Need for oil dollars in Iran, Iraq best hope for halting war in Gulf

Once again, the tie that binds Middle East nations most firmly together appears to be the oil dollar. Oil politics and pressures may, in fact, prove to be the key to ending the war between Iraq and Iran.

"It is truly remarkable," says a longtime Mideast economic expert in an interview with the Monitor. "When it comes to the pocketbook, they do achieve some amount of agreement."

The agreement to which he refers was reached this week in Bali, Indonesia, where the 13 OPEC member nations -- including those actually warring in other spheres -- sat down to decide on a base price for the lion's share of the world's oil.

ACynic might up the ensuing agreement to increase the base price $2 to $4 to "dollar chasing." But while of little solace to consumers, producers say the increase also may be seen as inevitable, due to the crucial, nonreplenishable nature of oil. Added to that is the producers' desire to protect income against inflation, and to affect world demand through higher prices.

That OPEC convened at all is remarkable. The two member states slugging it out along the Shatt al Arab estuary sat down in the same room, although host Indonesia had to sit between them to keep the peace. A provocative dimension was present due to Iraq's recent capture of Iran's oil minister, Muhammad Tunguyan. Nevertheless, the meeting proceeded, and at midweek a communique acceptable to all was issued.

Only 20 days earlier, business as usual was impossible at a summit meeting among Arab kinsmen in Amman, Jordan. Five of 21 Arab nations, plus the Palestine Liberation Organization (PLO), boycotted the conference. What is more , until last week, Jordan and Syria stod on the brink of war.

The latter two Islamic-Arab states are not themselves members of OPEC, but they are closely allied to oil giants: Jordan to Saudi Arabia, Iraq, and the Gulf nations; Syria to Libya, Algeria, and non-Arab Iran.

While that crisis has passed from its hot stage, it still smolders. Jordan's king Hussein recently said Syria saber-rattling has caused critical division in Arab ranks. Syria's President Hafez Assad, for his part, on Dec. 17 renewed his implicit charges that Jordan was behind recent terror attacks in Syria.

Yet in the dispute between Syria and Jordan it is the holder of the oil card who has been able to coax the nations away from a clash. In this case, Saudi Arabia, the primary oil supplier and bankroller of both states acted as intermediary.

Increasingly, oit appears to be the common ground in the Mideast. While analysts do not believe OPEC ever will become involved in actual peacemaking between Iran and Iraq, the strain on OPEC members -- notably, once again, Saudi Arabia -- may work to establish enough peace in the Gulf so that significant amounts of oil can be pumped once more from Iraq and Iran.

During the fall and early winter, slack demand, surplus oil, and extra pumping by Saudi Arabia helped stave off an oil crisis. Saudi production is currently at 10.3 million barrels per day. Saudi Oil Minister Ahmad Zaki Yamani indicates his nation is earger to bring production back to prewar levels.

Mr. Yamanu and oil industry experts predict a crunch in the market by spring unless consumpton remains moderate, oil stores are utilized, and Iran and Iraq come back on line. The International Energy Agency warns that demand will increase this winter, pressure will be felt, and the slack will grow taut.