Is There a Correlation Between the Level of Violence and the Output of Oil?
Some analysts have been asking the question: is there a direct relationship between the level of violence in a country and its output of oil? In Iraq there most certainly is. Iraq has witnessed its worst violence since 2008, it has seen its oil production decrease considerably. As reported last week by CNN, “the latest figures from Iraq’s Ministry of Energy illustrate the “direct link between the violence and the country’s oil output.”
Judge for yourself: Iraq’s oil production went from 77 million barrels during the month of May, dropping to under 70 million barrels in June. At the same time the United Nations recorded the number of killed in this country going from 595 in April to 963 in May and to more than 1,000 in July. This past weekend alone has seen a sharp rise in violence
And judging from what has been happening it Iraq in the past two weeks — multiple car bombs, bombings in cafes, etc., — the numbers of death are certain to rise past the 1,000 mark. And sure enough the oil production will suffer some more. Says John Defterios, CNN’s Emerging Markets Editor and anchor of Global Exchange, this has caused major setbacks for Baghdad’s aspiration to challenge Saudi Arabia as the top oil producer.
The immediate question that comes to mind is the following. Why are those responsible for the violence in Iraq continue their campaign of terror when they know it is hurting the economy of the country. The economy is the lifeline of a nation. A healthy economy produces jobs, which encourages the consumer to spend money on products. That creates a demand for more products and thus a demand for more jobs.
The trend is indeed quite clear. Looking only at the last three moths’ Iraqi oil production, the country saw a decrease of 2.328 million barrels per day in June. Experts say this is the lowest level not seen since March 2012.