Iraq Cuts Oil To Protest Mideast
Iraqi President Saddam Hussein announced Iraq would cut oil exports starting Monday for 30 days or until Israel withdraws from Palestinian territories.
In a nationally televised speech, Saddam said all exports would be cut. The oil minister said the move took effect as Saddam spoke.
Saddam said Iraq's top leaders met earlier Monday and decided "in the name of the people of Iraq...to stop exporting oil totally as of this afternoon through the pipelines flowing to the Turkish ports and the south for 30 days" unless Israel withdrew earlier. He said that if Israel had not withdrawn within the 30 days, Iraq would consider what action to take.
White House spokesman Ari Fleischer said Iraq's threat to cut off oil exports shows "Saddam Hussein is willing to hurt his own people," reports CBS News Correspondent Peter Maer.
Iraq had begun making calls last week on Arabs to cut oil supplies as a way of pressuring the United States, whose economy runs on oil, to force Israel to end its military incursions into Palestinian territory.
A boycott would be ineffective without Saudi Arabia and Kuwait, who have rejected Iraq's call to use oil as a weapon. Many Gulf states depend on oil revenues for more than two-thirds of government income and cannot afford to stop sales.
Kuwait responded that it had no plans to join Iraq's suspension of its oil exports for a month.
"There is no Kuwaiti intention to stop petroleum exports and we are closely watching the situation," a senior oil official told Reuters.
When asked if Kuwait would make up for some of the lost supplies, the official said: "There are no Kuwaiti intentions to increase production and we shall continue to abide by our OPEC quota and OPEC agreements."
"We don't actually see that this will have much effect certainly on the oil prices," oil analyst Dave Thomas of Commerzbank in London told CBS News Correspondent Sam Litzinger. Thomas expects an immediate price increase, but that Saudi Arabia will then boost its production.
He says Hussein is putting politics ahead of economics.
Leo Drollas with the Centre for Global Energy Studies in London told Litzinger it was a good public relations move: By saying his turning off the oil tap is a show of solidarity with Palestinians, it makes other countries less likely to increase their oil production.
"[We wont'] see the Saudis stepping in and putting oil into the market," he said. "They might do it unofficially."
The last time oil-producing Arab nations used oil as a political weapon was in 1973, when reduced exports caused a global energy crisis. Since then, the world's wealthiest nations have created the International Energy Agency to provide a cushion against any similar disruption.
Based in Paris, the IEA can tap into 4 billion barrels of strategic oil reserves maintained by its member countries. That's equal to more than five years of Iraqi production, based on the IEA's estimate of Iraq's output in January.
In November 2000, Saudi Arabia led the adoption of a pledge by the Organization of Petroleum Exporting Countries and other major exporters that oil would not be used as a political weapon.