03 May 2005

Why Did Iraq's Oil Output Drop In 2001?

I just got around to this morning's New York Times, and saw this article about Iraq's oil production falling short of expectations. In fact, it is significantly lower even than production under the sanctions regime.

No news there.  Anyone keeping track of the situation knows that the insurgents have been targeting the oil pipelines and other production infrastructure from the beginning.  That's not what got my attention.

Look at this graph closely:

You see that the highest production for the last 20 years, about 3 million barrels, fell off a cliff after the invasion of Kuwait and the First Gulf War.  No surprise.  Now look at the last five years.  The production rate during the Oil-For-Food scheme maxes out around 2.5 Mbl, then drops pretty suddenly.  In 2001.  Why?

There's a local minimum in 2003 due to our invasion, obviously.  But why did production drop the most 2 years earlier, right when the current administration was taking office?

I'm hoping someone who knows about the industry can explain this, because the article doesn't mention it, and I'm mystified.

There's a diary from this morning by thirdparty addressing the fact that even if you're OK with expending blood and treasure for oil, we still got conned.  But no mention of the 2001 drop there either.


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