Oil Prices and Iraq
It is no great feat to predict the coalition victory in Iraq will tend to drive oil prices down. More supply, a limit to Opec influence, a hungry nation....But who benefits?
Forbes, which should know better, ran this article by Richard Mably in which he makes this Reuteresque statement,
Already Iran has raised the prospect of an OPEC price war, music to the ears of Iraq's new masters in Washington, heavily dependent as they are on Middle East oil imports. link reuters
The common wisdom is that the US uses a lot of Middle Eastern Oil. Does it?
Here are the stats for 2002
Canada leads the pack exporting just over 1.8 million barrels per day. Then Saudi at 1.5m and Mexico at 1.5m. Sanctioned Iraq comes in at a little more than 500,000 barrels and the rest of the Middle East does not figure in the top ten exporting nations which account for 80% of America's imports.
Total US demand for oil is just under 20 million barrels per day. So the two biggest Middle Eastern suppliers of American oil supply just on 10% of demand. Hardly heavily dependent. link michigan public service commission
If there are winners from an OPEC price war they would tend to be places like France - make that oil guzzling surrender monkeys:
Middle Eastern countries supply 38.7% of France's crude oil imports, Saudi Arabia 22%, North Sea countries 35%. link tricolors.com
Leaving aside the question of when Saudi ceased to be part of the Middle East, this means France is dependent on the Middle East for 60.7% of her crude.
More to the point:
France has a limited amount of oil resources. Of the 2 million barrels per day of oil consumed in France, 1.9 million barrels per day are imported. France's oil consumption is projected to increase 0.4 percent per year until 2020. link export.gov
Bottom line: America's exposure to Middle East oil and the effects of an OPEC price war is around 10% of its total supply - though that number is a bit higher if you include Venezuela.
France's exposure is just under 60% of its total oil consumption.
Which makes you wonder just how dumb and well paid off Chirac really is. A twenty percent cut in OPEC's prices would stimulate the French economy as a whole. A stimulus which would more than offset any near term loss of the TotalFinaElf interests in Iraq. But the French economy as a whole does not make the ex-President of France's retirement nearly so comfortable as a major oil company might be able to.
Now that Chirac has proven himself an international goat there is no reason why he will not continue to block the right of the Iraqi people to sell their oil as best they can.