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 covering a wide variety of subjects, from the nature of the growing terror threat in Northern Africa to China’s crackdown on Tibet and the struggle over immigration reform in the United States. You can follow Jeff on Twitter at @jseldin or on Google Plus.

You May Like

Multimedia Obama, Modi Resolve Nuclear Deal Issues

Leaders find resolution on issues of liability of suppliers to India in event of nuclear accident, US demands to track whereabouts of material supplied to country More

WHO's Late Efforts in Tackling Ebola Highlight Need for Reform

Health experts debate measures to reform agency’s response to global public health emergencies in special one-day session on deadly outbreak More

One Tumultuous Year in Power for CAR's President

As sectarian violence raged across Central African Republic, interim President Catherine Samba-Panza has Herculean task: to end civil war and put country back on right track More

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.
Worldwide Photo Workshops Empower Youthi
X
Julie Taboh
January 23, 2015 11:08 PM
Last September, 20 young adults from South Sudan took part in a National Geographic Photo Camp. They are among hundreds of students from around the world who have learned how to use a camera to tell the stories of the people in their communities through the powerful medium of photography. Three camp participants talked about their experiences recently on a visit to Washington. VOA’s Julie Taboh reports.
Video

Video Worldwide Photo Workshops Empower Youth

Last September, 20 young adults from South Sudan took part in a National Geographic Photo Camp. They are among hundreds of students from around the world who have learned how to use a camera to tell the stories of the people in their communities through the powerful medium of photography. Three camp participants talked about their experiences recently on a visit to Washington. VOA’s Julie Taboh reports.
Video

Video US, Japan Offer Lessons as Eurozone Launches Huge Stimulus

The Euro currency has fallen sharply after the European Central Bank announced a bigger-than-expected $67 billion-a-month quantitative easing program Thursday - commonly seen as a form of printing new money. Henry Ridgwell reports for VOA from London on whether the move might rescue the eurozone economy -- and what lessons have been learned from similar programs around the world.
Video

Video Nigerian Elections Pose Concern of Potential Conflict in 'Middle Belt'

Nigeria’s north-central state of Kaduna has long been the site of fighting between Muslims and Christians as well as between people of different ethnic groups. As the February elections approach, community and religious leaders are making plans they hope will keep the streets calm after results are announced. Chris Stein reports from the state capital, Kaduna.
Video

Video As Viewership Drops, Obama Puts His Message on YouTube

Ratings reports show President Obama’s State of the Union address this week drew the lowest number of viewers for this annual speech in 15 years. White House officials anticipated this, and the president has decided to take a non-traditional approach to getting his message out. VOA White House correspondent Luis Ramirez reports.
Video

Video S. Korean Businesses Want to End Trade Restrictions With North

Business leaders in South Korea are calling for President Park Geun-hye to ease trade restrictions with North Korea that were put in place in 2010 after the sinking of a South Korean warship.Pro-business groups argue that expanding trade and investment is not only good for business, it is also good for long-term regional peace and security. VOA’s Brian Padden reports.
Video

Video US Marching Bands Grow Into a Show of Their Own

The 2014 Super Bowl halftime show was the most-watched in history - attracting an estimated 115 million viewers. That event featured pop star Bruno Mars. But the halftime show tradition started with marching bands, which still dominate the entertainment at U.S. high school and college American football games. But as Enming Liu reports in this story narrated by Adrianna Zhang, marching bands have grown into a show of their own.
Video

Video Secular, Religious Kurds Face Off in Southeast Turkey

Turkey’s predominantly Kurdish southeast has been rocked by violence between religious and secular Kurds. Dorian Jones reports on the reasons behind the stand-off from the region's main city of Diyarbakir, which suffered the bloodiest fighting.
Video

Video Kenya: Misuse of Antibiotics Leading to Resistance by Immune System

In Kenya, the rise of drug resistant bacteria could reverse the gains made by medical science over diseases that were once treatable. Kenyans could be at risk of fatalities as a result if the power in antibiotics is not preserved. Lenny Ruvaga has more on the story from Nairobi.
Video

Video Solar-Powered Plane Getting Ready to Circumnavigate Globe

Pilots of the solar plane that already set records flying without a drop of fuel are close to making their first attempt to fly the craft around the globe. They plan to do it in 25 flying days over a five month period. VOA’s George Putic reports.
Video

Video How Experts Decide Ethiopia Has the Best Coffee

Ethiopia’s coffee has been ranked as the best in the world by an international group of coffee connoisseurs. Not surprisingly, coffee is a top export for the country. But at home it is a source of pride. Marthe van der Wolf in Addis Ababa decided to find out what makes the bean and brew so special and how experts make their determinations.
Video

Video Yazidi Refugees at Center of Political Fight Between Turkey, Kurds

The treatment of thousands of Yazidis refugees who fled to Turkey to escape attacks by Islamic State militants has become the center of a dispute between the Turkish government and the country's pro-Kurdish movement. VOA's Dorian Jones reports.
Video

Video World’s Richest 1% Forecast to Own More Than Half of Global Wealth

The combined wealth of the world's richest 1 percent will overtake that of the remaining 99 percent at some point in 2016, according to the anti-poverty charity Oxfam. Campaigners are demanding that policymakers take action to address the widening gap between the ‘haves’ and the ‘have nots’, as Henry Ridgwell reports for VOA from London.

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

All About America

AppleAndroid