The withdrawl of American troops from Iraq and its direct impact on the crude oil markets

iraq-ju;y-2021


The recent meeting between Mustafa al Kadhimi, the Iraqi prime minister and President Jo Biden at the White House came at a critical time for Iraq, in particular and the region, in general.

In more than one way, the beleaguered Iraqi prime minister is stuck between a rock and a hard place at present: on one military front, the ISIS resurgence is real and alarming; on a diametrically opposite front, Iran backed militia groups are flexing their muscles; the grievances of ordinary Iraqis, meanwhile, grow exponentially even with daily survival at stake.

Against this backdrop, the Iraqi government, time and again, demanded the departure of all foreign troops – most likely the Americans. That’s what exactly the US is going to do by the end of the year.

Iraqis – and their prime minister – however, know very well that in the absence of foreign troops, Iraq will not descend into a military vacuum; on the contrary, it will be a haven for foreign elements without the legitimate zeal.

The US recently sent a clear, primary message to those who seek American support without a trace of gratitude; the withdrawal of troops from Afghanistan is a case in point.

In addition, the US sent a vague, secondary message to the countries that only focus on investing in the troubled regions when the former loses men and women with rising military cost – more often than not in ‘thankless’ tasks.

The ground realities that only becomes apparent after the departure of troops make countries like Iraq think twice about their impulsive ambitions. In short, it’s easier said than done.

We do not know whether the Iraqi prime minister appealed to Mr Biden to slow down the process of withdrawal; it’s equally hard for the Iraqi prime minister and politically suicidal too, because such a move will invoke the wrath of Iraq’s immediate neighbour, Iran.

Iraq’s economic woes are really unfortunate despite being the world’s 6th largest exporter. If the ISIS takes a foothold back in Iraq, there will be a serious battle to get hold of the oil wells as they did in the past to make money.

If the oil wells fall into the wrong hands or come under attack on regular basis, Iraq will be forced back into square one; in the event of such a scenario, the plummeting revenue will cause more pain for the ordinary Iraqis and the conflicts can take secretariat dimensions, citing discrimination against the minorities, especially the Sunnis.

In this context, the Iraqi prime minister has one of most enviable prime ministerial jobs in the world, perhaps second only to that of his Lebanon counterpart – moving forward while warring factions happy.

The looming crisis in Iraq, often overlooked by many analysts, has the potential to create problems for world’s crude oil supply that has come under strain recently.

In addition, it can create problems for Iraq’s main customers such as India and China when they are just taking steps to revive their battered economies by the pandemic; Iraq exports half of its crude oil to both countries with each receiving 1 million bpd.

How both Afghanistan and Iraq deal with the security in the absence of foreign troops, relying solely on indigenous security forces, remains to be seen. In the case of Iraq, any worrying development can create chaos in the supply side of the most crucial commodity market in the world.


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