![]() ![]() "The insurgency has run through a number of phases and now it looks as if those who are seen as Iraqi police and others who are seen as collaborators with the US are being targeted. "Saddam was already irrelevant by the time he was captured," says Middle East specialist Kevin Rosser of Control Risks Group. The former dictator was not found with any modern means of communication when he was captured, analysts note. Analysts say the attacks put into question how much of a role Saddam has played in the guerrilla resistance inside Iraq, which has crippled Iraq's main oil export route from the north. But prices soon rebounded on news that two car bombs had exploded outside Iraqi police stations one day after news of Saddam's capture broke. Oil prices initially retreated more than $1 per barrel on the news, as some market players speculated that more Iraqi oil will hit the market. Bush and a morale boost for the US-led military forces trying to restore order in Iraq. Undoubtedly the dramatic plucking of the once-mighty Saddam from a small hole covered by some Styrofoam and an old carpet was a big relief to millions of Iraqis and those in neighboring countries who suffered during his reign, as well as a major political victory for US President George W. "The sustainability and timing to reach this threshold remains in question, especially considering the age of the existing infrastructure, condition of the older fields, looting activities and large capital investments required," Lanni says. AG Edwards' oil analyst Bruce Lanni reckons Iraq will only be able to export an average 2.2 million b/d in 2004. ![]() "The timing and magnitude of the restoration of Iraqi oil exports remains the greatest uncertainty in forecasting oil prices," says Prudential Securities oil analyst Michael Mayer. Few pundits are comfortable predicting Iraqi export and production levels much beyond the next few months, though all agree that the sputtering postwar restoration contributed to this year's price volatility. Iraqi oil officials say exports should rise to 2 million b/d by the end of March. We are not adjusting our first-quarter estimates for production and exports." All oil specialists contacted by Energy Intelligence on Monday have penciled in Iraqi exports of less than 2 million b/d in the first quarter of 2004, not far from the 1.67 million b/d the Iraqis have managed to ship out so far in December. ![]() "But over the short term, the oil situation will not improve much. "Geopolitically, is giving Iraq a better chance of stability than it may have had with Saddam on the loose," says Deutsche Bank oil analyst Adam Sieminski. Oil companies already buying Iraqi Basrah crude say Iraq's State Oil Marketing Organization (Somo) has not yet indicated to them when Kirkuk barrels would hit the market (IOD Dec.9,p4). Iraqi oil officials, careful not to seem overly optimistic, say they do not know when the Kirkuk pipeline will resume operations. ![]() That pipeline, the victim of repeated acts of sabotage and looting, has been closed since the war began in March, limiting Iraq to about 1.7 million b/d of Basrah Light exports from the southern fields via the Basrah Oil Terminal in the Mideast Gulf. Rothman, like most other oil experts, does not believe that Iraq is capable of producing much above current levels without the opening of the 800,000 b/d pipeline that transports crude from the Kirkuk fields to the Turkish Mediterranean port of Ceyhan. "The breadth and pattern of resistance to the US occupation in Iraq suggests that the insurgency producing a spasmodic reconstitution of the country's oil industry may not dissipate quickly even with Saddam's capture," says Merrill Lynch energy analyst Mike Rothman. Companies are far more anxious about Iraq's future leaders than they are about leaders of the past when it comes to investing their money to help the country realize the its long-held dream to boost capacity to 6 million barrels per day and beyond. The big question is: What happens next? How Saddam is brought to justice and how the US handles the handover of power to the Iraqi people are bigger concerns for oil markets and oil companies. Having Saddam in US hands does not guarantee that the security situation that has hindered the oil flows will improve in the short-term, experts told International Oil Daily on Monday. The images of a captured and bedraggled Saddam Hussein may have triggered dancing in the streets of Baghdad and in the corridors of power in Washington, DC, but the uphill climb to restore Iraq's oil industry to its prewar luster after decades of bloody battles is not over, experts say. ![]()
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