First official Iraqi comment on rising oil prices
On Monday, Mazhar Muhammad Salih, the financial and economic advisor to the Iraqi Prime Minister, commented on the significant rise in global oil prices against the backdrop of the military conflict in the region.
Saleh told Shafaq News Agency that the oil administration in West Asian countries, particularly the Arabian Gulf region, is facing two major shocks as a result of geopolitical shifts in fossil resource production areas.
He explained that the first shock is positive and is represented by the rise in global oil prices to levels exceeding $100 per barrel, which enhances oil revenues and the financial capabilities of producing countries, while the second shock is represented by logistical and geopolitical restrictions that affect the ability of those countries to market their oil, especially with the risks associated with the passage of exports through the Strait of Hormuz.
He added that the global oil market is witnessing something like a “zero-sum game” among producers, as some countries have alternative export outlets that do not depend on the Strait of Hormuz, which gives them greater flexibility in marketing and benefiting from higher prices, while other countries – including Iraq – face greater risks because their exports are linked to this vital maritime passage.
Saleh explained that about 20% of global oil demand may be disrupted as a result of geopolitical tensions in the Gulf states, noting that Iraq faces challenges related to limited export outlets in the short term.
He pointed out that continued demand from China, which is the largest importer of Iraqi oil at about one million barrels per day, contributes to supporting public revenues and helps the government meet its financial obligations, including servicing the public debt.
Saleh noted that there are indications of a possible relative breakthrough in the energy supply crisis, including reports that the United States has pledged to provide a group insurance policy for oil tankers to encourage shipping through the Strait of Hormuz and reduce the risks associated with the war.
He concluded by saying that the return of oil flows to their normal levels may lead to a halt in the global price surge and perhaps the start of a gradual correction phase, as the market approaches a new balance between supply and demand, stressing that the stability of global oil demand is closely linked to global economic growth and the stability of the production and marketing environment.
Shafaq.com