Is Iraq War Fueling GCC’s Economic Boom?

Since the US-led invasion of Iraq in March, 2003, all six Gulf Cooperation Council (GCC) states have experienced high levels of economic growth, and the price of oil has doubled. Although the "Iraqi factor" can partly account for this upward trajectory in the price of oil, Emilie Rutledge writes that the unprecedented rise in global demand and lack of spare capacity are the more prominent factors. With the world having consumed half of its proven oil reserves already, the idea that it has reached peak oil is fueling speculation that prices will remain high for some time. Rising prices, however, have done little to dampen the growing demand for oil, especially in rapidly industrializing nations like China and India. "Although the occupation of Iraq has added to the 'terrorist/instability premium' in the oil price and contributed in a small way to the lack of spare capacity," says Rutledge, "it is not the main factor for the current oil price and therefore does not significantly contribute to the GCC's current economic boom." – YaleGlobal