VENEZUELA'S POSITION AND THE WAR IN IRAK
José Toro Hardy

For the first time, Venezuela couldn’t accommodate its production to alleviate the effects on the oil supply of the Middle East conflicts. Venezuela used to be considered one of the world’s most reliable oil suppliers. That situation has changed.

Venezuela build up its reputation over time. We earned that position because we had,

1. Significant oil reserves,
a. Proven conventional oil reserves in Venezuela account for 78,000 million barrels.
b. Additionally it counts with 270,000 million barrels of heavy and extra heavy crude oil and economically accessible at the Orinoco.
2. Extraordinary Geographic position
a. Venezuela is located on the western hemisphere, north of Latin America and close to the US – first oil consumer.

3. Oil history
a. Venezuela earned in the past 50 years its trustworthy position as an oil supplier. During the WW II, Venezuela provided more than 60% of the oil used by the allies and helped to win the war.
b. While the Korean War, Mossadegh nationalized the Anglo Iranian oil company and stopped its oil supply. Venezuela filled the gap increasing its oil production.
c. In 1967 during the Six Days War in Israel and the Arab nations, Gamal Abdel Nasser blocked the Suez Canal. Venezuela increased its production and took over to fulfill the world’s oil demand.
d. In 1969 Muhamar Gaddafi defeated Idrish king in Libya. At the end of the conflict the Arabic nations imposed an oil embargo to the western nations. Venezuela supplied oil to overcome the oil shortage.
e. In 1973 at the end of the Yom Kippur war, the Arabic nations imposed one more time an oil embargo to the western countries. Venezuela saved the situation and took over the oil supply.
f. In 1979 after the Iran Shah was defeated, the Islamic revolution started. The Iraqi’s oil production stopped. The world used once again Venezuela’s oil.
g. In 1991 Iraq invaded Kuwait. On his way out of Kuwait, Hussein set on fired most of the country’s oil fields .Venezuela increased its production to avoid a supply shortage.

The Middle East is one of the most conflicted zones in the world. Their problems started in biblical times, worsened after World War I with the collapse of the Ottoman Empire and after World War II with the creation of Israel. The internal conflicts of the Muslim world between the Shiites and Sunnites and the pending problems with the Kurds add more difficulty to the troubled area.

Venezuela, on the contrary, is a Christian western country and the only non-Muslim country in the OPEC. Therefore, Venezuela is not involved in geopolitical and religious conflicts that affect the rest of the OPEC members. For the first time in 2001, during the Iraq war, Venezuela was not able to increase its production to alleviate uncertainty in the oil market.
While the War in Iraq was happening, Venezuela’s oil production was stopped and the government fired 18,000 workers from that industry. Venezuela’s oil industry is deadly wounded; Chavez’s revolution discarded 200,000 years of experience.

Let’s see what could happen now in the oil market,

Iraq’s reconstruction could cost close to 170,000 million US$. In a few months, Iraq will be able to increase its oil production to pay for its reconstruction. Other OPEC nations could compensate their revenue’s decrease by increasing their production. Venezuela will not be able to do so.

It has been demonstrate throughout the history the every conflict in the Middle East plants the seed for the following one. In the case of Iraq, the Shiites, who account for almost 60 % of the population, are demanding the foreign forces ‘oust and the installation of a theocratic government as that of Iran. The Kurds, who are not Arabs and that account for 30 % of the population, are threatening with separation and with building a Kurd and independent state.

At the same time the situation in the Arab countries is far from being calm. The world needs Venezuela and the country needs to recover its reliability positioning as an oil supplier. By doing so, the country will re attract foreign investments. The changes could only happen with a new government.