War negatively affects Yemen’s oilEconomy goes down [Archives:2003/628/Business & Economy]

March 24 2003

By Mahyoub al-Kamali
Yemen Times staff

It seems that Yemen would be closely and negatively affected by the American-British war against Iraq because of its strategic situation and its economy's 95 per cent dependence on oil revenues, which represents the major factor and dynamism of the state's general budget. As the United States aims at oil and the oil reserves in the region, including Yemen, in its war against Iraq, Washington's and London's ambitions extend to the Gulf, Arab peninsula and Yemeni oil wells.
The United States imports oil worth $ 90 billion, which is a quarter of the world's imports estimated at around $ 350 billion. Studies mention that the volume of the U.S. consumption in the coming ten years would rise by 60 percent, i.e., 10-16 billion barrels per day. Washington considers the war against Iraq would ensure for the American economy its coming out of recession and also ensure stability of oil barrel price.
Since Yemen produces 475 thousand barrels a day, it falls within the American attention despite the small volume of its production. The more important thing is that the war leads to drop in oil prices in world oil markets and Yemen would thus lose around $ 700 million in the present year by counting the difference in revenues. In case of destruction of Iraq's oil wells experts expect the rise in oil barrel to $ 40 and in the worst situation America would control the Iraqi oil and work on increasing production. This leads to collapse of prices and would affect Yemen's annual revenues.
Oil sources expect the price of an oil barrel would drop to $ 8 during the coming two decades and Yemen's losses would exceed $1.200 billion per year.
His situation would be reflected on rates of economic growth and Yemen's plans for fighting poverty and this will urge the people to mutiny and extremism and hindering development operations and fighting terror. Yemen would then be changed into an artery for resisting the foreign influence in the region and this in turn would threaten sea navigation and mercantile ships and weaken the American presence in the region.