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THE ROVING EYE
Saudi Arabia next
in line?
By Pepe Escobar
DUBAI - Gulf oil experts are seriously worried
about an American attack against Iraq. Oil prices are
nowadays settled at around US$25 a barrel - an
overvaluation considering the current global economic
slump. The contrast could not be more striking when the
high price of oil is compared to the very low price of
raw materials such as copper, nickel and aluminum, which
are all victims of the global contraction in industrial
demand.
Gulf analysts consider that the
fundamentals of the oil market are good news as far as
consumer countries are concerned. There is an
accumulation of positive factors: new oil fields now
discharging their production, cheaper cargo freight, the
end of the civil war in Angola, intense internal debate
regarding production quotas at the Organization of
Petroleum Exporting Countries (OPEC), and a diminished
role for Iraq (second largest reserves in the world, but
producing only around 1.5 million barrels a day because
of United Nations restrictions). Analysts conclude that
if the price of a barrel of oil remains high it is
because the markets have integrated the risk of an
attack against Iraq.
Immediately after
September 11, North Sea crude shot up to $30.5 a barrel. A
few months later it was down to around $17 to $18. In
the second quarter of 2002 it started to rise again.
The risk is above all a political risk - because Iraq is
a major component of OPEC, and nobody at the moment
can seriously envisage OPEC's reaction to an
American attack. There are all sorts of scenarios flying about
in the Gulf: A barrel of oil could go for $6, or it
could go for $60. George W Bush wakes up every day to
meditate on the fact that during the Gulf War conducted by
his father more than a decade ago the price of a barrel
shot up to $35. This precipitated a recession that
ultimately cost Bush senior his reelection.
Saddam
Hussein's regime counts on the strong possibility of
support from OPEC's sister organization of Arab oil
producers. But Gulf analysts are not working on the
scenario of a possible 1973-style oil embargo. Oil
experts in London, on the other hand, are more prone to
the catastrophe syndrome: some expect an Iraqi attack on
oil fields in Saudi Arabia and Kuwait. They point as
evidence to the recent personal warning of Jordan's King
Abdullah to British premier Tony Blair: there could be a
serious menace to vast British oil interests in the
region if Blair blindly follows Bush.
The
International Monetary Fund's giant $30 billion
pre-emptive loan to Brazil may have controlled the Latin
American financial crisis for the moment, but if the
crisis persists nothing could prevent oil producers such
as Mexico and Venezuela from ignoring the current
OPEC-imposed production quotas.
Only one player
is bound to gain from an American attack on Iraq. Russia
is the world's second largest oil producer, immediately
behind Saudi Arabia. Gulf analysts acknowledge that at
the moment that nobody can tell how Russia would react:
cooperation with OPEC, or the pursuit of its own goals
to further enlarge its share of the world market.
A Gulf analyst says that in the event of war,
"OPEC will be paralyzed. Arab solidarity will dictate
that Saudi Arabia, the Gulf Cooperation Council and
Algeria will refuse to raise their production. The price
could easily reach $40 a barrel. The Bush administration
will be in trouble."
The US imports half of its
consumption of oil. It is desperately trying to get rid
of its dependence on Saudi Arabia and Venezuela by
importing more from Africa and by an ever closer
cooperation with Russia. America's hawks and the oil
lobby consider control of Iraq absolutely essential to
finish off American dependence on Saudi oil. No amount
of spinning will disguise that this is the real reason for
the war.
But at the same time this is the main
reason for the Saudi opposition to an attack. The American
officials most hawkish on Iraq are by no coincidence
the most hawkish on Saudi Arabia. Leaks to the press,
such as the recent obscure Rand Corporation analyst
report denouncing Saudi Arabia are nothing more than a
smokescreen to disguise what really drives the Americans
crazy: the increasingly good relations between Saudi
Arabia and Iran, and Prince Abdullah's interest in
really finding a solution for the Palestinian tragedy.
Gulf diplomatic sources confirm that the Saudi
royal family has been closely monitoring the mood of the
Arab street regarding Ariel Sharon's devastating
"policies" in Palestine. The Arab street is undeniably
silent. So the Saudi family is not worried about a
violent popular reaction in the event of an invasion of
Iraq. But its more conservative elements definitely
worry about the transformation of Iraq into an American
base. Iraq is potentially richer than Egypt, and it is
invulnerable to Wahhabi proselytizing. Saudis believe
that in the long run, with the de facto annexation of
Iraq as a client regime, America would inevitably turn
against Saudi Arabia.
(©2002 Asia Times Online
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