Home to fewer than 4,000 people and located in an isolated corner of the South Atlantic Ocean, the Falkland Islands don't often feature in global business headlines.

However, a UK-Israeli oil exploration project in the North Falkland Basin is stoking long-running tensions between Argentina and the people of the archipelago.

Argentina has laid claim to the islands, which it calls Las Malvinas, for two centuries . In 1982, the dispute over the islands' sovereignty led to a war between the UK and Argentina , though British control was quickly restored after Argentine forces invaded the islands.

A 2013 sovereignty referendum on the islands returned a 99.8% vote in favor of remaining tied to the UK as a self-governing British Overseas Territory.

The Sea Lion oilfield project has brought the issue back to the surface.…