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Oil is “flying high” and a parliamentary committee expects its continued rise
Economical 09/12/2023
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Baghdad: Haider Falih Al-Rubaie
The rise in global oil prices has constituted a positive turning point in the general budget, as it is expected that these rises will contribute to closing the hypothetical deficit gap and lead to an increase in financial returns, especially after “black gold” prices exceeded the $90 per barrel barrier, which constitutes an increase of 21 dollars over the default price in the budget, which amounts to 70 dollars, which prompted many specialists to demand the development of thoughtful plans to invest these increases, and to work on implementing strategic projects to raise the production value in the parallel non-oil sectors.
According to these price increases, the Parliamentary Oil and Gas Committee suggested that oil prices would continue to rise globally, attributing the reason to a decline in supplies of “black gold” as a result of the positions of Saudi Arabia and Russia, which decided to reduce their oil production, suggesting that the country’s fiscal deficit would decrease by 50%.
In the midst of this, energy specialists believe during their talk to “Al-Sabah” that “the increase in oil prices may not be of great importance in the rentier Iraqi economy, as it depends entirely on the revenues generated from oil prices, the rise of which will lead to global price increases.” In various goods and materials that Iraq will be forced to import at high prices due to its inability to produce them locally.
A member of the Parliamentary Oil, Gas and Natural Resources Committee, Representative Zainab Jumaa Al-Moussawi, told Al-Sabah: “Iraq is one of the rentier countries that depends by more than 95% on the financial revenues generated from the sale of crude oil in global markets, and governments are always working to Setting an approximate price in the general budget for the price of a barrel of oil in order for it to be balanced. In the event that global prices rise more than what is specified in the budget, then Iraq will achieve large financial surpluses, and as it is now, after the price of one barrel of oil exceeded the limits of $90 at the time of the budget, it was based on The price is $70 per barrel, which means there is a surplus estimated at about $20 per barrel.”
Al-Moussawi expected to achieve large financial surpluses as a result of these increases, which would lead to reducing the estimated budget deficit by up to 50%, stressing the need to exploit these increases to support strategic, urban and service projects, suggesting at the same time that oil prices would continue to rise until the end of the year. The current world is a result of the commitment of Saudi Arabia and Russia to reduce, which led to a rise in global demand for black gold, indicating that these rises could reach the range of $120 per barrel during the coming periods.
The expert in energy affairs, Dr. Bilal Al-Khalifa, did not stray far from the previous opinion, when he confirmed during his speech to “Al-Sabah” that “the Iraqi economy is completely linked to oil prices, and therefore any rise in prices represents an increase in financial revenues, which means reducing the planned budget deficit.” the public.
Despite the positive results that Iraq can achieve as a result of oil price increases, Al-Khalifa sees some negative aspects that could accompany these increases, indicating that the rentier Iraqi economy depends almost entirely on oil revenues, and there are no large industries that can cover the need for... The market, therefore, a large percentage of oil revenues will go outside Iraq to purchase commodities that are closely linked to oil prices, and therefore any rise in oil prices will be offset by another rise in the prices of goods, materials, and services in global markets.” The energy expert believes that oil markets are linked to many factors
. Which could lead to a reduction or rise in global prices, especially related to the approaching winter, global tensions, and OPEC decisions.
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