Russia » Economics
Author`s name Ольга Савка

Dollar To Rise After June17th

The export of the Iraqi oil is about to resume

As it is well known, the currency trade is a competition between nations. The invention of the combustion engine has turned this` competition into the struggle for oil. For the American dollar, the victory in this struggle is a matter of life and death. The USA produces only five million barrels of oil from the total daily amount of consumed oil - 20 million barrels. This means that the United States imports 15 million barrels of oil on a daily basis – 75 percent of the national consumption. It was the trouble with cheap oil deliveries that stopped the growth of the American economy after 9/11 attacks. The USA's incursion in an oil-abundant country was inevitable in the beginning of 2003. The attack on Iraq on March 20th of the current year marked the start of the new cycle of struggle for the global transformation.

All currency traders are currently waiting for the results of America's victory in the global international competition – the first shipment of the Iraqi oil to the USA. When George Soros says that he knows, what is going to happen to the US dollar, it means that all that he knows is the date, when the first tanker loaded with the Iraqi oil will set for America. We know this date now too, with the help of the head of the Iraqi oil export department chief, Mohammed al-Jibouri. The Iraqi official told Reuters today that the results of the first tender to acquire the Iraqi oil would be summed up on June 10th, and the first vessel would set for the States from Mina al Bakr port on June 17th.

It is not hard to guess, which countries are going to win the tender (and future tenders too). Apparently, the US dollar will rise all of a sudden on June 17th. The exact knowledge of the champion in the international competition gives a reason to make some more forecasts regarding the development of the world market of oil.

First of all, after June 17th, 2003, the dollar will repeat its growth of 1999-2001. The USA attacked Yugoslavia in 1999, when the rate was $1,19 per euro. After the occupation of Kosovo in June of 1999, the American currency started growing and reached the level of $0.84 per one euro. American winnings in Iraq are a lot larger than the ones in Yugoslavia, so one shall expect a faster growth of the American currency worldwide. It might gain 40 or 45 percent very quickly. Second of all, the dollar strengthening will last long. The Iraqi crude reserve is evaluated in the sum of $112 billion barrels. The daily crude production in Iraq before the war made up some three million barrels. According to exerts' estimates, the crude output might reach the level of eight million barrels a day by the end of the current year. Fifteen million barrels of oil daily may become real too, if there are certain investments for that. It is easy to calculate that the States will cover the import of cheap crude for forthcoming 20 years.

Finally, crude-manufacturing countries will not manage to avoid the crisis and it will ruin their national currencies. Americans would not wage war in Iraq to pay huge money to someone, for the prime cost to extract the Iraqi crude and deliver it to the USA makes up five dollars per barrel. As far as Russia is concerned, the Russian oil stock market might collapse and the dollar rate might reach the level of 60 rubles per one dollar (one USD costs about 30 rubles at present). It is time Russia should think of where it can get profits from for the coming decade or two.

Igor Suzdaltsev
Candidate of historical sciences
Moscow