RIYADH, 11 April 2003 — Senior economic editors have raised concerns over the possibility of Iraqi oil flooding the market, with the US as the occupying force procuring its oil supplies at reduced prices.
Providing an overview of the economic prospects for Saudi Arabia and other oil-producing countries in the aftermath of the US-led war in Iraq, Muhammad Al-Tunisi, editor in chief of Al-Eqtisadiah, told Arab News that media reports are speculating on oil prices tumbling if Iraqi crude is dumped on the market. However, Al-Tunisi pointed out that it would not be in the interest of the US to create instability in the oil market.
Even so, he said, US Vice President Dick Cheney has gone on record as saying that Iraq, which currently produces 1.7 million bpd, will jack up its production quota to three million bpd to fund Iraq’s reconstruction program. The addition of 1.3 million bpd into the market could have a disastrous effect on the Gulf economies.
Similar views were expressed by Adnan Jaber, economic editor of Al-Watan. He said the anticipated drop in oil prices could also have a domino effect on other sectors of the economy, leading to economic slowdown and a growing unemployment problem.
Describing the economic prospects in the postwar scenario as gloomy, Adnan said: “It is worth noting that while the US forces allowed the Iraqis to loot and plunder various ministries, the only one they protected against public intrusion and theft was the Ministry of Petroleum.”
To safeguard its oil interest, Adnan said the US would be prepared to pull Iraq out of OPEC in order to undercut the oil quota system. “After all, the US bypassed the UN Security Council in going to war against Iraq. It could just as well bypass OPEC in its quest for cheap Iraqi oil, since Iraq has 300 billion barrels of underground oil reserves.”
The cost of reconstruction of Iraq’s war-torn economy has been put at $100 billion. Many fear that reconstruction contracts will be exclusively awarded to American companies, who started lobbying for them before the war started.
Alkis Righas, administrative manager of a multinational construction company, said the fall in oil prices would have a negative impact on the economies of Saudi Arabia and other Gulf states. Construction projects are already on hold in the Gulf states as a result of the on-going crisis.
If the situation persists, construction companies, which are currently under pressure from the Labor Court to hire more Saudis, could be forced to reduce their staff.
