Oil Supply Woes: Iraq is back under spotlight - for the wrong reasons!

 

Iraq conflict

As analysts in the oil sector keep their focus firmly on the spat between the two important Middle Eastern allies, they seemed to have inadvertently missed the attention on an equally important – and relevant – player in the Middle East – Iraq.

Iraq has the world’s 5th largest oil reserves and is the sixth largest exporter of the commodity in the world, with India, the world’s third largest consumer, being a main buyer.

Despite an increasing flow of oil revenue, the subjects in the main oil regions are often in the streets in protest against the lack of basics, not the luxuries; the absence of a steady power supply in the middle of sweltering, unbearable heat has been just one of the main grievances for months.

Iran supplies a substantial amount of electricity needs of Iraq and recently suspended its supply for two reasons: Iraq owes Iran payments for the electricity; Iran has its own issues with power outages across the country, exacerbated by severe drought in some regions

In addition, Iraqis are up in arms against rampant corruption, mismanagement and nepotism.

Against this backdrop, the deadly bomb attack on Monday in Sadr City in Iraq, which resulted in deaths of more than 35 people and injuries to more than 60 people, resurrects a grim reminder of an even bigger conflict – with sectarian dimensions.

Sadr City is a mainly Shite neighbourhood. The suicide bomber targeted the location on the eve of a major Muslim religious event, with the clear intention of causing maximum carnage, while people were shopping for the festival in question.

ISIS, the Sunni militant group, claimed the responsibility for the attack. They launched a similar attack in April this year too.

The Sunnis in post-Saddam Iraq have been complaining about the discrimination against them by Shia rulers. Their grievances, more often than not, fell on deaf ears of those who used to govern the country. It ultimately led to the birth of the ISIS, an extremist Sunni group, which caused havoc in the region at first, and then across the world.

In short, analysts believe this could have nipped in the bud.

Iraq is a country with more than 2/3 being the Shite Muslims. It, however, was ruled by the Sunnis for decades until Saddam Hussain was overthrown. Of course, during that time, Shite had the same grievances over being ruled by a minority.   

When President Trump came to power, one of the main policy decisions made was to wage war against the ISIS in Iraq with a Western military coalition. Iran-backed militia in the region played a significant role too in complementing the task, although it was not widely acknowledged.

The military coalition finally achieved the success in a matter of months and Iraqis enjoyed relative peace for some time.

Since then, in a matter of just three years, with the change of administrations did come the instability back in Iraq; falling oil price during the period did not help the existing governments either.

With the ever diminishing role of the US in the region, particularly in Iraq, the Iraqis will be forced to fend for themselves if the ISIS gets a firm foothold back in Iraq; nor will the West ever get involved in yet another military conflict in the region, unless the US is at the forefront; the current situation in Afghanistan is a classic example that explicitly illustrates the evolving US foreign policy – no more involvement in ‘for-ever-wars’.

If the ISIS expands its influence well into the oil producing area, there will be a fierce competition between the Iraqi security forces to grab the oil fields; if it happens, it is just a matter of history repeating itself, when the militants fill in their coffers at the expense of vital government revenue.

If the falling oil revenue was solely to blame for the current Iraqi woes, the world would have sympathized with the country. With the price of oil fluctuating around $70 a barrel in recent months, that cannot be the case.

Two successive, major fires at Covid-19 hospitals, which led to the deaths of many hapless patients, just show where the blame should fall on when it comes to dealing with key issues; this happened in a country, which used to have a health system that was envy of the world – when a dictator was in power, of course.

Ordinary Iraqis of walks of life are frustrated to the core with the never ending political instability in the country while sitting on a major resource for generating revenue; they look at the prosperous neighbours in similar situations and wonder why Iraq oscillates between relative calm and outright carnage at regular intervals.

If the grim security situation on the ground, coupled with incompetent management, gets worse, Iraqis will be compelled to blame it  on democracy too – within a long list of grievances; it may not be just scapegoating!

 

 

 

 

 


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