Herald Tribune, “OPEC chief warns of ‘unlimited’ oil prices if Iran is attacked”
VIENNA: The head of the Organization of Petroleum Exporting Countries warned Thursday that oil prices would see an “unlimited” increase in the case of a military conflict involving Iran, because the group’s members would be unable to make up the lost production.
“We really cannot replace Iran’s production - it’s not feasible to replace it,” Abdalla Salem El-Badri, the OPEC secretary general, said in an interview.
Iran, the second-largest producing country in OPEC, after Saudi Arabia, produces about four million barrels of oil a day out of the daily worldwide production of close to 87 million barrels.
The country has been locked in a lengthy dispute with Western nations over its nuclear ambitions.
In recent weeks, the price of oil has risen higher on speculation that Israel could be preparing to mount an attack on the country’s nuclear facilities. The saber-rattling intensified this week with missile tests by Iran.
That has further rattled oil markets because of concerns that any conflict with Iran could disrupt oil shipments from the Gulf.
“The prices would go unlimited,” Badri said during the interview, referring to the impact of a military conflict. “I can’t give you a number.”
Tehran has insisted that its nuclear program is for purely peaceful purposes.
Badri, a former oil executive who has headed the oil industry in Libya and served as deputy prime minister of that country, called for a peaceful solution, and he hinted that an additional conflict in the Middle East besides the ongoing conflict in Iraq would be severe and long-lasting.
“If something happened there, nobody would be able to solve it,” he said, referring to a war involving Iran.
He said that current geopolitical tensions were among the principal reasons why oil prices were so high. He said that a shortfall in refining capacity and a weak dollar were other factors but reiterated OPEC’s position that speculation on oil markets probably was the most important.
He insisted that reserves of oil were plentiful and that worries about scarcity were misplaced.
Supplies from Russia and Norway and other non-OPEC nations outside the 13-member OPEC would keep growing, helped by technologies like turning gas and coal into liquid fuel and extracting oil from tar sands and shale.
Even so, he also sought to assuage concerns about a supply shock, saying that OPEC members already were investing $160 billion in new production capacity up to 2012.
But he said additional investment in future production capacity could be frozen, potentially sharpening a dispute with consuming nations about whether sufficient steps are being taken to meet demand over the next decade.
Steps taken by the European Union and in the United States to cut dependence on fossil fuels meant that OPEC had no alternative but to take a cautious approach before going ahead with plans to invest up to $540 billion in oil production up to 2020.
“If we don’t see the demand, we are not going to invest,” said Badri, adding that there was real doubt over what amount of money OPEC nations would invest after 2012.
OPEC nations “don’t want to spend their money on something they cannot use,” he said.
OPEC nations contribute about 40 percent of daily worldwide production.
We’re all just so stupid to be so dependent on foreign oil AND to have also allowed George W. Bush to remain in office for two terms:
“I believe President Bush is going to order air strikes (on Iran) before he leaves office”
-Norman Podhoretz (Lyons, 2007).
Bush and his cronies say they want peace and diplomacy, but the problem with the members of Bush administration is that you can’t trust them. You can’t take what they at face value. As former Nixon aide John W. Dean wrote, “George W. Bush and Richard B. Cheney have created the most secretive presidency of my lifetime. Their secrecy is far worse than during Watergate” (quoted in Wittkopf and Jones, 2008, 329).
The administration secretly planned and prepared for war with Iraq without disclosing it to the general public. Planning began in November of 2001 and included upgrading airfields in various Gulf countries, moving supplies to the region and the construction of necessary facilities. By April 2002, the planning and preparation for war was also being hidden from Congress. Bush had instructed General Tommy Franks not to make financial requests through Washington. “Anything you need, you’ll have.” The money would no longer be appropriated through congress. By the end of July 2002, Bush had approved more than thirty projects totaling over $700 million. Congress had no knowledge or involvement (Woodward, 2004, 122).
In December of 2002, Bush and Rumsfeld agreed to start secretly deploying troops into the theatre so as not to attract the attention of the press or the rest of the world. The first deployment order went out on December 6, 2002 and deployments continued every two weeks or so thereafter. Troops were given less than a week’s notice at times. In January 2003, the Bush administration arranged for much of its humanitarian relief to be disguised as general contributions to conceal its war planning from the NGO recipients. Yet, when asked about Iraq, Bush’s favorite response was “I have no war plans on my desk.” At one point or another after the planning began, nearly every member of the administration publicly denied any plans to go to war with Iraq (Woodward, 2004, 129).
A better approach to Iran would be negotiations. While Fareed Zakaria agrees that there is no reason not to use sanctions and embargoes against states such as Iran, he suggests that we also need to “allow a viable way out.” That is to say, we need to negotiate and not merely mandate.
Yes…more negotiations. I take it you mean, just add another “really” to our usual letter from the U.N. that says:
“We would really really appreciate it if you would stop what you are doing. Thanks a bunch! :-)”
Everyone knows how sanctions and negotiations have been SOOO useful thus far. I guess if Obama wins he can go over and beg at the table of the terrorists and nations like Iran…I’m certain that will be infinitely more helpful.
nice anti-bush tirade
more sanctions wont work for the holocaust denier, if he makes a move on destroying Israel, or if Israel thinks Iran is too close, then there could be a conflict
i agree that we need to be self-sufficient when it comes to oil, but until then we have to rely on world trade (especially since the dems are blocking local drilling)
oil needs to be replaced, that doesnt mean we have to give it up until we can find an alternative
im sorry if you find it shocking that this country runs on oil John, but believe me i dont want to rely on the Middle East as much as you