Black Gold

For those of you that didn't know before the invasions of Afghanistan and Iraq that there might be some value in controlling the countries which hold the world's largest oil reserves, CNN reports, "World oil and gas 'running out'".

Basic supply and demand theory states the more scarce a resource, the greater its value - especially in times of increasing consumption. Oil fits this profile very nicely and America happens to be the single largest consumer of oil on the planet.

The countries with the largest oil reserves (measured in billions of barrels) are:

1 Saudi Arabia (265.3)
2 Iraq (115)
3 Kuwait (98.8)
4 Iran (96.4)
5 United Arab Emirates (62.8)
6 Russia (54.3)
7 Venezuela (47.6)
8 China (30.6)
9 Libya (30)
10 Mexico (26.9)

Source: Aneki

The largest oil producer, Saudi Arabia, is already on-side (Osama Bin Laden and the vast majority of the 911 hijackers are/were of Saudi origin but that's neither here, nor there), Iraq has the world's second largest oil reserves and Iran the fourth largest. Both Iran and Iraq, coincidentally, feature in George Bush's list of 'axis of evil' countries that he targeted in his State of the Union address in early 2002. The list was later expanded to include Cuba, Libya and Syria. One down...

Iraq had insisted on being paid for oil in Euros rather than dollars. Russia is thinking of switching oil trade from Dollars to Euros and, according to Youssef Ibrahim, managing director of the Strategic Energy Investment Group in Dubai and a member of the U.S. Council on Foreign Relations, "a number of countries within OPEC would prefer to trade in euros." Ibrahim maintains that this currency switch was one of the reasons that the US attacked Iraq and goes on to say, "There is a great political dimension to this. Slowly more power and muscle is moving from the United States to the EU, and that's mainly because of what happened in Iraq."

If the US was upset by Iraq's shift to the Euro, they're going to be more than mildly irritated should Russia and bunch of other OPEC countries wish to do the same. Given that it is oil trading in dollars that literally gives the US a license to print money, any further shifts by any of the major players is going to have serious repercussions on both the American economy and the balance of global power.