Global Policy Forum

Jon Tkach

Fadhil Chalabi, a one-time OPEC under-secretary general and former Iraqi oil official, says Iraq could soon produce more than ten-percent of the world's daily oil demand.

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This huge amount of oil would not take long to be expanded. In five or six years it can reach six million or seven million (barrels per day). In a matter of eight years Iraq can reach eight million.

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Mr. Chalabi told a private Washington conference on Iraq's oil industry (Tuesday) that demands for hard cash and investment following nearly eleven years of international sanctions could convince Baghdad to sell oil outside of OPEC - possibly leading to a drastic increase in supply, and a consequent fall in oil prices.

Mr. Chalabi also says current industrial growth around the world will not demand as much oil as forecasters believe - making the impact of any increase in Iraqi oil output even greater.

But Ed Porter, of the American Petroleum Institute, believes the oil forecasts are on the mark, and that growing demand will absorb an increase from Iraq if it is phased in slowly - say over ten years or so.

But, he also says Iraq has affected world markets in the past by over-producing.

/// PORTER ACT ///

In fact in `98 when prices declined so rapidly, a big portion of that decline was due to Iraq. Their production from late `97 through the end of `98 rose over a million barrels a day, which was more than the world increase in demand because of the slowdown in Asia.

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Mr. Porter says that because oil prices have skyrocketed since then, Iraq's greatest threat now is to stop producing as much oil - driving prices even higher.

Iraq has already threatened to cut back oil production if the United Nations continues to block the delivery of spare parts Baghdad says it needs to maintain production. The parts are currently being held up because of fear they will be used for military purposes.

Despite recent pressure to lift sanctions, the U-N Security Council shows little indication of doing so as Iraq continues to reject a return of international arms inspectors.

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