IN THE NEWS / U.S. energy secretary sees little effect if Iraq oil flow stops
WASHINGTON, Dec 17 - U.S. Energy Secretary Bill Richardson said Thursday if Iraq cuts off oil exports to the United States in retaliation for U.S. bombing, the disruption would have little impact.
"U.S. companies buy oil on the open market. Right now the global supply of oil far outstrips demand, so we don't anticipate any shortages," he told Reuters in a statement.
By bombing Iraq, the United States runs the risk of cutting off a major oil supplier.
While economic sanctions imposed on Iraq by the United Nations in 1990 have curbed many Iraqi exports, the country is allowed to sell up to $5.256 billion of crude oil every six months to buy food and medicine -- under the United Nations oil-for-food program that began in December 1996. Iraq, however, is only able to sell up to about $3 billion of crude oil every six months because its oil industry is still in disrepair after damage suffered during the 1991 Gulf War.
U.S. oil companies are among the major buyers of Iraqi crude. Through the first 10 months of this year, Iraq was the eighth-largest supplier of crude to the United States, just ahead of Kuwait. Iraq's invasion of Kuwait in August 1990 led to the Gulf War and the imposition of sanctions against Iraq.
Saudi Arabia exported the most oil to the United States through October, followed closely by Venezuela and Mexico. Together, those three countries accounted for 48 percent of U.S. oil imports during the 10-month period and would likely step in quickly to pick up any lostIraqi market share.
On Thursday, two U.S. senators from the oilpatch state of Oklahoma, Don Nickles and James Inhofe, called for the Senate's Energy and Foreign Relations Committees to hold joint hearings in January on Iraq's ability to increase its oil output while not complying with U.N. resolutions. Both senators are Republicans.
At this point, it's unclear whether Iraq will stop future oil sales to the United States, either in retaliation or because of a disruption in exports due to bomb damage. On Wednesday, before the American and British air strikes began, Iraq' ambassador to the United Nations, Nizar Hamdoon, had warned that if the U.S. bombed Iraq, then his country's oil exports would stop.
On Thursday morning, however, the United Nations confirmed that Iraqi oil exports had not been hit by overnight cruise missile attacks.
"Oil exports as of (Thursday) morning New York time are proceeding normally," said John Mills, spokesman for the U.N.'s Iraq oil-for-food program.
Mills said he was not sure whether Iraqi oil exports would continue to flow if the bombing is prolonged.
There is speculation that bombing an oil facility would be viewed as an indirect attack on the Iraqi people, since money earned from crude exports is used to buy food and medicine.
However, Senator Joe Biden, Democrat of Delaware, said Wednesday that Iraq's oil facilities would be legitimate targets for attack if they are believed to be connected with producing weapons of mass destruction.
"I think the military has to make that judgment," he told reporters on Wednesday evening. "If they were of the view that a particular oil-producing facility was essentially a mask for a chemical, biological or nuclear weapons facility, then I think they would be justified for going after it."
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