In Theory: World may be moving towards a new oil war

With the abrupt and rapid fall of Baghdad that has come contrary to the expectations of military experts and political analysts, including the Pentagon and White House experts, the war against Iraq has practically come to an end if we exclude some pockets of resistance that usually end a while after the end of military operations.

Soon after the fall of Baghdad, U.S. Secretary of State Colin Powell declared that Saddam Hussain's fate was no longer the core of concern. The former President would be prosecuted like any war criminal, as would the remaining members of the former Iraqi leadership.

Powell's remarks coincided with the looting operations and state of anarchy that prevailed in the Iraqi cities after the total security disorder that accompanied the fall of the regime. Most government ministries and state institutions were set alight under the sight of the U.S. and British troops that could have at least provided protection for such departments and organisations.

Strangely enough, the only government institution that was given protection was the Ministry of Oil and its affiliated companies. In addition, the oil-fields were secured and provided with protection on the first day of the military operations. Throughout the three weeks of the devastating war that was characterised by fierce air bombardment of the Iraqi cities, the oil pumps have remained operating at their normal capacity with millions of barrels of crude oil pumped from Iraq's northern oil fields in Kirkuk to the Turkish ports.

Southern fields

The southern oil-fields were suspended not because of damages to the oil pumps and fields but because of the military clashes around the Ports of Umm Qasr and Al Baker in the far south.

In practice, the war has come to an end. However, there is a war of oil and economic nature awaiting Iraq and all Arab and developing oil producing and exporting countries, especially the Opec countries. Through Iraq, the United States may be considered from now on to become a full member of the Organisation of Oil Exporting Countries (Opec). The Iraqi oil output that can directly influence oil supplies and prices will be decided from now on according to certain guidelines with the participation of the United States. U.S. Vice President Dick Cheney decided on the second day after the fall of Baghdad to raise Iraq's oil output to reach three million barrels per day (bpd).

More funds

If expectations with respect to the U.S. policies for pumping more funds to increase Iraq's crude oil output to eight million bpd over the next five years are true, the world will be on the verge of a new oil war that is totally different from previous oil crisis and wars, including the oil boom that occurred in the mid-1970s.

Previously oil crisis arose from the attempts of the oil producing countries to protect their interests through Opec while the oil consumer nations sought through the International Energy Agency to obtain oil at cheaper prices. It is clear that this equation has changed completely in the post Third Gulf War era.

Being the biggest oil consumer in the world, the United States will have the initiative as the most influential nation that affects the decisions of the second country with the biggest oil reserves in the world.

Against this background of this new balance in the world oil industry, prices can fall to very low levels which could force the remaining oil producing and exporting countries, especially the Opec member states, to reconsider their calculations and plans so as to protect their interests. This is particularly relevant given that oil revenues constitute 80-90 per cent of the annual budgets of such countries.

In the next oil war, there will be no Cruise and Tomahawk missiles and enriched uranium bombs falling, but the economies of many countries especially the oil producing nations with high population density will face consequences the seriousness of which cannot be minimised.