Lower oil prices have hit Iraq much harder than the core Mideast Gulf producers.
Although Iraq is almost a Mideast Gulf country geographically, and although it enjoys abundant reserves that are relatively cheap to produce, lower crude prices are hitting its capacity development plans in a big way. But lower prices that are a bane to Iraq could turn out to be a boon to the foreign companies developing its nine largest fields.
Baghdad’s oil export agreement with the Kurdistan Regional Government (KRG) is hanging by a thread — just. Neither Baghdad nor Erbil is able to stick to its side of the bargain, and the agreement looks increasingly as though it could collapse under its own weight.
The deal was never meant to be a permanent agreement in the first place. It was concluded in December as a pragmatic, stop-gap measure that would allow Iraq’s federal government to make use of the KRG’s pipeline export capacity to restart its own crude marketing operation at Turkey’s Mediterranean port of Ceyhan, after insurgent attacks on the northern federal pipeline system forced a halt to exports in early March 2014. Continue reading
Saudi Arabia’s King Salman bin Abdel-Aziz is coming into his own, one week after becoming monarch. His generous hand-outs to large numbers of citizens — two months’ extra pay to all government employees and pensioners, and other recipients of government benefits, various charities and educational and cultural clubs — are aimed at boosting his popularity. He is dispensing these hand-outs, which will cost an eye-watering 110bn Saudi riyals ($29bn), even though the country’s oil export revenues, which provide around 80pc of budgetary income, will be significantly below last year’s, given that oil prices have lost around 60pc of their value since mid-2014.
Only a few days ago, the chief executive of state-owned Saudi Aramco, Khalid al-Falih, publicly advocated more careful spending, both within Aramco and in the country at large. But the king’s gesture is in keeping with traditional Arab culture of dispensing gifts to celebrate a happy occasion — in this instance, his accession to the throne.