US pullout now will lead Iraq to civil war, warns S. Arabia
WASHINGTON, Sept 23 : The price of oil will probably drop and then stabilize about $20 a barrel lower than it is now, Saudi Arabia’s foreign minister said Thursday, pointing to limited US refining capacity as a reason for soaring gasoline prices.
“The oil industry does not suffer from a lack of oil,” Prince Saud al-Faisal said in an interview with The Associated Press.
Prince Saud also commented on the political situation in the Middle East, questioning whether the Bush administration’s efforts in Iraq will yield a stable, unified nation. He warned that Saud said if US troops pulled out now, Iraq would dissolve into civil war.
He ruled out diplomatic contacts by his own nation with Israel in the short term, putting him at odds with other Arab and Muslim countries that have reached out to the Israelis following the historic exit of settlers and troops from the Gaza Strip.
He said Saudi Arabia had warned the Bush administration before the Iraq war and since about long-term practical problems with its approach to occupation and rebuilding.
“It is frustrating of course to see something clearly that is going to happen, and you are not listened to by a friend and some harm comes out of it,” he said. “It hurts.”
He did not detail which advice was ignored, but other Saudi officials have said they cautioned the administration about sectarian divisions emerging in Iraq and the dangers of disbanding Saddam Hussein’s army and infrastructure.
Prince Saud said there is no shortage of oil, and that prices should stabilize at $40 to $45 a barrel. Oil hit $68 on the New York market at one point on Wednesday, as refinery capacity was threatened anew by Hurricane Rita.
He said a big problem with energy markets is a lack of refineries in the United States and elsewhere. He noted that Saudi Arabia had sought to help build a refinery in the United States with no takers. It is building two refineries in Saudi Arabia, he said.
“We are adding barrels of oil on the market,” Saud said. “It has no place to go.”
The Saudis frequently have blamed America’s high energy prices on a lack of refineries but have not explained why such a shortage would keep crude prices high if there was oil that couldn’t find a refinery.
Asked about that, Saud said, “I wouldn’t be surprised if soon you will see the product (gasoline) prices going up and oil prices going down ... because of the lack of refineries.” Energy analysts say two forces are behind a global market in which oil prices soar if anything unusual happens: tight supply with little excess production capacity and growing demand, especially in China.
As for the political situation in his own region, Saud said he hopes the proposed Iraqi constitution and upcoming elections will unify the country, and he noted that pessimism that Iraq could carry off its last elections last January proved unfounded. He indicated he was worried, however, that divisions among Iraq’s Kurdish, Shia and Sunni factions are too great. “We have not seen a move inside Iraq that would satisfy us that the national unity of Iraq, and therefore the territorial unity of Iraq, will be assured,” Prince Saud said.
“Perhaps what they are saying is going to happen,” he said in apparent reference to optimistic assessments of the Oct 15 voting from the US ambassador in Baghdad and others. “I wish it would happen, but I don’t think that a constitution by itself will resolve the issues, or an election by itself will solve the difficult problems.”—AP
