Page 11 - MEOG Week 35 2022

MEOG NEWS IN BRIEF MEOG

POLICY economic reality, as the country still lacks OIL
developed infrastructure, basic health
Iraq’s economy: floating services, or even oil-derived services such as Iran deal a wild card for oil
consistent electricity.
over oil and turbulences suffering acute consequences of the different market strained by supply
As a matter of fact, Iraq’s economy is
Iraq is one of the wealthiest countries in crises that rocked the country for decades, risks
the world in terms of resources, but Iraq’s starting from years of Western-imposed
economy is nowhere as rich. sanctions during the 1990s, the US military A looming EU embargo on Russian oil is
If we were to look at the Iraqi economy, intervention in 2003, the civil war during the expected to exacerbate supply tightness and
we need to examine the different phases the 2000s, the global economic shock in 2008, the keep prices in triple digits this year unless
country has gone through over the last three battle against ISIS in mid-2010s, and finally there is a return of Iranian barrels, a Reuters
or more decades. the economic meltdown caused by COVID19 poll showed on Wednesday.
While Iraq is one of the richest countries in 2020. A survey of 41 economists and analysts
in the world in terms of valuable natural Prior to the COVID-19 pandemic in 2020, forecast benchmark Brent crude would
resources, namely oil and gas, the country’s Iraq had lived through several months of mass average $103.93 a barrel this year, down from
potential remains unlocked due to decades of protests by average Iraqis who had demanded a forecast of $105.75 in July but above its
political storms, violent conflicts, and deep better living conditions and an end to the current $100 trading level.
corruption. country’s, then, unemployment crisis among U.S. crude was seen averaging $99.91 a
Over the past few weeks, Iraq lived through youth, which had reached (25%). barrel in 2022, down from a July consensus of
yet another major political hurdle, one that However, protests that started in October $101.28.
reignited fears of its economy facing a new set 2019 were interrupted by the outbreak of Oil prices have come off highs in March of
of challenges. COVID-19, the pandemic that aggravated the nearly $140 on recession fears, but concerns
Iraq is a country of +40 million people, Iraqi economy’s status. about supply remain at the forefront, analysts
with literacy rates exceeding 85.60% and a Being an oil-reliant economy, Iraq received said.
GDP per capita approaching $5900 USD. a major blow in 2020, as oil prices dipped to Fundamentals point to higher prices, with
Iraq’s most valuable commodity is oil, historic lows, severely affecting the country’s spare capacity below 2 million barrels per day
making its economy overwhelmingly reliant budget. During 2020, Iraq’s GDP shrank by (mbpd), oil inventories at multi-year lows and
on its oil wealth. 11.3%, before being able to climb by 1.3% in the European Union set to sanction Russian
Oil makes up 99% of oil exports, 85% of its 2021, as oil prices rebounded globally. oil via shipping in December, said UBS analyst
government budget, and 42% of its GDP. Each of these crises has left its mark on Giovanni Staunovo.
On a global rank, Iraq has the world’s 5th the Iraqi economy, making it hard for its oil “Also, ending sales from the strategic oil
biggest reserve of oil and is the 6th largest wealth to make up for the volatile economy. reserves of OECD countries will remove
producer, offering the world about 4% of its Currently, Iraq’s unemployment rate more than 1 mbpd of supply from November,
oil needs. among youth exceeds 35% and government pointing to tighter markets at the end of the
Iraq is also rich in natural gas, being the revenues are experiencing slow growth, year.”
33rd-largest producer, and has the world’s thanks to soaring oil prices throughout 2022. Most buyers have been cutting back
12th-largest reserves. However, the country’s economy will remain on imports of Russian oil products since
Iraq’s non-oil economy is largely driven prone to instability and turbulence as long as Moscow’s invasion of Ukraine, with the EU
by the country’s sectors of agriculture, food political instability continues and as long as its sanctions due to tighten later this year and a
processing, chemicals, fertilizer, textile, leather wealth is still as dependent on the oil industry. full ban agreed from February 2023.
goods, construction materials, tobacco, paper, AL BAWABA “However, if and when the market realises
and others. that Russia is still able to shift exports to
These figures sadly do not match Iraq’s other regions, oil prices will retreat,” said John

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