Gas prices have risen 30 percent after US and European sanctions were imposed on Russia’s banking, financial and commercial sectors, as Moscow suspended gas exports to Germany and some European countries due to leaks and repairs to the main North Stream pipeline. Higher gas prices for household production and consumption in Europe are the biggest threat this winter. This issue and other factors have led to decreasing European Euro to a low level, which risks further reduction against global currencies, especially the US dollar that currently $1 = 0.99 euro.
If Iran returns to the world oil market, oil prices will fall directly. Western and Iranian negotiators have intensified their meetings to return Tehran to the negotiating table. Indeed; as much as Iran needs an agreement and the exciting of sanctions, the United States and Europe need an agreement more, especially for oil and natural gas. These EU attempts are mostly involved in economic sector. Especially after the West imposed economic and trade sanctions on the Russian oil sector, the West wants to compensate for the decline in oil volumes through Iran, and decrease its prices. But so far, little has been achieved in the meetings.
In the past, OPEC and the Gulf countries in general and Saudi Arabia in particular, have been against increasing production and exports, even Saudi Crown Prince Mohammad bin Salman, openly rejected the request of US President Joe Biden in this regard. In the latest meeting of OPEC Plus, it has decided to cut production by 100,000 barrels per day, which lead to increase the Oil prices three percent. Market inflation, for all commodities, is a major global crisis, in this regard, oil exporting countries, prefer the level of oil exports would be at this level or may be less, in order to meet the needs of their countries.
Therefore, any decline in oil prices will directly reduce the revenues of exporting countries, in this center (Iraq and Kurdistan region), are at risk of this disaster, because in Iraq more than 90% of revenues, depends on oil revenues. According to the Kurdistan Regional Government (KRG), the Kurdistan Region exports 420,000 barrels of oil per day, providing an average of $550 million monthly for salaries and expenses. Unfortunately, due to the high costs of extraction, transportation and marketing, only 49% of oil revenues go back to the KRG. OPEC Plus countries do not want to increase oil production and exports to keep oil prices high.
Russia’s goal is to cut the economies of oil-consuming countries, especially the European Union and the United States, in response to sanctions, but the goal of oil exporting countries (OPEC) to generate more revenue for their budgets. What is currently threatening oil prices is the agreement between Iran and Western countries, by returning to negotiations, agreements, lifting and easing sanctions on Tehran, especially in oil exports will directly increase volume of oil, thus oil prices are falling. Tehran has stored oil that is estimated at about 100 million barrels. It also can export more than 1 million barrels-per-day, increasing the volume of oil in the markets, increasing supply and lowering oil prices.
What further increases the burden on families and residents of Kurdistan region; the lack of kerosene for daily uses, we can say; for this winter, 90% of families in the region do not have kerosene. The price of a barrel of kerosene for households is above 250,000 dinars, which is high and every family cannot provide enough oil at this price. Therefore, the Kurdistan Regional Government should provide at least one barrel of high quality oil to every family before the winter season to ease the burden. In short; any decline in oil prices will directly lead to a generally unfavorable economic and financial situation in the region, where the salaries of the employees will be more important.