Iraq's Oil

DUBAI, United Arab Emirates, October 6, 2004 -- The costs and benefits of America's occupation of Iraq vary, according to proponents and opponents, except when it comes to oil exports. The U.S.-led invasion has resulted in the loss of an average of 2 million barrels a day of Iraqi oil from world markets. That is a significant number with huge consequences for economies around the globe. Instead of rosy promises by the neoconservatives of the Bush administration who pushed for the invasion -- partly on the premise that they would turn it into America's private gasoline-pumping station -- the contrary has occurred.

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The consequences have been evident in the past few months. Oil prices stand at 20-year-high records with no relief in sight. Indeed, should the ongoing disruption of Iraqi oil exports be compounded with an interruption of production elsewhere -- Russia, Africa, Saudi Arabia, Venezuela or any member of the Organization of Petroleum Exporting Countries -- we could be looking at prices far above $50 a barrel, perhaps $60 or more. Indeed, the sky is the limit.

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raq used to produce close to 3.5 million barrels of oil per day under the rule of Saddam Hussein. It exported about 2.5 million barrels daily within the now-defunct, United Nations-guided oil-for-food program. It produced another half a million barrels for its own internal consumption to feed its now-looted and destroyed refineries. And it managed to "smuggle" about 300,000-500,000 barrels a day to Iran, Jordan, Syria and Turkey, with the money going into Saddam's treasury.

The reason oil prices have been hovering around $50 a barrel now is that most of these Iraqi exports disappeared just as oil consumption began to skyrocket around the world.

Zmag