|Saddam's Trump Card: The World Needs Iraq's Oil As Never Before.|
And the Iaqi president seems certain to exact whatever concessions he can for it
The Guardian, September 26
There is nothing like an oil crisis to spread feelings of empowerment around the Middle East. Last week even Palestinians - whose only oil comes from olives - were suggesting that here was a weapon their friends could use to further the struggle with Israel.
Suddenly everyone in the region is aware of how much the world depends on them. The Middle East holds two-thirds of the world's proven oil reserves and, at current rates of production, it will last for 87 years, compared with 14 years for North American oil and eight years for European. And our dependence on the Middle East is increasing. The US Department of Energy predicts that 10 years from now the region will be called upon to produce about 30% more oil.
Given the political uncertainties in the region, the risks are obvious. Among the Middle Eastern producers, Saudi Arabia is way ahead of the rest, providing 12% of the world's oil and holding more than a quarter of the known reserves. It is the only country capable of influencing prices single-handed, by turning the taps on and off - or it was until recently.
In return for exercising this power responsibly, the west guarantees Saudi Arabia's security and doesn't complain too loudly about its record on human rights.
But now this arrangement faces a challenge from Iraq. Following the recent Opec production increases, Iraqi production - currently just over 3m barrels a day - exceeds the world's readily available spare capacity. If supplies from Iraq were interrupted, by accident or design, havoc would ensue.
On its own, that makes Iraq no different from other producers of similar size - Iran, Norway and Venezuela, for example - though it's worth noting that Iraq is one of the six largest suppliers to the United States. But in combination with Iraq's pariah status and the unpredictability of Saddam Hussein, it is potentially devastating.
'Five years ago, the Iraqi president, in his most fantastic dreams, never thought he would find himself in the position he is in today,' says Jareer Elass of the Washington-based Oil Navigator consultancy. 'Tight oil markets, a world weary of sanctions, and an American presidential election - there's no way Saddam is going to let this pass.'
Chance has delivered Saddam a powerful weapon, and it is easy to see how he might use it: to end sanctions (on Iraq's terms), roll back the no-fly zones, and get out of paying several hundred billion dollars in Gulf war compensation. 'The Iraqis are trying to bargain with the UN and oil companies to keep oil production going in exchange for a pledge to remove sanctions,' a Kuwaiti official said last week.
But Iraq may be in less of a mood for bargaining than for testing UN-imposed restrictions to destruction in the belief that a world desperate for Iraqi oil, and suffering from sanctions fatigue, will be powerless to resist.