Oil price new weapon for warlike Saddam

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Tuesday 19 September 2000 Oil price new weapon for warlike Saddam By Anton La Guardia, Diplomatic Editor

City: Pound hits 14-year low against dollar

RISING oil prices are giving President Saddam Hussein of Iraq an economic windfall and a burst of bellicose confidence that is raising military tension in the Gulf. He has renewed sabre-rattling accusations that Kuwait is "stealing" crude from oil fields close to the border with Iraq - an echo of claims that preceded his 1990 invasion of Kuwait. He has also increased public criticism of Saudi Arabia and the United Arab Emirates.

The belligerence of Iraq has helped to send crude prices soaring to 10-year highs amid fears that Saddam could disrupt the flow of oil - either by undermining Kuwait's production or by cutting off Iraq's supply. Diplomats said Saddam would also be delighted by recent indications that the embargo on civilian flights to and from Iraq is weakening.

A group of senior Russian oil executives arrived in Baghdad at the weekend on board what was described as a "humanitarian flight". It had been given clearance by the United Nations committee overseeing sanctions against the regime. But the Iraqi news agency quoted Arngolt Bekker, director of a pipeline company, as saying: "The trip is an expression of Russia's rejection of the flight ban illegally imposed on Iraq."

Aeroflot has plans to resume scheduled flights to Baghdad, while Jordan has also signalled a readiness to re-open air links. The United Nations Security Council is divided over the air embargo, with Russia and France saying there are no specific provisions banning civilian flights, while the United States and Britain say they are covered by a ban on trade with Iraq.

A statement last Thursday from Amer Rashid, Iraq's Oil Minister, accusing Kuwait of stealing Iraqi oil, has set nerves on edge. Washington and London had been bracing themselves for the possibility of renewed confrontation with Iraq as America becomes distracted by its presidential election. This time they face an Iraq bolstered by high revenues - through the combined impact of rising production and high crude prices.

As Europe is torn by protests over fuel prices, the fear now is that Iraq will cut off the flow of crude. The West needs Iraqi oil. Iraq accounts for about four per cent of world oil production, and analysts say any reduction in its exports could send prices soaring even higher. British officials said it was unlikely Saddam would wield the oil weapon for fear of losing income.

Still, Arab commentators believe that the rising price of oil is changing the balance of power in the Middle East. The London-based al-Quds newspaper said: "Saddam Hussein must be the happiest of Arab leaders as he watches from the safety of Baghdad the angry protests against high fuel taxes."

http://www.telegraph.co.uk/et?ac=002844489039691&rtmo=Qxk3O9LR&atmo=99999999&pg=/et/00/9/19/wsad19.html

-- Martin Thompson (mthom1927@aol.com), September 18, 2000

Answers

Why is it that the conventional wisdom is always that a break must come in U.S. markets, then spread overseas, when the reverse is not only possible, but probable. It's happened several times in the past with prior oil shocks.

-- Chance (fruitloops@hotmail.com), September 19, 2000.

A friend tells me Texas is full of oil wells that are still capped. I don't understand. Why can't these be uncapped, put back into production, and make up for any Iraqi shorfall?

-- LillyLP (lillyLP@aol.com), September 19, 2000.

Lily: Part of the "capped oil well" story is urban myth -- I've heard the same thing in every energy crisis since 1973 -- and part truth. There ARE a lot of capped oil wells in Texas, OK, Kansas, Colorado, and a lot of other places, because 1) they just plain ran dry. It does happen. Or 2) the production is so low that it costs more to operate them than they produce. Now that oil prices are up again, I hear that some wells are being reopened, but remember these are the ones that produce maybe five to ten barrels a day max, so-called stripper wells, in most cases. It's actually all pretty straightforward, no conspiracy in sight. If it pays, it pumps. If it doesn't, it's capped.

-- Cash (cash@andcarry.com), September 19, 2000.

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