Iran has been unsettled by recent deals to develop Iraq's oil industry, which are likely to see its Arab neighbour emerge in its place as the world's second biggest oil state.



Oil experts believe Iran is attempting to deter investment in Iraq's oil industry by targeting fields that are to be auctioned to foreign oil companies.



"The incursion only goes to highlight the still very uncertain conditions on the ground in Iraq that have been impeding the recovery of the country's oil sector," said Harry Tchilinguirian, a London-based industry analyst.