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Re: oil crisis

Dear all,
 
Richard is quite right to identify the present oil crisis as affecting the politics of sanctions against Iraq.
 
I think that an informed view from within the industry would be very helpful, but in the interim I would just like to clarify that I originally suggested that dropping sanctions on Iraq would not affect oil _supply_, not that it would definitely leave oil _prices_ unaffected.
 
The two questions before us are:
1) How much would the price of oil change in the short-term if sanctions were lifted (which could well be translated as 'how much would oil speculators/investors/oil companies react to such announcement')
2) How much would this anticipated price change affect US/UK sanctions policy. (Here of course we would have to model what US/UK decisionmakers would anticipate in terms of price changes, not our own estimates of the scale of such changes.)
 
My guess on both questions is 'virtually not at all', but like Richard I am just guessing.
 
Cheers
 
Mil

Milan Rai
158 Springfield Road Brighton BN1 6DG
ph/fax (0)1273 508 331
milanrai@trinityroad.free-online.co.uk
 
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----- Original Message -----
Sent: Friday, September 15, 2000 1:18 PM
Subject: Re : oil crisis


Mil and all

I'm not sure that Mil is right when he says this that dropping sanctions would not affect the price of oil. The Financial Times reported yesterday that the high price of oil was a "paper price" and that the oil refineries in Europe and the US were working up to capacity, so suggesting that there is not as yet a genuine shortage of supply. So  paper speculation is defintely of significance in the oil price. Who can say what the financial markets will do but a move which would suggest an increase in Iraq's oil production in the long term could have a "paper effect" on the oil price.

Richard Byrne 

  Milan Rai <milanrai@trinityroad.free-online.co.uk> wrote:

Dear all

Dropping sanctions on Iraq would not have a short term impact on oil
supplies, because Iraq is pumping as much as it can already. The
psychological impact could nevertheless affect prices marginally, I guess.

Cheers

Mil


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