the situation in iraq.

last month, Iraq’s vice-president, Tariq al-Hashimi, denied charges of terrorism after the country’s top court issued a warrant for his arrest. The move marked an escalation of tensions between the prime minister’s Shiite Muslim-led allies and Sunni Muslim politicians, such as al-Hashimi, raising concerns the government could collapse.

That was preying on the minds of analysts at RBC Capital Markets, who downgraded Heritage Oil to “underperform” from “sector perform” given worries over the worsening political outlook in Iraq.

Hopes for oil exploration in Kurdistan, which has historically been a challenging area due to years of wrangling between Baghdad and the Kurdistan regional government, were lifted in November when Exxon-Mobil signed a major oil and gas exploration deal with the Kurdistan authorities.

It marked the first pact with an oil major and fuelled speculation that the region could experience a wave of consolidation.

RBC acknowledged that Exxon’s entry into the region “generated an upswing in interest” but, with analysts fearing that the government “appears to be crumbling”, they erred on the side of caution.