Adviser to the Prime Minister for Financial Affairs, Mazhar Muhammad Salih, explained today, Saturday, the extent to which Iraq and the oil market are affected by the fluctuation of its prices as a result of the continued competition and economic and commercial dispute between China and the United States of America.
Saleh said in a press statement, "There is a cycle of oil assets that is still in the interest of the oil-producing countries, which is indicated by the continuous rises in the prices of energy resources. It declined due to the global economic shutdown and the deterioration of international economic activity, specifically in the year 2020 due to the Corona pandemic.
He added, "The United States liberating part of its oil stocks comes to strengthen the oil supply and stabilize prices in conditions of still slow growth in GDP here and there. A serious case of stagflation in the coming days is trying to contain oil prices within the limits that reduce the growth of excess demand or the demand gap in the current global oil market.”
He continued: “Despite the foregoing, the ongoing tension between the great powers producing and consuming oil remains an important player in deciding energy policies in the world, since the outbreak of the trade war between America and China during the era of President Donald Trump in 2018, which began after the announcement of the American president on 22 March 2018 announced an intention to impose tariffs of US$50 billion on Chinese goods under Section 301 of the 1974 Trade Law which chronicles the history of unfair trade practices, intellectual property theft, and in retaliation by the Chinese government, tariffs have been imposed on more than 128 American products, the most famous of which is soybeans.
And he continued: “Here, it can be said, from a personal point of view, that weight in the oil equation between the two countries that constitute the forefront of the global economy in terms of gross domestic product and international trade and investment influence (the United States and China) requires looking at it, as the increase in oil prices will remain strategically in the interest of the United States. Being the largest oil producer in the world, it is able to produce 14 million barrels of crude oil per day, while China is one of the largest oil importers in the world and consumes about 14 million barrels of oil per day, most of it imported.”
And he added: “As oil prices will remain the weight of the egg between the largest producers (America) and the largest consumers (China) in the trade war game between them, and oil will remain as the first political and strategic commodity in the world and one of the tools of influence within the global economy whose prices cannot be easily compromised. Therefore, the intervention of the United States by offering part of its reserve stocks came after the strengthening of supply and the opening of the OPEC countries with an additional offer, which enabled Iraq, for example, to produce an additional 400,000 barrels out of its total production of more than 4 million barrels of oil per day.
He pointed out that "all of this aims to bring about stability and balance in the energy market in proportion to the desired growth and stability in the global economy and to avoid dangerous phenomena such as (inflationary stagflation) referred to above due to the continuing rising energy costs in the world as a result of the demand gap for energy resources."
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