Essay Example on Republic of Iraq has played a major role in the world's oil Market









Ever since oil was struck at Baba Gurgur in 1927 the Republic of Iraq has played a major role in the world's oil market 1 In 1960 we hosted the Baghdad Conference and became one of the founding members of the Organization of the Petroleum Exporting Countries OPEC aiming to coordinate and unify petroleum policies as well as to empower member states with more control over their natural resources As the second largest crude oil producer in this organization 2 geopolitical instability near our oil fields translates into major effects on the global oil market In 2006 the Iraqi Government recognized Kurdistan as a federal region still all hydrocarbon contracts and refined petroleum produced by the Kurdistan Regional Government KRG had to be signed by the central government and shipped through the State Oil Marketing Organization SOMO In 2011 the KRG signed a product sharing agreement with ExxonMobil Corporation to develop northern oil fields 3 reigniting flames of past conflicts In 2014 the same fields were taken by Daesh for oil smuggling representing a daily revenue of 700 000 4 The northern province of Kirkuk was reclaimed by the Iraqi Federal Government recently through a military campaign In spite of the animosity sparked by this enterprise coupled with last year s unconstitutional Independence Referendum Iraqi and Kurdish Prime Ministers met in late January 2018 to diplomatically reach an understanding 5 thereby alleviating tensions tremendously and adding even more stability to the Iraqi oil output Kirkuk s oil fields which had hitherto been under de facto jurisdiction of the Kurdistan Regional Government KRG could not be forced to comply with the 2017 

OPEC production cuts agreement Conversely Iraq initially preferred to be exempt from the agreement as well in order to avoid hindering fiscal revenues necessary to finance the war against Daesh especially in light of the fact that 99 of our government's income is generated by the petroleum sector 6 Nevertheless Iraq has now embarked on a shift in its policies For instance our government has recently supported the aforementioned agreement as a way to countervail falling oil prices 7 thus disregarding our internal crisis induced by the war in favor of the greater good of the Arab nations as a collective It was through the reduction of more than 200 000 barrels per day in Iraqi output that the Brent Crude Oil benchmark surpassed 60 per barrel on October 2017 8 Notwithstanding the armed conflict against Daesh we are even exceeding our compliance rate by cutting 270 000 barrels per day instead of the proposed 210 000 barrels per day 9 The Republic of Iraq deems the ongoing Middle Eastern geopolitical instability insurgencies and foreign intervention in Arab domestic affairs to be the main contributing factors which drive petroleum importers to decrease their dependence on Middle Eastern oil ergo we ponder whether the impact these factors had on non OPEC countries with crude oil reserves of their own was enough to prompt them to exploit their natural resources expanding and diversifying their energy supplies thereupon By introducing more barrels into the market they have managed to cause the prices of crude oil to plummet all while developing better technologies to further capitalize on their fossil fuel reserves at lower production costs and finally start to shove OPEC producers out of the market Today Iraq upholds a timeless commitment to maintain the Middle East and Northern Africa MENA region s influence over the energy market

To that end we will support oil production cuts until March 201810 and promote reviewing market conditions before increasing production again Once production increases OPEC and non OPEC suppliers will compete again in the market hence the reason why Iraq proposes to lower Arab nations fiscal break even oil prices in an attempt to later develop a buffer price strategy to exploit the 840 billion barrels of proven crude oil reserves in the MENA region 11 Executing this strategy will successfully grant the Arab League a softer transition into renewable energies lengthen the fossil era allow single product economies to develop lucrative energy alternatives and concede Middle Eastern importers of petroleum more time to further advance into the green energy market All this will allow developing countries to invest on new energy sources such as natural gas of which the MENA region holds 43 of proven reserves 12 We aim to reduce gas flaring as well as to implement systems to recapture natural gas either to be used as an alternative source of energy or to be reinjected as a substitute of water to induce the flow of crude oil toward the surface Current estimates forecast oil demand to rise in the next five years 13 but efforts to benefit from this trend will be futile unless the League brings the war on terror to an end As our President Fuad Masum stated We are fighting for the whole world we hope to receive the support of the international community through logistic or rather by combating the financing of Daesh 14 Thus the Delegation of Iraq considers imperative to create a regional strategy so as to prevent terrorist groups from retailing stolen barrels of crude oil as this is one of their main sources of income feeding the ongoing instability that initiated the decrease of dependence on Middle Eastern oil in the first place

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