Iraq,
the current oil crisis and American mismanagement (Book Review)
By
Shubha Singh
"The
Ultimate Prize - Oil and Saddam's Iraq"; Author: Ranjit
Singh Kalha; Publisher: Allied Publishers Pvt Ltd; Price:
Rs 695: Pages: 429
The
price of crude oil jumped over $10 per barrel in a day to
hit $139 last week and analysts have predicted that it is
likely to go up to $150 a barrel by next month. Israeli threats
of a strike against Iran, reports that a new project in Nigeria
might be delayed or even new projections of huge increase
in demand - because of the two new western bugbears - the
consuming classes of China and India - are enough to set speculators
at work pushing up the already volatile oil prices.
Speculation
and uncertainties of supply are fuelling the crude oil price
spiral, but it is the imbalance between demand and supply
of crude oil that is behind the steady increase in crude prices
in the past year. In a new book titled "The Ultimate
Prize - Oil and Saddam's Iraq", Ranjit Singh Kalha, a
former Indian envoy to Iraq, explains that it is the disruption
of the supply of crude from the Iraqi oil wells to the international
oil market that is one of the important factors in the demand-supply
mismatch. The Iraqi oil supply at present is not even up to
the sharply restricted levels that the UN sanctions imposed
on the Saddam Hussain regime in Iraq before the US led invasion
of Iraq took place in 2003.
Iraq
has an estimated 11 percent of the world's oil reserves, the
second largest proven reserves after Saudi Arabia. Iraqi oil
has two other qualities: it lies just under the surface and
therefore is easier and cheaper to extract and is of a higher
quality. India was hit particularly hard by the oil crisis
after the first Gulf War in 1991 as Iraq was one of its main
suppliers of crude oil and Indian refineries were configured
to use to the higher grade of crude extracted from Iraqi oil
wells.
The
American occupation of Iraq has not been able to create the
conditions for stabilising the oil industry in the country
after the destruction during the Second Gulf War. Before the
Iraqi invasion of Kuwait, Baghdad exported 3.5 million barrels
of oil per day. Now, with the high ruling prices of crude,
Iraqi oil, whose cost of extraction was $1.5 per barrel when
Oman's oil extraction costs were $5 a barrel, is even more
valuable.
In
his book, Kalha relates how Iraqi oil has been a major factor
in the oil politics of the world. Recognising the great strategic
value of oil, the British carved a brand new country from
the crumbling Ottoman empire. Boundary lines were drawn on
the sands to join together three disparate regions that had
been held by different ethnic groups and warring tribes to
encompass the rich oil producing areas. Kalha explains that
oil has remained a defining feature in the politics of the
region. The American forces remain in Iraq despite the growing
opposition to the war back home in the US, for as Kalha writes
"control over Iraqi oil is an economic necessity, a strategic
requirement according to US National Security Directives".
In
his absorbing account of Iraq and its history, Kalha reveals
how a major oil producing country remains out of the international
market - purely through political mismanagement by the Americans.
The story is specially relevant in the current scenario when
perceived increases in future demand and any anticipated risks
to supply of crude oil is keeping the international oil market
volatile despite the absence of actual shortages and the American
consumer cutting back because of the high petrol prices.
("The
Ultimate Prize" is being launched by India's External
Affairs Minister Pranab Mukherjee June 11 in New Delhi. R.S.
Kalha can be contacted at rskalha@hotmail.com)
Indo-Asian
News Service
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