Focusing On The Non-Oil Sector - Part 15 - Iraqi & US Energy Issues.

The Bush administration is facing a number of energy issues in Iraq and the US. In Iraq, continuing violence is overshadowing efforts for parliament to pass the country's petroleum law. In the US, Congress in the past week was on the verge of approving an "obscene attempt" to "steal Iraqi oil". And, decrying near-record high gasoline prices, the US House of Representatives on May 22 voted to allow the government to sue OPEC over oil production quotas, with the White House objecting as that might disrupt supplies and lead to even higher fuel costs at the pump.

Brent crude oil climbed above $71 on May 24 as nine US warships put on a show of force off Iran's coast, coinciding with a UN agency report on the Shi'ite theocracy's nuclear programme and new US demands for the UN Security Council (UNSC) to issue further sanctions against Tehran (see rim5-IraqIranMay28-07).

The nine US warships carrying 17,000 personnel entered the Persian Gulf on May 23, starting a new cycle of tensions affecting the energy world. US Navy officials said it was the largest daytime assembly of ships since the 2003 Iraq war. They added that Iran had not been notified of plans to sail the ships, which included two aircraft carriers, through the Strait of Hormuz, a narrow channel in international waters off Iran's coast and a major artery for global oil shipments.

There are indications of a politically hot summer coming up as renewed US-Iranian tensions are sending crude oil prices up and WTI may soon jump above the $78.40/barrel record reached on July 14, 2006, when Israel and Hizbullah were at war in Lebanon (see omt22KuwaitProspMay28-07). There are renewed tensions between the US and Russia (see news22-RussiaEnergyMay28-07).

Trapped in Iraq since it invaded the country in March 2003, the US and its allies face a wide range of complications. Not only has it become the most expensive war in history, costing US tax-payers more than $2 bn a week and many American lives, but it has caused the worst refugee problem since the Palestine tragedy as 4m Iraqis are homeless - within Iraq and in the neighbouring countries - and a Sunni-Shi'ite war is compounded with a looming confrontation between the Kurds of the north and Turkey (see Part 14 in ood4-IraqComplicationsApr23-07)