Analysis
By Andrew Walker
BBC Economics correspondent
BBC
3/14/2003 Oil is the major
objective for the United States in seeking to occupy Iraq, according to the
former Saudi Arabian Petroleum Minister Sheikh Zaki Yamani. Sheikh Yamani, who
was the leading figure in oil producers' cartel Opec for 25 years, gave his
assessment of the push for regime change in a BBC interview. He said the US is
aiming to secure its oil supplies. In his view, the US wants to reduce its
dependence on oil from the Gulf, and from Saudi Arabia in particular. Sheikh Yamani said
the US had wanted to do this very quickly after 11 September 2001. He said the US
accused Saudi Arabia of being the main source of terrorist activities, backing
them financially and ideologically. Long-standing
ambition It is certainly
true that most of those who carried out the attacks were Saudi nationals. For the US, he said, the real answer is to
have Iraqi crude. Iraq
could quadruple its current level of oil production - taking it to eight
million barrels a day - by the end of the decade, he said. And much of it
could be exported via the Eastern Mediterranean Sea, ending US dependence on
oil passing through the Strait of Hormuz - a narrow waterway leading out of the
Gulf. Seven years or so
ago, he saw a letter addressed to ex-President Clinton by a group of
politicians advising him to attack Iraq, occupy the country and operate the
oilfields. Those who signed
the letter are now in power - including Vice-President Richard Cheney,
Secretary of Defense Donald Rumsfeld, his deputy Paul Wolfowitz and Deputy
Secretary of State Richard Armitage. Opec a casualty?
However, Sheikh
Yamani said, victory against Iraq could have one outcome the US does not want -
the end of Opec. If
there is a stable political future for Iraq then the price of oil will start
coming down. He believes that
with more Iraqi oil flooding the market, Opec members would fight among
themselves as some try to increase their production too. However, Saudi
Arabia would shoulder the burden of maintaining price control by reducing its
production, he said. But one day the
Saudis would not be able to do this any more, "and that's the end of
Opec", he said. That is definitely
not the outcome the US wants to see. US faces pain
too US interests would
not be served by a very low price. A number of US
states are oil producers, and a low price of oil these states would hit them
hard, he said. When the price of
oil collapsed in 1986, George Bush senior - then US Vice President - asked
Saudi Arabia to raise the price of oil, he recalled. "America does
not want a very low price of oil, that is obvious," said Sheikh Yamani. This negative view
of Opec's prospects - assuming a successful war for the US - is in striking
contrast to that of mainstream energy forecasters, who predict the cartel's
market share would rise. Stark warning The key difference
between Sheikh Yamani's outlook and theirs is that he thinks technology
"is against oil producers". "It is
reducing the cost of discovery, the cost of development and the cost of
production." The result, he
argued, is likely to be more output from Russia, the Caspian Sea and West
Africa. Technology is also
cutting the consumption of oil. It adds up to bleak outlook If the war goes
badly for the US, then oil prices - in the near future at least - could hit the
upward path. If Saddam Hussein
sets fire to his oilfields, attacks neighbouring Kuwait, Saudi Arabia and Iran
or uses biological weapons on them, the world will see high oil prices -
"something very disturbing", the Sheik said. And even the low
oil price scenario could lead to political instability in oil producing
countries that may rebound against the West and oil consuming countries. "You are
playing with fire," he warned. Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/2851723.stm
Published: 2003/03/14 18:55:28
© BBC MMIII