Watching the World: Iraq’s war over oil

Jan. 9, 2006
The administration of US President George W. Bush has always denied that the war in Iraq was over oil.

The administration of US President George W. Bush has always denied that the war in Iraq was over oil. That may be, but insurgents have clearly made oil the focus of their war, and they’re winning.

Just last week, Iraqi interior ministry sources said Rahim Ali Sudani, a director-general at the oil ministry, and his son, were killed in a drive-by attack on their car.

It is not clear, even now, who carried out the attack, nor is anyone ever likely to find out. That’s the nature of the insurgency: Masked men appear, attack, and melt away.

But what is clear is that the insurgents will stop at nothing-even to the point of killing children-in their ruthless efforts to bring the country’s oil industry to its knees.

Two-pronged attack

In their efforts, the insurgents are focusing on both sides of the Iraqi oil industry: exports and domestic supplies. In both cases, the aim is to hobble the economy and unleash popular unrest to the point of civil war.

Certainly, their efforts against exports are paying dividends as, on Jan. 3, it was announced that Iraq’s crude oil exports were 4.7% lower in 2005 than in 2004.

Altogether, some 508 million bbl were exported in 2005, or 1.41 million b/d: 496 million bbl from southern oil fields and just 12 million bbl through the Turkish port of Ceyhan.

Bad weather, power cuts, technical problems, and lack of investment in the oil fields hampered southern exports, but in the north, persistent sabotage to oil pipelines and facilities did the job.

Iraq’s exports were well under the 2005 target of 1.6-1.7 million b/d set by the Iraqi government. More to the point, the 2005 export figures are far under the 2.2 million b/d Iraq exported before the war began.

Civil unrest

That hampers the country’s economic revival and can lead to civil unrest as happened last week in Al-Nasiriyah, where clashes broke out between civilians protesting against unemployment and Iraqi police.

The fury of ordinary Iraqis also flares when they face difficulties in obtaining supplies of fuel for their cars-and that in the country with enormous reserves of crude oil.

But that’s part of the insurgents’ plan, too, as shown by their efforts in mid-December to undermine production at the nation’s largest refinery at Baiji by intimidating tanker drivers.

As one observer noted, closure of the Baiji refinery will impact Iraq and Baghdad in particular, which has been feeling the pinch from a shortage of fuel, much of which is already imported because of the country’s diminished refining capacity.

More ominously, he noted, a number of demonstrations have already been held around Iraq because of a Dec. 19 increase in gasoline prices. Such demonstrations add fuel to the insurgent flames.

That’s how the war over oil in Iraq is tending today. As for tomorrow, well, that’s just too far off to judge.