News / Middle East

    Mideast Wary Over Iraq-Iran Plan to Unite in Oil Market

    Mideast Is Wary Over Iraq, Iran Plan to Unite in Oil Marketi
    X
    February 05, 2014 9:03 PM
    Iraq is planning to triple its oil producing capacity by 2020, hoping to leverage its natural resources in a power arrangement with Iran that could challenge Saudi Arabia’s domination of the world oil market. VOA's Jeff Seldin reports.
    Iraq is planning to triple its oil-producing capacity by 2020, hoping to leverage its natural resources in a power arrangement with Iran that could challenge Saudi Arabia’s domination of the world oil market.
     
    So far, most of the talk has come from Iraqi officials who have been expressing confidence the country can again become a major regional player despite an upsurge in violence that killed 1,000 people last month, and nearly 9,000 last year.

    In London last week, Iraq's Deputy Prime Minister for Energy Hussain al-Shahristani announced that Iraq plans to triple its oil output to nine million barrels per day by the end of the decade. And he hinted that is just part of Iraq’s plans.

    "Iran has been in touch with us," al-Shahristani told the London Telegraph. "They want to share our contracts model and experience."

    OPEC control

    Oil industry and Middle East experts believe the comments were meant to send a message to OPEC [Organization of Petroleum Exporting Countries], which oversees about 70 percent of the world’s proven oil reserves and about 40 percent of the total world oil supply .

    “The game here is for control of the OPEC cartel,” said Simon Henderson at the Washington Institute for near East Policy. “Baghdad and Tehran get on very well together and they are vying against Saudi Arabia, which is the other major power in the Gulf. The energy side of it is that oil and gas is the main component, the main weapon which these countries can use against each other.”

    Officials with OPEC have downplayed the impact of increased production from Iraq and Iran, which is hoping to use progress in nuclear talks with world powers to get sanctions lifted on its oil industry.

    Long-time dominant OPEC member Saudi Arabia is not yet likely to be rattled.

    “The Saudis are very experienced in oil policy, and usually from their own point of view, call it right,” said Henderson. “They are not embarrassed by anybody else’s antics in the oil market.”  

    Saudi concern

    The math is worrying for the Saudis, however, according to some analysts.

    The latest data from the United States Energy Information Administration shows that Saudi Arabia has a proven oil reserve of about 267 billion barrels, far ahead of Iran’s 151 billion barrels worth of reserves and Iraq’s 143 billion barrels of proven reserves. But combined, Iran and Iraq would have the capacity to possibly shift the balance of power.

    It is cause for concern, given the Saudis and the Iranians have already been facing off in a proxy war in Syria -- Saudi Arabia helping to arm rebels groups while Iran has backed the Syrian regime, helping keep it in power.

    "The cooperation between Iran and Iraq is more than just oil because both governments are Shi'ite-dominated governments, and they share some strategic interests,” said Nader Habibi at at Brandeis University's Crown Center for Middle East Studies.

    “Obviously, Saudi Arabia and the other Sunni governments are concerned. We have seen that the uprising in Syria has not been successful now and Iran and its allies have been able to support the Assad regime," said Habibi. "So I am sure other countries in the region are closely watching the level of cooperation between Iran and Iraq.”

    For now, though, experts like Habibi expect Iran to keep the focus on oil.

    "Especially because Iran has economic problems and the government is more focused on trying to resolve those issues and improve the economic conditions,” he said. “And that requires a more moderate foreign policy."

    Iran's leaders have said little publicly so far about cooperating with Iraq on oil. International sanctions have taken a toll on Iran’s production, which the U.S. says has fallen to about 1 million barrels per day.

    Iran's ambitions

    Iranian officials have reached out to Russia about potential oil deals, and have expressed hopes that if sanctions are lifted, they could ramp up production to as much as four million barrels per day.  

    Iraq’s comments about working with Tehran, however, have gotten notice in Washington, which has been supportive of Iraq’s desire to boost oil output.

    "As we've made very clear, not just to Iraq, but to any country in the global community as a matter of policy, engaging with Iran's energy sector runs risks including violating and running afoul of U.S. and international sanctions," said U.S. State Department spokeswoman Jen Psaki.

    Oil industry experts say while Iraq can certainly boost oil production, it is far from certain Baghdad can triple its output by 2020.

    The Washington Institute’s Henderson also cautioned that for all the noise, Iraq and Iran will want to be careful about just how far they push Saudi Arabia and other OPEC members by boosting production.

    “The big question is, to what extent, will countries like Iraq, be able to maintain some sort of leverage on the price of oil so that the price doesn’t plummet and all their efforts to produce a greater amount of oil lead to roughly the same revenues or frankly even less revenue,” he said.

    Jeff Seldin

    Jeff works out of VOA’s Washington headquarters and is national security correspondent. You can follow Jeff on Twitter at @jseldin or on Google Plus.

    You May Like

    US Internet Giants, EU Reach Deal to Combat Online Hate Speech

    Facebook, Twitter, Google and Microsoft commit to ‘quickly and efficiently’ act to clamp down on use of social media to incite violence, terror

    Tunisia’s Ennahda Party Begins a New Political Chapter

    Party now moves to separate its political and religious activities; change described by party members as pragmatic response to political and economic challenges facing Tunisia today

    Virtual Reality Fine-tuned at Asia Tech Show

    Microchip designers hope to improve resolution for users of systems that can turn your bedroom into the ocean floor

    This forum has been closed.
    Comment Sorting
    Comments
         
    by: Bakhtiar from: Iraq
    February 08, 2014 11:17 AM
    Throughout Iraq history oil is a major curse this saying has been a message of some political analysts . But i believe denying the Kurdish legitimate cause for practicing their right of self-determination is major factor of instability the region. What Mr.Jeff referred to in the article , is on the one hand gulf states wants to keep the balance of power in the region for their interest, on the other hand they want to use oil revenue in keeping status quo in the interest of dominant ethnicity .

    by: MikeBarnett from: USA
    February 05, 2014 3:19 PM
    This deal would benefit the US, EU, China, Japan, and all other oil consumers by reducing oil prices significantly below $100 per barrel. However, there is a Sunni-Shia civil war in Iraq, and the US has sanctions on Iran over WMDs that don't and won't exist to make Israel and its US supporters happy. Therefore, the deal probably won't work as planned, so Russia will continue to develop the world's biggest oil and gas station in Siberia to serve China's growing industrial, commercial, and military needs.
    In Response

    by: Nafji Fatina from: USA
    March 03, 2014 4:53 PM
    After WWII tag of war still going on with Two superpowers , now other power is on broad. Same thing happen when WWII started when third power (Germany) came in power . Shia-Sunni, protestant - catholic are the source of colonialism, but super power don't like third power , they will still divide the world into east west north south population of world will suffer and super power will enjoy the chess game.

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Tech Startups Showcase Wares at Amsterdam Conferencei
    X
    Serginho Roosblad
    May 30, 2016 5:11 PM
    More than 20,000 tech enthusiasts, entrepreneurs and lovers of digital technology came together in Amsterdam recently at the Next Web Conference to discuss the latest developments in digital technology, look to the future and, of course, to connect. In recent years, there has been an explosion of so-called startup businesses that have created devices and applications that have changed the way we live; but, as Serginho Roosblad reports for VOA, there are pitfalls for such startups as well.
    Video

    Video Tech Startups Showcase Wares at Amsterdam Conference

    More than 20,000 tech enthusiasts, entrepreneurs and lovers of digital technology came together in Amsterdam recently at the Next Web Conference to discuss the latest developments in digital technology, look to the future and, of course, to connect. In recent years, there has been an explosion of so-called startup businesses that have created devices and applications that have changed the way we live; but, as Serginho Roosblad reports for VOA, there are pitfalls for such startups as well.
    Video

    Video US Military's Fallen Honored With Flags

    Memorial Day is a long weekend for most Americans. For some, it is the unofficial start of summer -- local swimming pools open and outdoor grilling season begins. But Memorial Day remains true to its origins -- a day to remember the U.S. military's fallen.
    Video

    Video Rolling Thunder Rolls Into Washington

    The Rolling Thunder caravan of motorcycles rolled into Washington Sunday, to support the U.S. military on the country's Memorial Day weekend
    Video

    Video A New Reading Program Pairs Kids with Dogs

    Dogs, it is said, are man's best friend. What some researchers have discovered is that they can also be a friend to a struggling reader. A group called Intermountain Therapy Animals trains dogs to help all kinds of kids with reading problems — from those with special needs to those for whom English is a second language. Faiza Elmasry has more on the New York chapter of R.E.A.D., or Reading Education Assistance Dogs, in this piece narrated by Faith Lapidus.
    Video

    Video Fan Base Grows for Fictional Wyoming Sheriff Longmire

    Around the world, the most enduring symbol of the U.S. is that of the cowboy. A very small percentage of Americans live in Western rural areas, and fewer still are cowboys. But the fascination with the American West is kept alive by such cultural offerings as “Longmire,” a series of books and TV episodes about a fictional Wyoming sheriff. VOA’s Greg Flakus recently spoke with Longmire’s creator, Craig Johnson, and filed this report from Houston.
    Video

    Video Chinese-Americans Heart Trump, Bucking National Trend

    A new study conducted by three Asian-American organizations shows there are three times as many Democrats as there are Republicans among Asian-American voters, and they favor Hillary Clinton over Donald Trump. But one group, called Chinese-Americans For Trump, is going against the tide and strongly supports the business tycoon. VOA’s Elizabeth Lee caught up with them at a Trump rally and reports from Anaheim, California.
    Video

    Video Reactions to Trump's Success Polarized Abroad

    What seemed impossible less than a year ago is now almost a certainty. New York real estate mogul Donald Trump has won the number of delegates needed to secure the Republican presidential nomination. The prospect has sparked as much controversy abroad as it has in the United States. Zlatica Hoke has more.
    Video

    Video Drawings by Children in Hiroshima Show Hope and Peace

    On Friday, President Barack Obama will visit Hiroshima, Japan, the first American president to do so while in office. In August 1945, the United States dropped an atomic bomb on the city to force Japan's surrender in World War II. Although their city lay in ruins, some Hiroshima schoolchildren drew pictures of hope and peace. The former students and their drawings are now part of a documentary called “Pictures from a Hiroshima Schoolyard.” VOA's Deborah Block has the story.
    Video

    Video Vietnamese Rapper Performs for Obama

    A prominent young Vietnamese artist told President Obama said she faced roadblocks as a woman rapper, and asked the president about government support for the arts. He asked her to rap, and he even offered to provide a base beat for her. Watch what happened.
    Video

    Video Roots Run Deep for Tunisia's Dwindling Jewish Community

    This week, hundreds of Jewish pilgrims are defying terrorist threats to celebrate an ancient religious festival on the Tunisian island of Djerba. The festivities cast a spotlight on North Africa's once-vibrant Jewish population that has all but died out in recent decades. Despite rising threats of militant Islam and the country's battered economy, one of the Arab world's last Jewish communities is staying put and nurturing a new generation. VOA’s Lisa Bryant reports.

    Special Report

    Adrift The Invisible African Diaspora