Iraq War and the Price of Oil

[John Simkin]

I remember just before the Iraq War started reading an interview with Rupert Murdoch in the Guardian. He argued the main reason for the war was that it would result in lower oil prices. This was based on the idea that the USA would gain control of Iraq’s oil fields and would be in a position to increase production. Murdoch added this was stimulate the economy and one result would be a dramatic increase in share prices. At the time it was suspected that this was the real reason for the invasion. This was especially important to Bush as he did the economy to perform better if he was to be re-elected.

The first few weeks of the war appeared to be proving Murdoch/Bush right. Oil prices did fall and share prices shot up. However, since George Bush declared the end of the Iraq War oil prices have gone up by 50%. The reason for this is that the invasion has destabilized other Middle Eastern countries such as Saudia Arabia, the world’s largest oil producer. The real threat is that countries like Saudia Arabia (the main supplier of terrorists in the 9/11 attack) will experience a fundamentalist revolution. Experts have forecast that the result of this will be oil prices to reach $80 a barrel and a long and damaging recession.