Crude Highest in Year
Compliments Of Oil & Gas International
Analysis:
Crude prices highest in year due to fears of US attack on Iraq
by Thomas L. Bedford
George W. Bush.
Dick Cheney.
Donald Rumsfeld.
(8/27/2002 - OGI: Washington) Concern that the US will ignore the advice from allies and near universal opposition and carry out a pre-emptive attack on Iraq has sent crude oil prices soaring for a second day, to the highest levels they have seen in over a year - an increase of almost 50% just this year. Fears are such an attack will disrupt oil supplies from the Middle East not only from Iraq, but also from countries sympathetic to Iraq or simply outraged by what they see as blatant aggression.
US President George W. Bush appears set on unseating Iraq's President Saddam Hussein and has been painting him as a threat to the world, claiming that he is developing biological, chemical, and even nuclear weapons. Most European, Middle Eastern, Asian, and African governments do not accept this argument and have adamantly opposed any military action to oust Hussein.
Nevertheless, to reinforce his position, Bush has had a parade of his supporters making belligerent speeches tailored to garner mass media attention with "sound bites" aimed at Hussein's overthrow. In previous days, it has been Secretary of Defense Donald Rumsfeld and national security analyst Kenneth M. Pollack beating the drums of war, and now comes Vice President Dick Cheney to posture before the Veterans of Foreign Wars, saying action against Hussein is imperative because Iraq probably possesses weapons of mass destruction and can't be permitted to grow stronger.
Aside from the consternation all this is causing across the globe, it is sending crude prices well beyond the usual price gains even with the war premium that has been carried on benchmark crudes for some time now. Most benchmarks are, in fact bordering on or passing the US$30 per bbl mark, in fact West Texas Intermediate has already exceeded it but has backed down somewhat. October deliveries are just under the $30 price on the New York Mercantile Exchange (NYMEX) and the International Petroleum Exchange (IPE) as well as at other trading centers around the world.
Analysts are now predicting that, if the US attacks Iraq, the price of crude will rise even more precipitously to $40 or even $50 per bbl and there is a very good probability that supplies will be curtailed not only from Iraq, where it is thought the Bush administration may be targeting oilfields, but from other countries as well, not just in the Middle East but around the globe.
Former Secretary of State James Baker, a member of Bush's Republican Party, has cautioned him not to unilaterally attack Iraq and advised that if he can 't get international military support not to go through with the invasion, and Brent Scowcroft, former national security adviser under Bush's father, warned an attack on Iraq would be a disastrous mistake. Yet US forces are massing now on Iraq's perimeters - a giant airbase has been built in Qatar, four brigades are poised near Iraq, and US Special Forces are in Iraqi Kurdistan.
Various sources indicate that Bush is hoping the incessant threat of a US attack will provoke the Iraqi army to a coup against Hussein, but if it doesn't, most believe there will be a major invasion of the country either in October or in April 2003 that will be supported by Israel in which heavy casualties will taken as Hussein uses whatever weapons he has, including any biological or chemical weapons he may actually have. Concurrently, analysts say, OPEC will either cut oil exports to the United States or refuse to increase production until the war ceases, either way causing the price of oil to soar past $50 per bbl throughout 2003 and causing another worldwide economic slowdown that will itself send prices plummeting to about $18 a bbl by mid-2004.
