United Press International
Oct 20 2007
Analysis: Oil price not only due to Turkey
Published: 19, 2007 at 5:56 PM
By DEREK SANDS
UPI Energy Correspondent
WASHINGTON, Oct. 19 (UPI) — Record high oil prices over the past
week have been attributed to the possible loss of supply from
northern Iraq, but the potential for a change in the regional balance
of power, as well as other events around the world — from Alaska to
Nigeria — have also tightened the markets, according to an expert in
Middle East oil policy.
Oil prices topped $90 a barrel on Friday, a record high that comes as
world headlines reported the Turkish government has authorized its
military to cross the border into northern Iraq to stop terrorist
attacks carried out by a Kurdish separatist group, the Kurdistan
Workers’ Party, or PKK.
`A Turkish incursion that weakens the Kurdish government will not
only stop Iraqi oil exports from the north, but it will also change
the power balance in the Middle East, worsen the relationship between
Turkey and the U.S., and embolden Iran and Syria,’ according to A.F.
Alhajji, a professor of energy economics at Ohio Northern University
and expert on Middle East energy markets.
`It is this change in the balance of power that will change the
outlook for world oil markets and put pressure on prices,’ Alhajji
said.
The United States worsened its relations with Turkey last week when
the U.S. House of Representatives moved forward with a bill that
would officially refer to the killing of 1.5 million Armenians during
World War I as `genocide.’ The possibility of such a bill was
immediately criticized by the White House, but Turkey reacted
swiftly, recalling its ambassador.
Turkey denies there was a genocide, and U.S. President George W. Bush
has been sensitive to Turkish sentiments by referring to it as `mass
killings.’
Whether Turkish military incursions into northern Iraq can be stopped
is still up in the air, but harsh action, or no action, by the United
States and the European Union still has the potential to continue
shifting power toward regional actors Iran and Syria, according to
Alhajji.
The United States and the European Union have many options on the
table, but it’s unclear which ones would be appropriate.
`They can also retaliate by bringing the issue to the U.N. Security
Council, impose economic sanction on Turkey, and eliminate foreign
assistance. In the process, EU officials who oppose the inclusion of
Turkey in the EU will find another reason to prevent Turkey from
joining the EU. As a result, the government of Turkey and the Turkish
people will turn against the West and strengthen their ties with
Middle Eastern countries. In fact, the Turkish government has already
sent a strong massage when it hosted the Syrian president,’ Alhajji
said.
Although some disagree, many analysts say Iran is pursuing a policy
of regional supremacy. The United States, as well as some European
countries, has been very critical of Iran’s civilian nuclear program,
saying that it is a cover for developing atomic weapons.
Syria has long been an ally of Iran, especially when their interests
converge, as in opposition to Israel and the United States.
But politics are not solely to blame for high oil prices. According
to Alhajji, there were at least nine recent events across the globe
that have tightened the oil market as well.
A fire at a BP oil facility in Prudhoe Bay, Alaska, caused a slump of
30,000 barrels a day for two weeks in early October. On the other
side of the world, Nigerian oil workers called a strike briefly last
week, causing some concern in oil markets. Also, separate reports
indicated winter oil consumption in the United States, as well as
U.S. economic growth, would be unexpectedly up over the winter.
Supplies may also be down due to a potential royalty increases on oil
sands projects in the Canadian province of Alberta, while demand from
the U.S. Strategic Petroleum Reserve is up and the International
Energy Agency continues to project international demand increases,
according to Alhajji.