.2% in May, according to the latest Producer Price Index. Economists missed the mark badly with their consensus +0.1% forecast.

• Next week is Federal Reserve week. The Federal Open Market Committee convenes Tuesday morning and should release a policy statement Wednesday afternoon.

• Just to make your weekend more interesting, it looks like Russian tanks crossed the border into Ukraine. Exactly why is unclear. It does not appear to be a full invasion, so maybe they were just lost.