Did Oil Drive the US Invasion of Iraq?

Sands of Iraq Held World's 2nd Largest Oil Reserve in 2003

US soldier standing guard as Iraqi oil well burns.
Mario Tamba / Getty Images

The United State’s decision to invade Iraq in March 2003 was not without opposition. President George W. Bush argued that the invasion was a vital step in the war on terror by removing Iraqi dictator Saddam Hussein from power and riding the Iraq of his weapons of mass destruction then believed to be stockpiled there. However, several members of Congress opposed the invasion, arguing that its actual primary goal was to control Iraq’s oil reserves.

'Utter Nonsense'

But in a February 2002 address, then-Secretary of Defense Donald Rumsfeld called that oily assertion "utter nonsense."

"We don't take our forces and go around the world and try to take other people's real estate or other people's resources, their oil. That's just not what the United States does," Rumsfeld said. "We never have, and we never will. That's not how democracies behave."

Nonsense aside, the sands of Iraq in 2003 held oil... lots of it.

According to data from US Energy Information Administration (EIA) at the time, "Iraq holds more than 112 billion barrels of oil — the world's second-largest proven reserves. Iraq also contains 110 trillion cubic feet of natural gas, and is a focal point for regional and international security issues."

In 2014 the EIA reported that Iraq held the fifth-largest proven crude oil reserves in the world, and was the second-largest crude oil producer in OPEC.

Oil IS Iraq's Economy

In a 2003 background analysis, EIA reported that the Iran-Iraq war, the Kuwait war and punishing economic sanctions had greatly deteriorated Iraq's economy, infrastructure, and society during the 1980s and 1990s.

While Iraq's gross domestic product (GDP) and standard of living fell sharply after its failed invasion of Kuwait, increased oil production since 1996 and higher oil prices since 1998 resulted in an estimated Iraqi real GDP growth of 12% in 1999 and 11% in 2000. Iraq's real GDP was estimated to have grown by only 3.2% in 2001 and remained flat through 2002. Other highlights of the Iraqi economy include:

  • Inflation in Iraq was estimated at around 25 percent.
  • Unemployment and underemployment were both high in Iraq.
  • Iraq's merchandise trade surplus was about $5.2 billion, although much of this was gained under UN-sanctioned control.
  • Iraq suffered a heavy debt burden, possibly as high as $200 billion (or more) if debts to Gulf states and Russia were included.
  • Iraq also had no meaningful taxation system and suffered from erratic fiscal and monetary policies.

Iraq's Oil Reserves: Untapped Potential

While its proven oil reserves of 112 billion barrels ranked Iraq second in the work behind Saudi Arabia, EIA estimated that up to 90-percent of the county remained unexplored due to years of wars and sanctions. Unexplored regions of Iraq, the EIA estimated, could have yielded an additional 100 billion barrels. Iraq's oil production costs were among the lowest in the world. However, only about 2,000 wells had been drilled in Iraq, compared to about 1 million wells in Texas alone.

Iraqi Oil Production

Shortly after its failed 1990 invasion of Kuwait and imposition of resulting trade embargos, Iraq's oil production fell from 3.5 million barrels per day to around 300,000 barrels per day. By February 2002, Iraqi oil production had recovered to about 2.5 million barrels per day. Iraqi officials had hoped to increase the country's oil production capacity to 3.5 million barrels per day by the end of 2000 but did not accomplish this given technical problems with Iraqi oil fields, pipelines, and other oil infrastructure. Iraq also claims that oil production capacity expansion has been constrained by the refusal of the United Nations to provide Iraq with all the oil industry equipment it has requested.

EIA's oil industry experts generally assessed Iraq's sustainable production capacity at no higher than about 2.8-2.9 million barrels per day, with a net export potential of around 2.3-2.5 million barrels per day. In comparison, Iraq produced 3.5 million barrels per day in July 1990, prior to its invasion of Kuwait.

Importance of Iraqi Oil to the US in 2002

During December 2002, the United States imported 11.3 million barrels of oil from Iraq. In comparison, imports from other major OPEC oil-producing countries during December 2002 included:

  • Saudi Arabia - 56.2 million barrels
  • Venezuela 20.2 million barrels
  • Nigeria 19.3 million barrels
  • Kuwait - 5.9 million barrels
  • Algeria - 1.2 million barrels

Leading imports from non-OPEC countries during December 2002 included:

  • Canada - 46.2 million barrels
  • Mexico - 53.8 million barrels
  • The United Kingdom - 11.7 million barrels
  • Norway - 4.5 million barrels

US Oil Imports vs. Exports Today

According to U.S. Energy Information Administration, the United States imported (bought) approximately 10.1 million barrels of petroleum per day (MMb/d) from about 84 countries. “Petroleum” includes crude oil, natural gas plant liquids, liquefied refinery gases, refined petroleum products such as gasoline and diesel fuel, and biofuels including ethanol and biodiesel. Of these, about 79 percent of imported petroleum was crude oil.

The top five source countries of U.S. petroleum imports in 2017 were Canada (40%), Saudi Arabia (9%), Mexico (7%), Venezuela (7%), and Iraq (6%).

Of course, the United States also exports (sells) petroleum. In 2017, the U.S. exported about 6.3 MMb/d of petroleum to 180 countries. The top five foreign customers for U.S. petroleum in 2017 were Mexico, Canada, China, Brazil, and Japan. In other words, the United States bought about 3.7 MMb/d of petroleum more than it sold in 2017.

History of Oil in US Middle East Interventions

Whether it specifically drove the U.S. invasion or not, oil has long played a key role in the formulation of America’s foreign policy as it applies to military, political, and economic intervention. 

In 1948, as the Cold War began to dominate American foreign policy, President Harry Truman worried that the Soviet Union could come to control oil supplies in the Middle East. Surprisingly, the Truman administration’s strategy was built not so much on defending the oil fields in the face of a possible Soviet invasion, as on denying the Soviet Union use of the oil fields if it should invade.

The administration quickly developed a detailed plan that was signed by President Truman in 1949 as NSC 26. Developed along with the British government and American and British oil companies without the knowledge of governments in the region, the plan called for the covert placement of explosives throughout the Middle East. In the event a Soviet invasion could not be repelled, as the last resort, the oil installations and refineries would be blown up and the oil fields plugged to make it impossible for the Soviet Union to use the oil resources.

At one point, the Truman administration considered supplementing conventional explosives with “radiological” weapons. However, as revealed in declassified documents, the option was rejected by the Central Intelligence Agency in June 1950. The CIA explained, “Denial of the wells by radiological means can be accomplished to prevent an enemy from utilizing the oil fields, but it could not prevent him from forcing ‘expendable’ Arabs to enter contaminated areas to open well heads and deplete the reservoirs. Therefore, aside from other effects on the Arab population, it is not considered that radiological means are practicable as a conservation measure.”

Ultimately, the plan was implemented and explosives were moved to the region. In 1957, worries over Middle Eastern oil intensified, leading the Dwight Eisenhower administration to reinforce the plan as fears of regional instability grew following the Suez crisis. Declassified documents indicate the plan—and the explosives—remained in place at least through the early 1960s.

Today, the prevailing belief in Washington is that Iraq and Iran continue to be aggressive, dangerous states that harbor and encourage terrorists. As a result, deterring their ability to encroach on Saudi oil fields—hence denying them additional oil revenues—remains one aim of American presence in the region.

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Longley, Robert. "Did Oil Drive the US Invasion of Iraq?" ThoughtCo, Oct. 4, 2021, thoughtco.com/oil-drive-us-invasion-of-iraq-3968261. Longley, Robert. (2021, October 4). Did Oil Drive the US Invasion of Iraq? Retrieved from https://www.thoughtco.com/oil-drive-us-invasion-of-iraq-3968261 Longley, Robert. "Did Oil Drive the US Invasion of Iraq?" ThoughtCo. https://www.thoughtco.com/oil-drive-us-invasion-of-iraq-3968261 (accessed June 26, 2022).

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