Tuesday, August 19, 2003

Waiting for petro.
The three months since full-blown hostilities ended have been a hard lesson for markets which had hoped to see oil exports from Iraq climb swiftly towards the 2m barrels a day the US promised to deliver by the end of the year. Southern refineries have been plagued by power cuts, the north-south "strategic pipeline" had already been sabotaged, and the weekend's attacks brought exports from the north of the country to a complete standstill. . . .

With anti-coalition guerrillas having discovered economic terrorism, few now believe the 2m barrel objective is achievable. "There are a lot of factors out there supporting the oil price right now, but the overriding question is when Iraqi production comes back," said Razia Khan, of Standard Chartered bank. A prolonged period of $30-a-barrel prices is not the prescription central bankers and finance ministers would have written for the world economy right now.
Here is the General's favorite part:
Hawks in the Bush administration had hoped before the war that oil revenues of up to $15bn a year would offset the $4bn a month cost of keeping troops in Iraq. But far from profiting from the war by seizing a cheap source of energy, Washington is having to throw money at securing Iraq's oil sector, at a time when its finances are already showing a record deficit.
As Mick Jaggar so ably crooned, "You can't always get what you want, but if you try sometimes you might find you get what you need." The neocons particularly, but also the country as a whole, needs this collective reality-inducing slap upside the head. Brent crude is at $28.80/barrel today and moving higher.

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