Iran's foreign minister visited Iraq today for talks aimed at resolving a dispute over an oilfield. Tensions have been rising between the neighbouring countries since December 17, when Iranian forces seized an oil well in the al Fakkah field, about 320km south-east of Baghdad. The Iranian soldiers withdrew from the oil well, but have remained stationed close by, in border territory claimed by both countries.
"There will be a meeting within a week between the two countries about the borders," Manouchehr Mottaki said at a joint news conference in Baghdad with his Iraqi counterpart Hoshyar Zebari. "We have agreed to normalise the border situation between the two countries and return to the situation as it was before," said Mr Zebari, adding that Mr Mottaki's visit indicated "an honest desire to find solutions".
Nevertheless, the Middle East Economic Survey (MEES) said it was "significant" that the well was seized just days after Baghdad awarded contracts to foreign companies to develop seven other oilfields. Iraq produced about the same amount of oil as Iran until the First Gulf War in 1990. Since then, it has rarely pumped more than half its neighbour's volume. "These projects, if developed, would catapult Iraqi production capacity far above Iran's," MEES said.
Both nations are founding members of OPEC. The development has contributed to geopolitical jitters that in the past two weeks have helped the price of crude approach a 15 month high. "It looks like some kind of warning shot, and it could definitely escalate into a big worry for oil companies," said Samuel Ciszuk, the Middle East energy analyst with the consulting firm IHS Global Insight. @Email:email@example.com