At present, OPEC+, the Organization of Petroleum
Exporting Countries plus Russia, resembles an unstable nucleus of a radioactive
atom; judging by what we hear on political front, there seems to be uneasy compliance
with self-imposed quota-limits with murmurs of cacophonies.
Although crude price dipped slightly over the past
two days, it is still high and countries that desperately need petro cash to
prop up under-performing economies are deprived of a once-in-a decade
opportunity to cash in on the fortune.
These nations, exactly like sub-atomic particles in
an unstable nucleus, do make subtle manoeuvres in seeking unknown freedom,
while securing their positions within where they belong to – the crude oil
cartel, in this case.
The current predicament of Iraq is a case in point.
Bloomberg reported this week that export of crude oil
by Iraq in the first half of February was higher than what was permitted by the
loose-agreement by the OPEC+.
If officially confirmed, not only did Iraq break the
convention, but also went back on the earlier pledge to the OPEC+, to cut down
on production in order to compensate for the overproduction in the past.
The recent OPEC+ agreements regarding the
self-imposed production cuts seem to be having a few loopholes for member
nations to slip through.
The disgruntled members in the organization, for
example, can argue – with a reason –
that export is not synonymous with production and come up with their own
equation, exports = stockpiles + permitted production by the OPEC+ agreement; the
second part of the equation does not come within the purview of the production
cuts; a classic case of small print at play!
Unlike most of the OPEC+ members, Iraq – and Nigeria
for that matter – has to deal with a range of critical socio-economic issues
internally, some of which could potentially threat the very existence of the
federation.
In addition, it is sandwiched between two regional
power players along the religious lines – Shia dominated Iran and Sunni
dominated Saudi Arabia; moreover, the federal government has very little
control over the crude oil production – or overproduction – by its
semi-autonomous Kurdish region.
The widening gap between the Sunni and Shia
communities in Iraq does not help things either for the beleaguered federal
government.
Since the West has all but abandoned its perpetual
military presence in Iraq in the presence of regular hostile acts by Shia
militants, the atmosphere for much-needed investments is not conducive at
present, despite the government’s PR drive to say otherwise.
If the two main communities based on religious affiliations
do not bridge the gap, security analysts fear that Iraq will be back where it
was before 2017 with the ISIS making a comeback; in this context, the Iraqi government
cannot afford let the Sunni community feel that they have been marginalized - once again.
According to the estimates based in 2019 by the OPEC,
Iraq has the 5th largest oil reserves in the world. If Iraq just
consumes crude oil without exporting them, which is very unlikely, these
reserves will last over 147 years; if it carries on exporting at the current
rate, the reserves will still last over 87 years. In short, unlike most
countries on the planet, the Iraqis will not see an energy crisis in foreseeable
future.
It’s sad to see the way Iraqis still suffer and have
to demonstrate in order to win basic rights for their existence despite the
above enviable numbers.
Iraq needs a leadership with a clear vision to turn
around the current situation in order to reap the full benefits of the black
gold that it’s blessed with for decades to come.
