Oil prices are forecasted to soar to $80 a barrel in the first quarter of 2003 in the event of a US attack on Iraq. According to the American Center for Strategic and International Studies (CSIS), prices are expected to triple if Iraq destroys its oil refineries in the midst of confrontation with the US. A barrel of oil currently trades for approximately $26.
The Center also predicts that the use of weapons of mass destruction by Iraqi forces and damage to oil facilities in neighboring Saudi Arabia and Kuwait by Iraqi missiles could also impact the price of crude.
The CSIS calculates that after oil reaches $80 in the first quarter; prices will drop to $60 in the second quarter and then to $50 in the third and fourth quarters. Equities exchanges and housing prices in the United States are expected to drop sharply, along with a decline in overall economic activity.
Prior to the Gulf War oil was selling at $24 a barrel. Prices jumped to around $40 two months after Iraq invaded Kuwait in 1990 and then dropped to $20 when it was evident that the US-led coalition would win the war. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
