The oil price disaster is a alarm that terrifies the Iraqis
The oil price disaster is a alarm that terrifies the Iraqis
The market turmoil comes after the collapse of the oil alliance between OPEC and Russia a few days ago, where the Organization of Petroleum Exporting Countries, led by Saudi Arabia, had proposed to Russia a significant reduction in production after daily oil production, with the aim of stopping the drop in oil prices following the decline in demand Global, especially from China with the spread of the Corona virus, but Russia rejected the proposal and the two parties did not reach an agreement and the failure of the meeting between them led to a shock in the oil industry, and analysts said that the Kingdom reduced the prices of its official sale for the month of April by 6 dollars to 8 dollars, in An attempt to restore its market share And increase the pressure on Russia.
As the price of oil in the United States of America decreased by 27%, to its lowest level in 4 years, to a price of $ 30 a barrel, Saudi Arabia is flooding the market with crude oil in an attempt to regain its market share, and crude oil was recently trading at a rate of less than 22% As the price of a barrel was less than $ 32, according to the data, oil contracts are heading towards their worst day since 1991.
The repercussions of low oil prices on Iraq: The
Iraqi economy will strike a strong blow, especially as it is not ready for this war, especially with internal problems, street turmoil and the government crisis, in addition to the repercussions of Corona, which puts the country on the brink of the abyss, as Iraq relies on oil by more than 95% in Its resources and economy.
To make matters worse, Iraq originally sells its oil at a rate less than the global price basket by about $ 7, meaning that the sale price will not exceed $ 18, in addition to that, Iraq has to pay the dues of licensing tour companies that register their dues in all cases, and this is perhaps According to our estimates, it is about $ 7 per barrel.
Returning to the budget of Iraq for the year 2020, we find that the estimated deficit is about 50 trillion Iraqi dinars against the price of a barrel of estimated oil at 56 dollars, and we can imagine how much the deficit will reach in the event of low oil prices of about 100 trillion Iraqi dinars.
The problem of the Iraqi economy can be summed up as a rentier economy with distinction by almost totally adopting the sale of oil and harnessing its imports from the dollar to pay the salaries of six million employees and retirees, and the remainder distributed as budgets for ministries and service departments, and oil experts criticized the current Iraqi oil policy, and the licensing rounds that incurred and incurred the economy The Iraqi more collapse, especially the marketing policy and setting prices.
Add to that, during the past years, the continuous currency auction depletion of hard currency received from the sale of oil was one of the most important elements of the Iraqi economy’s necrosis due to the volume of money that fled abroad (money laundering) under the cover of importing poor-quality consumer goods that contributed significantly to hitting The Iraqi industry and its complete cessation, which is able to compete, and instead of using that money received from exporting oil to strengthen the internal Iraqi economy, the Authority has adopted ways that are said to be sabotage to all kinds of economic activities, which has made the country’s trade balance with the countries of the atmosphere I see that the world is almost zero on the part of Iraq, as Iraq has turned into an open market for all kinds of bad and cheap goods that are under its coverage hundreds of billions of dollars of Iraqi oil have escaped.
Iraq clearly lacks an independent oil policy, and it did not take its influential position as a large and active member of OPEC, but rather that it remains according to the policies and interests of regional oil states, and this is unfortunately due to the absence of national oil competencies operating in the marketing sector, and that the approved oil company. Sumo “is still managed by improvised policy, and does not have a clear investment strategy, no future plans, and no country in the world works with this dependency.
And whoever represents Iraq in this field were neither specialists nor experts in managing the oil policy externally, and the evidence is that Iraq has not set its own price policy, and that it depends on pricing policies carried out by Saudi Arabia, as documents and bulletins issued show, so Iraq is losing a lot of its capabilities Influential in the global oil markets, which must take into account the internal and productive conditions of Iraq, and not rely on the Saudi price bulletins that are issued, to then determine the oil prices, without looking at the big difference between Saudi Aramco, which is considered one of the giants of the international oil companies, And owns Vision has its own strategy, while Iraq is still suffering from the absence of any real oil strategy with that second country at the level of production in the OPEC.
The experts stressed that there are no clear treatments at the Iraqi Ministry of Oil, nor SOMO in this significant decline in oil prices in global markets, and that the absence of the minister from meetings of this importance constitutes a big question mark, especially since the character who represented Iraq was not qualified to lead negotiations with countries Major produced.
From the point of view of researchers at the Links Center for Research and Strategic Studies, immediate solutions that can work in such an embarrassing circumstance, the development of a national emergency government, the imposition of state authority, centralization of decision and cooperation with great powers to cooperate with Interpol in order to recover stolen money and hold the thief accountable, and return Examine the oil policy as quickly as possible, cancel the licensing contracts and conclude new contracts on the basis of the country’s interest first and on the basis of the sale price, stop the currency auction that drained the hard currency, agricultural development to achieve self-sufficiency, control border outlets and customs departments, and clean them from And electronically linked to injuries with the central bank and tax departments to ensure the entry of goods transferred their funds through the auction currency, stop the amounts financed by the parties and armed groups in Yemen, Lebanon and others.
Economic Studies Unit,
Links Center for Research and Strategic Studies