An oil economics specialist, Mamdouh Salameh, who advises the World Bank and the UN Industrial Development Organisation, contends that oil prices would be at less than 1/3 of their current level had the US not invaded iraq.
We’ve noted before that Iraqi reserves somehow gets overlooked, which is odd. Iraq’s production has fallen further than Saudi Arabia’s has, but that fact is not often mentioned in polite company.
Iraq is somewhere between number one and number three in total reserves, depending on whom you believe. The Iraqis claim that new exploration brings the country proven reserves to 350 billion barrels, which would put it ahead of Saudi Arabia’s 284 billion barrels. This contention, as convenient as it sounds, might well be true because Iraq is underexplored.
Now even if Iraq does have this much oil, it would take quite some time to develop it. Iraq’s oil industry suffered more than a decade of underinvestment during the embargo, and the decrepit infrastructure has been subject to attacks.
Note that Salameh does not consider the possibility that reserves may be higher than previously thought; he simply goes back to status quo ante.
Mamdouh Salameh believes the oil price would now be no more than $US40 a barrel, less than a third of the current price, if not for the Iraq war.
An oil economist adviser to the World Bank and the UN Industrial Development Organisation, Dr Salameh says that among the world’s biggest oil producers, Iraq alone has enough reserves to increase flow substantially. Production in eight others – the United States, Canada, Iran, Indonesia, Russia, Britain, Norway and Mexico – has peaked, he says, while China and Saudia Arabia, the remaining two, are nearing the point of decline. Before the war, Saddam Hussein’s regime pumped 3.5 million barrels of oil a day, but this has fallen to just 2 million barrels.
Salameh told a British parliamentary committee last month that Iraq had offered the US a deal, three years before the war, that would have opened 10 new giant oil fields on “generous” terms, in return for lifting sanctions. “This would certainly have prevented the steep rise of the oil price,” he said. “But the US had a different idea. It planned to occupy Iraq and annex its oil.”