DUBAI – Gulf oil experts are seriously worried about an American attack against Iraq. Oil prices are nowadays settled at around US$25 a barrel – an overvaluation considering the current global economic slump. The contrast could not be more striking when the high price of oil is compared to the very low price of raw materials such as copper, nickel and aluminum, which are all victims of the global contraction in industrial demand.

Gulf analysts consider that the fundamentals of the oil market are good news as far as consumer countries are concerned. There is an accumulation of positive factors: new oil fields now discharging their production, cheaper cargo freight, the end of the civil war in Angola, intense internal debate regarding production quotas at the Organization of Petroleum Exporting Countries (OPEC), and a diminished role for Iraq (second largest reserves in the world, but producing only around 1.5 million barrels a day because of United Nations restrictions). Analysts conclude that if the price of a barrel of oil remains high it is because the markets have integrated the risk of an attack against Iraq.

Immediately after September 11, North Sea crude shot up to $30.5 a barrel. A few months later it was down to around $17 to $18. In the second quarter of 2002 it started to rise again. The risk is above all a political risk – because Iraq is a major component of OPEC, and nobody at the moment can seriously envisage OPEC’s reaction to an American attack. There are all sorts of scenarios flying about in the Gulf: A barrel of oil could go for $6, or it could go for $60. George W Bush wakes up every day to meditate on the fact that during the Gulf War conducted by his father more than a decade ago the price of a barrel shot up to $35. This precipitated a recession that ultimately cost Bush senior his reelection.

Saddam Hussein’s regime counts on the strong possibility of support from OPEC’s sister organization of Arab oil producers. But Gulf analysts are not working on the scenario of a possible 1973-style oil embargo. Oil experts in London, on the other hand, are more prone to the catastrophe syndrome: some expect an Iraqi attack on oil fields in Saudi Arabia and Kuwait. They point as evidence to the recent personal warning of Jordan’s King Abdullah to British premier Tony Blair: there could be a serious menace to vast British oil interests in the region if Blair blindly follows Bush.

The International Monetary Fund’s giant $30 billion preemptive loan to Brazil may have controlled the Latin American financial crisis for the moment, but if the crisis persists nothing could prevent oil producers such as Mexico and Venezuela from ignoring the current OPEC-imposed production quotas.

Only one player is bound to gain from an American attack on Iraq. Russia is the world’s second largest oil producer, immediately behind Saudi Arabia. Gulf analysts acknowledge that at the moment that nobody can tell how Russia would react: cooperation with OPEC, or the pursuit of its own goals to further enlarge its share of the world market.

A Gulf analyst says that in the event of war, “OPEC will be paralyzed. Arab solidarity will dictate that Saudi Arabia, the Gulf Cooperation Council and Algeria will refuse to raise their production. The price could easily reach $40 a barrel. The Bush administration will be in trouble.”

The US imports half of its consumption of oil. It is desperately trying to get rid of its dependence on Saudi Arabia and Venezuela by importing more from Africa and by an ever closer cooperation with Russia. America’s hawks and the oil lobby consider control of Iraq absolutely essential to finish off American dependence on Saudi oil. No amount of spinning will disguise that this is the real reason for the war.

But at the same time this is the main reason for the Saudi opposition to an attack. The  American officials most hawkish on Iraq are by no coincidence the most hawkish on Saudi Arabia. Leaks to the press, such as the recent obscure Rand Corporation analyst report denouncing Saudi Arabia are nothing more than a smokescreen to disguise what really drives the Americans crazy: the increasingly good relations between Saudi Arabia and Iran, and Prince Abdullah’s interest in really finding a solution for the Palestinian tragedy.

Gulf diplomatic sources confirm that the Saudi royal family has been closely monitoring the mood of the Arab street regarding Ariel Sharon’s devastating “policies” in Palestine. The Arab street is undeniably silent. So the Saudi family is not worried about a violent popular reaction in the event of an invasion of Iraq. But its more conservative elements definitely worry about the transformation of Iraq into an American base. Iraq is potentially richer than Egypt, and it is invulnerable to Wahhabi proselytizing. Saudis believe that in the long run, with the de facto annexation of Iraq as a client regime, America would inevitably turn against Saudi Arabia.

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