Facing its most chronic shortage in oil stocks for 27 years, the US has this month turned to an unlikely source of help – Iraq.
Weeks before a prospective invasion of Iraq, the oil-rich state has doubled its exports of oil to America, helping US refineries cope with a debilitating strike in Venezuela.
After the loss of 1.5 million barrels per day of Venezuelan production in December the oil price rocketed, and the scarcity of reserves threatened to do permanent damage to the US oil refinery and transport infrastructure. To keep the pipelines flowing, President Bush stopped adding to the 700m barrel strategic reserve.
But ultimately oil giants such as Chevron, Exxon, BP and Shell saved the day by doubling imports from Iraq from 0.5m barrels in November to over 1m barrels per day to solve the problem. Essentially, US importers diverted 0.5m barrels of Iraqi oil per day heading for Europe and Asia to save the American oil infrastructure.
The trade, though bizarre given current Pentagon plans to launch around 300 cruise missiles a day on Iraq, is legal under the terms of UN’s oil for food programme.
But for opponents of war, it shows the unspoken aim of military action in Iraq, which has the world’s second largest proven reserves – some 112 billion barrels, and at least another 100bn of unproven reserves, according to the US Department of Energy. Iraqi oil is comparatively simple to extract – less than $1 per barrel, compared with $6 a barrel in Russia. Soon, US and British forces could be securing the source of that oil as a priority in the war strategy. The Iraqi fields south of Basra produce prized ‘sweet crudes’ that are simpler to refine.
BY TOM TOMORROW