Kazakhstan is moving fast to pacify its restive west as a new video circulates in which police shoot and beat retreating oil workers protesting labor conditions. Two reasons: With parliamentary elections three weeks away, President Nursultan Nazarbayev (pictured above) wants to stamp out any political narrative conflicting with his long-time assertion of keeping Kazakhstan stable. Abroad, the jittery global oil market is already starting to factor in a possible disruption of Kazakhstan's 1.5 million barrels a day of oil exports, half of which is an extremely high-quality light variety.

The Kazakhstan unrest -- violence in the western city of Zhanaozen in which some 14 workers were killed -- caps an extraordinarily turbulent year in the world's oil patch. The distribution of power has been shaken up in the Magreb countries of Egypt, Libya and Tunisia, and violence continues to threaten the rulers of Syria and Yemen. Saudi Arabia is spending some $130 billion to stave off its own public dissatisfaction. In Russia, Prime Minister Vladimir Putin's seemingly unassailable hold on power has been challenged by a botched decision to return to the Kremlin, and a rigged parliamentary election. All in all, the uprisings have helped to push annual average oil prices to their highest level in history, exceeding $100 a barrel.

The trouble on the eastern Caspian Sea is the climax of a six-month-long labor strike by some 1,500 oil workers over wages and other grievances. These workers appear to have mounted their strike against two oil companies -- the state oil company, which goes by the acronym KMG, and a Chinese-Kazakh oil company called Karazhanbasmunai (here is a good explanation by Alisher Khamidov at eurasianet.org.). Last weekend, as the country prepared to celebrate the 20^th anniversary of its independence, workers protested city plans to turn their strike camp -- the Zhanaozen public square -- into a festive place for dancing and public dining. It turned into a riot, with vehicles and buildings set aflame.

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Has ExxonMobil -- the annoyingly prissy schoolboy who always obeys the teacher -- risked weakening one of its distinguishing pillars in order to break into a single oil patch? And if so, could that shake up the global oil market along with geopolitics?

We are referring to the news, indiscreetly disclosed by a Kurdistan official last week, that the northern Iraqi region has signed an oil exploration agreement with Exxon. The reason this is a problem is that Kurdistan has been in a long-standing turf war with the folks in Baghdad over how to divide the spoils from its hydrocarbon riches. Until it's settled, Baghdad has forbidden foreign oil companies with which it does business -- which include Exxon, Shell, Italy's Eni, France's Total, the China National Oil Corp., Russia's Lukoil and virtually every substantial name in the industry -- to sign any deals with the Kurds without its okay. In September, for example, the U.S. company Hess was barred from a new round of Iraqi leases explicitly because of deals it executed with the Kurds three months earlier.

The stakes are high not just for Exxon, but for Iraq, the U.S., and the international community: The commercial tensions arise a little over a month before the Dec. 31 deadline for U.S. troops to be out of Iraq, and a predictable rise of other, security-based challenges to Prime Minister Nuri al-Maliki. In an analysis, Reuters' Patrick Markey writes that a hard line against Exxon by al-Maliki could backfire by encouraging other companies to pull up stakes in Iraq proper and take up drilling in Kurdistan, hence jeopardizing his aim of building up oil exports from the south; but if he isn't tough enough, he could lose authority with other restive Iraqi regions.

The U.S., too, has a stake in stability on the ground once it leaves, and in Iraq's oil exports rising from the 2.9 million barrels a day it currently ships. The U.S. also is eager for a north-south agreement since it could result in Kurdistan's natural gas flowing into Europe through the proposed Nabucco pipeline, with which the U.S. hopes to curb Russian market dominance of the continent. Already, Genel, an oil company linked to former BP CEO Tony Hayward, is planning a 400,000-barrel-a-day oil export pipeline from Kurdistan, to be finished in the second half of 2013. In a statement, State Department spokeswoman Victoria Nuland said that the Obama administration had advised Exxon that "they run significant political and legal risks if they sign contracts" with Kurdistan.

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