Former Saudi oil minister, EU, warn on oil prices

17 March 2003
Iraqi oil output could be permanently damaged by war and prolonged conflict could send prices soaring to more than $50, former Saudi oil minister Ahmed Zaki Yamani told a London seminar on 14 March. Yamani, who runs the Centre for Global Energy Studies (CGES), is strongly opposed to a US attack on Iraq. 'If the absence [of Iraqi exports] is long enough it can't be corrected by strategic reserves, prices can go to a very horrible ceiling and the price will be above $50 and it will be way above $50,' he warned. 'It will ruin the world's economy.' Both he and Gassan Atiyah, director of the Iraqi File publication, expressed fears that if Saddam Hussein set alight the oil wells, he could 'kill the oil for good,' because the low pressure of the wells compared with those in Kuwait made them vulnerable to irreparable damage. 'They might even destroy the wells deep enough which means that the whole occupation of Iraq does not really give any returns,' said Yamani.

On 17 March, the European Commission (EC) laid out two possible scenarios for the movement of the oil price caused by war. In the case of a brief war with minimal disruption to supplies, the EC predicts an initial spike to $41 followed by a fall to $26 by the third quarter and to $21 by the fourth quarter. However, in its worst case scenario, the shock caused by war will last two quarters, during which the price will be between $57 and $52, before falling to $26 by the end of the year.

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