In a country where 90 percent of the budget comes from oil, whoever controls the oil controls the state. That explains why the takeover by Islamic extremists ISIS of Baiji refinery, Iraq's largest, was seen as a watershed moment for Iraq's future.

However, while Iraq's potential descent into civil war is often framed as a standoff between the Shiite majority and the Sunni minority, the northern Kurds have oil reserves of their own, and it is they who stand to gain from the chaos as the Sunni rebellion threatens to redraw the country's borders.

Iraqi soldiers have now recaptured Baiji, but ISIS continue their march south towards Baghdad and more oil bounty. Under Iraq's soil, there is an awful lot of oil to fight over.

Much of it is clustered at supergiant fields, such as Kirkuk near the Turkish border, and the southern Rumaila field near Iraq's outlet to the Persian Gulf. Kirkuk alone is thought to hold 8.7 billion barrels of oil, equal to total remaining Norwegian reserves.The remainder of the oil fields are scattered between the country's predominantly Shiite South, Sunni middle and Kurdish North.

Fighters with the Islamic state of Syria and the Levant, or ISIS, present nervous Westerners with the quintessential post-9/11 image of terrorism. The Sunni insurgents arrived across Iraq's border with Syria to take Mosul, leaving a trail of executions and draconian Islamist laws in their wake.

As soon as instability in the OPEC's second-largest oil producer hit the headlines, many feared global oil prices would soar, particularly paired with deflated production in Libya. But that hasn't happened, and for the time being, production has been relatively unharmed as Iraq's "oil police" patrol key infrastructure.

Many analysts predict that ISIS will eventually run out of funds and steam before it is able to establish its medieval Islamist caliphate. But the question remains of what will take its place in the longer term, and that is likely to be a country divided along ethno-sectarian lines between its Sunni, Shiite and Kurdish elements.

The Kurdish autonomous region, governed by the KRG from the northern city of Erbil, is home to around 15 percent of Iraq's population. It also has its fair share of oil, with an estimated 45 billion barrels of reserves.

The region is also years ahead of the rest of the country in prosperity, security and development. The divergent fates of the cities of Baghdad and Erbil are illustrative; while Baghdad has been rocked by car bombs and lawlessness, Erbil has seen great improvements in security since 2003 and consequently has been seen as "Baghdad-lite" by investors looking to get a foothold in the region.

With unexplored natural gas reserves, Kurdistan has even been suggested as a potential supplier for the EU-backed Southern Corridor gas export strategy into Europe.

All the Kurds need to do now is unlock their exports. Under Iraq's 2007 Oil Law, the Kurds are obliged to get the consent of Baghdad before exporting their oil. Equally, the central government in Baghdad regards the increasing number of production sharing contracts signed between the KRG and international oil companies, including ExxonMobil, as illegal.

Since 2003, Baghdad has not offered the KRG the incentives it needs to stay part of a united Iraq, and as central government looks weaker and weaker, the Kurdish hand will become stronger.

In the words of Kurdish military veteran Mahmoud Sangawi, Iraq is “a country held together by force,” and indeed much of the strengthening Kurdish position owes to its security services. The Kurds have not only been blessed with a natural wealth of oil, they also have the "peshmerga."

Peshmerga, the name used for the famed Kurdish military forces, literally means “those who face death.” As Iraqi soldiers fled from ISIS forces, the peshmerga picked up the pieces and secured oil-rich Kirkuk.

It is thanks to their unmatched discipline, morale and competence that Kurdistan has come to be seen as a safe haven from conflicts in both Iraq and Syria.

With little appetite for military intervention among the U.S. and its allies, the peshmerga may be relied on to protect the Iraqi state from the insurgent threat. If that is the case, the Kurdish negotiating position can only become stronger.

All of this is reflected in the share price of IOCs that have committed to the region. Shares in Genel Energy, a Turkey-based producer headed by former BP boss Tony Hayward, initially fell on news of the ISIS invasion, but have since recovered.

Hayward and his fellow investors have been betting on political changes in the region since they began in 2011, and they may now see their chance at large-scale exports as Kurdistan looks forward to greater autonomy.

While Kurdish officials are formally calling for continued autonomy, and the same for their Sunni neighbors, many suspect more ambitious plans among the Kurds to finally achieve outright independence and their own homeland.

The Kirkuk oil field, of course, would be the jewel in the crown for Kurds. The town of Kirkuk, which currently lies beyond the reach of the KRG as one of the "disputed territories," not only has oil wealth, but a deep symbolic significance for the Kurdish people.

Seen as the historical capital of the Kurds, it bore the brunt of the "Arabisation" policies under Saddam Hussein, and Kurdish leaders have now requested a referendum on its independence.

It is not a foregone conclusion that Iraq will split into three. More importantly, if it does, it is not likely to be as clean an operation as it sounds, with large-scale ethnic cleansing likely. But the one thing most analysts agree on is that there is no going back to what Iraq looked like before ISIS took Mosul.

This doesn't mean a Sunni Islamist takeover of Iraq and Syria but, just as happened in 1916 in the wake of World War I, Iraq's arbitrarily drawn borders may well be redefined. The media has already dubbed the resulting regions "Sunnistan" and "Shiastan."

Iraq has seen many faces since it gained its independence from Great Britain in 1921, from client leader King Faisal through a string of military coups, the brutal but stable Ba'athist dictatorship of Hussein, a U.S.-led occupation and the erratic Shia rule of Prime Minister Nouri al-Maliki today. Events suggest we may be about to see the next one, and it is the Kurds who currently look to have the upper hand.