Dubai: The death of Iraq's Al Qaida leader will not bring more security to the vital oil sector in the country, where political instability and violence will continue to hamper exports and investment, analysts said.
Oil prices fell more than a dollar after Iraq announced yesterday that Abu Musab Al Zarqawi, whose group has claimed some of the bloodiest attacks in Iraq, had been killed.
Iraq's failure to return oil exports to pre-war levels, due to violence and mismanagement, has fuelled crude's price rally. "The end of Zarqawi will not be the end of threats to oil exports in Iraq," said Mustafa Alani, an Iraqi expert at the Gulf Research Council in Dubai.
"Yes, Al Qaida attacked oil installations but they were not the only actors and they were not the main actors," he said.
"There is also a new factor political parties that are using threats against oil to gain leverage."
Insurgents in Iraq have waged a bloody campaign against US-led forces and the Iraqi government, repeatedly sabotaging oil infrastructure in the north to hamper efforts to boost crude oil exports, the main source of government revenue.
Iraq, which sits on the world's third largest oil reserves, has been struggling to produce two million barrels per day (bpd), down from nearly three million before the US-led invasion in 2003.
Its exports in May were around 1.5 million bpd, according to shipping sources.
An Iraqi oil official hoped that Al Zarqawi's death and the formation of a permanent government would boost stability.
"We hope the appointment of new defence and interior ministers and Al Zarqawi's death will be a positive indicator to security in the country," he said.
