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The Tally Ho

Monday, August 09, 2004

Guardian: Iraq Sabotage Fear Deepens Oil Crisis/Kay at the Senate

The Guardian Unlimited's Economics Editor, Larry Elliot, writes:
Despite attempts to calm the markets, news that Iraqi armed militiamen were freely roaming the main southern oil production centre and that insurgents had fired mortar rounds at the oil ministry compound in Baghdad prompted speculation that the cost of US crude would soon be testing the $50-a-barrel level.

Iraq has been exporting about 1.9m barrels a day, but a week of violence in the country has rekindled concern about the ability of oil supplies to keep up with strong global demand. With the threat of bankruptcy still hanging over the Russian oil company Yukos, analysts were gloomy about the outlook.

"It looks like the insurgency might threaten oil supply, and that's enough to get this speculative momentum going again," said Marshall Steeves, analyst at Refco Group.

I wish someone would explain to me how pipelines of any kind can be efficently guarded. When I think of a pipeline I think of a miles and miles of pipe surrounded by nothing (desert, or forest, or plains), and I wonder about the logistics of protecting it from sabotage. Seeing how Iraq's future, at least in the relative short term, may be tied to oil production - it seems like an obvious conclusion that this is going to continue to be a serious threat.

Also, this CNN article based on the Transcript by David Kay's Senate testimony.


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