Playing the Iraq Oil Card

  • Share
  • Read Later
Qassem Zein / AFP / Getty

Iraqi flags flutter during the opening ceremony of a new oil refinery plant in the Shi'ite holy city of Najaf, Iraq.

If anyone had any doubt that Iraq was a lot about oil, they shouldn't after the recent Capitol Hill appearance by our ambassador to Baghdad, Ryan Crocker. In a closed House hearing, Crocker put the fear of god in Congress. His message: If we leave Iraq, Iraq will destabilize the Gulf, and a destabilized Gulf equals unstable oil prices.

With oil bumping pushing past $120 a barrel, you can bet you could hear a pin drop in the room. But what exactly was he talking about? Iraqi Shi'a militias invading Kuwait and Saudi Arabia, burning their oil fields, driving the price of gasoline up to $10 a gallon and us into a depression? Crocker wouldn't elaborate on his vague warnings, preferring to leave it at a sense of dread.

There was a time when we could count on Saudi Arabia to make up a shortfall in oil when something like Iraq came up. During the Gulf War Saudi Arabia boosted its production by 3.1 million barrels a day to make up for the 5.1 million barrels a day of Kuwaiti and Iraqi production that was taken off markets. Oil prices rose relatively little.

Today, Saudi Arabia either refuses or can't increase its production. The peak oil Cassandras are convinced the Saudis can't. Saudi Arabia's mega fields like Ghawar are depleted, they say. And we'd better get used to gasoline at $4 a gallon and up.

But Crocker wasn't all bad news. He said that if we were to stabilize Iraq, and attract investors to the oil sector, Iraq could become the largest producer in the world, surpassing Saudi Arabia. Crocker didn't put it in terms this baldly, but he might as well have said: We keep an army in Iraq, and we go back to the days of cheap oil. Anyone can afford to drive an SUV if they want one.

Crocker assured Congress that we are making progress. The Iraqi government retook the port of Basra that week, Iraq's main export terminal. And now that the government is in full control of Iraq's oil infrastructure things will get better.

What Crocker didn't talk about was Iran — and its plans for Iraq's oil. Months before retaking Basra, the Iraqi government started talks with Iran about running an oil pipeline to Abadan, Iran's main export terminal. Iran also has said that it will have a say in Iraq's mega field Majnun, which may contain 30 billion barrels of oil — a rival to Saudi Arabia's larger field. I suspect, though, if he'd been asked about Iran, Crocker would have said it is simply one more reason we should stay in Iraq, to keep Iran at bay.

Crocker could be right. We have no idea what is on the mind of the populist Shi'ite cleric Moqtada al-Sadr. If Sadr were allowed control of the Basra oil terminal, would he shut down Iraq's oil exports? Shell Kuwaiti fields?

Nobody really knows, which is just what the Bush Administration is counting on. They got us into this mess in the first place by preying on people's fears, and now they are continuing to do so. And $10 a gallon for gasoline is his equivalent of an economic WMD.

Robert Baer, a former CIA field officer assigned to the Middle East, is's intelligence columnist and the author of See No Evil and, most recently, the novel Blow the House Down.