Hussein reiterates embargo
Iraqi President Saddam Hussein restated his request Monday for Arab producers to halt oil exports to the United States and Israel, but was countered by Saudi Arabian claims to fill shortages caused by such an embargo.
Hussein had announced the embargo April 8 in an effort to force Israel out of Palestinian territory, causing an increase in world oil prices.
According to www.washingtonpost.com, Hussein said, “Arab oil exporters should immediately decrease the production of their oil for export by 50 percent and directly deprive the United States and Zionist entity (Israel) from the exported half.”
Arab countries make for more than half the 11-member Organization of Petroleum Exporting Countries (OPEC).
According to The Washington Post, Hussein said any countries reselling oil to either the United States or Israel should be cut off as well. The cuts are to last until Israel withdraws or for 30 days, after which the decision will be reviewed.
According to NBC News Services at www.msnbc.com, many Persian Gulf states rely on revenue from oil exports for two-thirds of government income and cannot afford to launch an embargo.
The last time Arab nations used oil as a political weapon was in 1973, when reduced exports caused a global energy crisis, according to NBC.
During an April 22 C-SPAN2 broadcast on energy and economic relations, Saudi Minister of Petroleum and Mineral Resources Ali Al-Naimi said his country produces more than 3.5 million barrels a day in excess oil. He referred to United States consumption as their most valued asset.
“The Saudi Arabian objective is to maintain balance between demand and supply and keep stable prices,” he said during the broadcast.
Alan Larson, undersecretary of state for economics, business and agricultural affairs, responded by renewing the United States’ commitment to a relationship with Saudi Arabia.
“Both producers and consumers realize that use of oil as a political weapon is unacceptable,” he said during the broadcast.
Basudeb Biswas, professor of economics, said as long as other countries and more OPEC members like Saudi Arabia do not join the Iraqi embargo there should not be a great problem.
“The economic impact will depend on the political resolution of the Middle Eastern countries,” he said.
If other oil-producing countries follow suit, an oil price shock could result. The economy would slow, as would production of goods and services. The result would be a chain reaction, he said.
“[Eventually], it would create apprehension in the minds of consumers,” Biswas said.
It is important to consider how Middle Eastern countries couldn’t go without punishing themselves, too, he said.
“History would repeat itself,” Biswas said.