The Coming Iraqi Challenge: Le Défi Irakien?……
“The map of the world's main energy suppliers is about to change as Iraq's oil output quadruples over the next 10 years according to new forecasts. Iraq will eventually displace Saudi Arabia as the world's biggest exporter, experts predict, giving Baghdad crucial influence over the future price of oil.……..The outcome of what is being called "the great Iraqi oil rush" will inevitably transform the balance of power between oil-producing states with Iraq the winner, Saudi Arabia and Iran the losers. Dr Leo Drollas, chief economist of the London-based Centre for Global Energy Studies, who has produced the first comprehensive study of the impact of the new Iraqi contracts and the consequences of an accelerated oil rush over the coming years, predicts that "the evolution of Iraq's oil capacity over the next 10 years promises to be the most important issue confronting Saudi Arabia in particular and Opec and the oil industry in general." Saudi Arabia and Iran will both be badly hit as Iraq raises its oil production even if it does not achieve its maximum target. Dr Drollas says: "Saudi Arabia will only meet its revenue needs if Iraq wholly fails to meet its production plans." Given that Opec has more capacity than it needs to meet demand, increased Iraqi output will drive down the price of oil……”
As I have noted here in the past, Iraqi petroleum represents a menacing unknown to its OPEC neighbors, especially Saudi Arabia and Iran. It represents a bigger threat to Saudi Arabia because Iran’s petroleum is not as fully developed or explored, it has been neglected almost as long as Iraq’s. Any Iraqi expansion in production will almost certainly affect the Saudi share more.
Iraq also represents another threat to Saudi Arabia of a kind that it does not pose to Iran: Iraq is an Arab country, potentially the richest Arab country, and still potentially the strongest Arab country militarily. This fear of competition for leadership no doubt worries Saudi leaders, as it should. For this reason, the Saudis may prefer to have an Iraq not fully reintegrated into the Arab system: it will reduce their role as the most important state (by default). For all their media talk of keeping Iraq within the fold, this may not be what they really want. On the other hand, the smaller Persian Gulf states like Kuwait and Qatar have an interest in cultivating a moderate Iraq that will not menace them again, and that can only happen with a democratic Iraq.
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mhg
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