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Who's ahead

It's not too soon to declare the winners of the war in Iraq. In rough order, they are Exxon Mobil, Royal Dutch Shell, Hugo Chavez and Vladimir V. Putin.

When U.S. troops invaded Iraq in 2003, a barrel of crude oil sold for $27. On Friday, it was at $77. It makes all the difference.

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Is the war entirely responsible for the high prices? Of course not. But the run up to what are now near-record prices began just weeks after the U.S. invasion, helped along, somewhat, by the decline in Iraq's production. Jitters in the greater Middle East play a role, too, reflected in a market war premium and the reluctance of the Organization of Petroleum Exporting Countries to lower prices by increasing production.

Demand from China and India, refinery bottlenecks, trouble in Nigeria - all these contribute to the high price of petroleum products. But the war is unmistakably an important factor, and if the question has to do with who has come out ahead because of Iraq, the answer is: any organization that can take advantage of more expensive oil.

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Mr. Chavez and Mr. Putin, the presidents of Venezuela and Russia, have made a handsome political profit from the high oil prices.

But Exxon Mobil, which reported profits of over $10 billion in the second quarter, and doesn't have the imponderables of statecraft to worry about, would seem to be on even firmer ground. So would Shell, which saw an 18 percent increase in profits to $8.67 billion; Chevron, where profits rose 24 percent; and even British Petroleum, which has been struggling but would be struggling a lot more without the cushion of the high-priced oil.

Russia's major oil firm, Rosneft, is piled with debt and would be in serious trouble if the price of oil were below $50. Its management is not worried.

By some measures, the oil companies' profits are not out of line. Their margin on sales, once about 6 percent, is edging closer to 10 percent; that's still less than pharmaceuticals, tobacco firms and most newspapers make. But the absolute amount of money involved is staggering - about $110 million a day for Exxon Mobil. Wall Street, characteristically, was disappointed in the company's performance, which weakened slightly thanks to lower prices for natural gas. All the more reason for the company to be grateful for the high price of oil.

Iraqis fear the U.S. wants to make their oil fields vulnerable to American acquisition. (There's a bill in Congress that would prohibit exactly that.) It's a reasonable concern. But with some analysts predicting that a barrel of crude could go for $100 by this winter, it's getting time to face reality: Big Oil has already won the war.



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