Monday, May 26, 2003

Thamir Ghadhban, interim head of the Iraqi Oil Ministry, reports that Iraqi people will control Iraqi oil. One has to wonder what Mr. Ghadhban's definition of "control" is. Iraq engineers and technicians, of course. Oil funds channeled into a development fund? Certainly. Iraqi political control? Please.

The buzz that Iraq will leave OPEC is ongoing, although Ghadhban denies it. At the same time, he says Iraq may pump without an OPEC quota -- thus formally in the organization but not bound by it! OPEC meets again June 11, but Iraq has no delegation to send. In fact, there is no Iraqi government of any kind to send a delegation. The goal seems to be 1.4 million barrels a day by mid-June; before the 1990 invasion of Kuwait, Iraq was pumping 3.5 million barrels per day.

There are lots of opportunities for Big Oil to invest in Iraqi and grab a piece of the pie. Surely the Iraqis in some nebulous form will have the remaining pieces, but at what price? OPEC likes $22-$28/barrel. We can be sure the Bush administration would like to push prices below that OPEC floor, probably close to the longterm trend price of $15/barrel, and Iraq is the means to do so. Iraqi "control" under US oversight in no oxymoron.

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