Allawi: Saudi Investments Are a Major Driver for Iraq’s Rebuilding

(Photo: Ahmad Fathi)
(Photo: Ahmad Fathi)
TT
20

Allawi: Saudi Investments Are a Major Driver for Iraq’s Rebuilding

(Photo: Ahmad Fathi)
(Photo: Ahmad Fathi)

Iraq’s deputy prime minister said that Saudi encouragement and investments in Iraq play a great role in the country’s rebuilding process, especially in the fields of energy, electricity, petrochemicals and agriculture.

Ali Allawi, who is also Iraq’s finance minister and acting oil minister, stressed that oil for Iraq is an irreplaceable source of income as it represents 92% of the country’s exports.

Allawi called for the need to move towards a triple electrical grid between Saudi Arabia, Kuwait and Iraq, for what this could contribute to the development process, stating that his country's budget faces current difficulties with a decline in oil prices, which left the government concerned about the salaries of workers and retirees.

Speaking to Asharq Al-Awsat from Riyadh, Allawi said he met with the Saudi Energy Minister Prince Abdul Aziz bin Salman and Minister of Foreign Affairs Prince Faisal bin Farhan. Allawi also met with Saudi Arabia’s ministers of commerce and finance.

During his meetings, Allawi presented the officials with political and economic developments in Iraq, encouraging Saudi investment in his country.

Iraqi Oil

Allwai confirmed that his country is committed to the OPEC+ deal agreed on by a Saudi-Russian initiative.

“We are among the countries most affected by the decision to reduce the rate of oil production,” Allawi said, pointing out that most countries have safety nets in the form of investment funds and financial possibilities away from oil. But Iraq, according to Allawi, is not protected against low oil prices.

If the oil crisis drags on, Iraq will seek to have neighboring countries look differently at the situation in Iraq, as 92% of the country’s resources come from oil.

According to Allawi, areas of flexibility do not exist for Iraq and that the window of options is very limited.

Investment in Iraq

One of the main goals of the new Iraqi government is to restore economic and commercial balance in the country. Allawi pointed out that Saudi economic role in Iraq is somewhat “shy” knowing that the Saudi economy is the size of about half of that of the Arab world’s.

Compared to Turkey and Iran’s $12 billion investment in Iraq, Saudi Arabian investments stand at $1 billion annually.

“We want to change the balance, and we seek to increase the share of Saudi Arabia inside Iraq in various fields, including electricity, oil, petrochemicals and agriculture,” Allawi said.

He pointed out that the flow of Saudi investments in Iraq, despite the obstacles that face Saudi investors, plays a more important and bigger role in the process of rebuilding Iraq.

Allawi acknowledged that major obstacles are inhibiting Iraq’s growth. These hurdles are present in the legal system, administrative arrangements and stifling bureaucracy. The weak banking sector has also led to security problems.



Oil Steadies as Market Awaits Fresh US Tariffs

FILE PHOTO: A view shows an oil pump jack outside Almetyevsk in the Republic of Tatarstan, Russia, June 4, 2023. REUTERS/Alexander Manzyuk/File Photo
FILE PHOTO: A view shows an oil pump jack outside Almetyevsk in the Republic of Tatarstan, Russia, June 4, 2023. REUTERS/Alexander Manzyuk/File Photo
TT
20

Oil Steadies as Market Awaits Fresh US Tariffs

FILE PHOTO: A view shows an oil pump jack outside Almetyevsk in the Republic of Tatarstan, Russia, June 4, 2023. REUTERS/Alexander Manzyuk/File Photo
FILE PHOTO: A view shows an oil pump jack outside Almetyevsk in the Republic of Tatarstan, Russia, June 4, 2023. REUTERS/Alexander Manzyuk/File Photo

Oil prices were little changed on Wednesday as traders remained cautious ahead of US tariffs due to be announced at 2000 GMT, fearing they could exacerbate a global trade war and dampen demand for crude.

Brent futures were down 7 cents, or 0.09%, at $74.42 a barrel by 0858 GMT. US West Texas Intermediate crude futures fell 5 cents, or 0.07%, to $71.15.

The White House confirmed on Tuesday that President Donald Trump will impose new tariffs on Wednesday, though it provided no detail on the size and scope of the trade barriers, according to Reuters.

Trump's tariff policies could stoke inflation, slow economic growth and escalate trade disputes.

"Crude prices have paused last month's rally, with Brent finding some resistance above $75, with the focus for now turning from a sanctions-led reduction in supply to Trump's tariff announcement and its potential negative impact on growth and demand," said Ole Hansen, head of commodity strategy at Saxo Bank.

Traders will be watching for levies on crude imports, potentially driving up prices of refined products, he added.

For weeks Trump has touted April 2 as "Liberation Day", bringing new duties that could rattle the global trade system.

The White House announcement is scheduled for 4 p.m. ET (2000 GMT).

"The balance of risk lies to the downside, given that weaker than expected tariff measures are unlikely to drive a significant rally in Brent, while stronger than expected measures could trigger a substantial selloff," BMI analysts said in a note.

Trump has also threatened to impose secondary tariffs on Russian oil and on Monday he ramped up sanctions on Iran as part of his administration's "maximum pressure" campaign to cut its exports.

"Markets likely to be volatile ahead of the final announcements on tariffs and the scale of them. The threat of secondary tariffs on Russian crude continues to provide some support for prices, with more downside risk at present around tariff uncertainty," said Panmure Liberum analyst Ashley Kelty.

US oil and fuel inventories painted a mixed picture of supply and demand in the world's biggest producer and consumer.

US crude oil inventories rose by 6 million barrels in the week ended March 28, according to sources citing the American Petroleum Institute. Gasoline inventories, however, fell by 1.6 million barrels and distillate stocks were down by 11,000 barrels, the sources said.

Official US crude oil inventory data from the Energy Information Administration is due later on Wednesday.