Al-Kadhimi's advisor elaborates how Iraq could be affected by the international economic discord
The Iraqi prime minister's advisor for financial affairs, Mazhar Mohammed Salih, elaborated on Saturday, that Iraq and the oil market have been affected by the volatility of oil prices as a result of the ongoing economic and trade rivalry between China and the United States of America.
Saleh told the Iraqi News Agency (INA): "The cycle of oil assets continues to be in the interest of the oil-producing countries, marked by sustained increases in the price of energy resources, as the oil prices and their accelerated growth correlate with the return of growth in the global economy and the high demand for crude oil to build and renew various stocks that fell due to the global economic shutdown and the deterioration of international economic activity, specifically in 2020, due to covid-19.
He added, "The U.S release part of its oil stocks comes to strengthen the supply of oil and stabilize prices in conditions of still slow growth in GDP, as the industrialized countries see that the rises in the growth of oil prices that exceeded the economic growth in them will inevitably lead to a serious case of stagflation in the coming days, and trying to contain oil prices within the limits that reduce the growth of excess demand or the demand gap in the current global oil market".
Saleh continued: "Despite the above mentioned points, the ongoing tension between the oil-producing and oil-consuming great powers has been an important player in global energy policy-making, since the outbreak of the trade war between America and China under President Donald Trump in 2018, which began after the announcement by the President of the United States on 22 March 2018 of an intention to impose $50 billion in tariffs on Chinese goods under section 301 of the Trade Act 1974,which lists the history of unfair trade practices and intellectual property thefts ,and as a retaliation ,the Chinese government has imposed customs duties on more than 128 American products, most famously soybeans.
And he added, "As oil prices will remain the weight of the egg between the largest producers (America) and the largest consumers (China) in the trade war game between them, and oil will remain as the first political and strategic commodity in the world and one of the tools of influence within the global economy
He went on to say: "Oil prices will continue to be the balance between two largest producers (America) ,and the largest consumers (China) in their trade war game, oil will remain the world's first political and strategic commodity and one of the influence tools within the whose prices cannot be easily compromised.
Therefore, the step taken by the United States through releasing part of its reserve stocks came after the strengthening of supply and the opening of the OPEC countries with an additional offer, which enabled Iraq, for example, to produce an additional 400,000 barrels out of its total production of more than 4 million barrels of oil per day".
He pointed out that "All of this aims to achieve stability and balance in the energy market in proportion to the desired growth and stability in the global economy
and to avoid dangerous phenomena such as (stagflation) referred to above due to the continues rising of the energy costs in the world due to the demand gap for energy resources."