Home Page - Gulf in the Media
HomePoliticsEconomy                               Set Gulfinthemedia.com as home page
Opinions
"Postings of opinions published in the Gulf and international newspapers
 Print  Send This Page
Save Listen to this Article
Effects of Arab Spring on global oil industry   

Gulf Times - 08 May, 2012
Author: Dr Yasser al-Saleh

Almost 15 years ago, I started my professional career in the oil industry by undertaking extensive training on board large oil tankers that transport crude oil from Saudi Arabia to the United States. The tanker crews always welcomed the shorter trip when we returned via the Suez Canal instead of having to travel around the tip of Africa.
Eight hours transit in the canal was an occasion to appreciate and reflect on the efforts that had been put into constructing this key shipping channel, and also the strategic importance of the Middle East and North Africa (Mena) region.
The so-called Arab Spring or Arab Awakening, which brought political instability to Libya, Egypt, Yemen and more recently Syria, has brought another opportunity to reflect on the significance of this region through considering the likely profound impact that any political volatility can have on the global oil market.
The Mena region has massive hydrocarbon resources (some 60% of the world’s proven oil reserves and 45% of global gas reserves). Most of those resources are concentrated in the Gulf Co-operation Council (GCC) region, which is home to approximately 40% of the world’s proven oil reserves and 25% of natural gas reserves. So, the Mena region, and the GCC in particular, is of great importance to the global energy market and to the economic stability and prosperity of the world.
The current political unrest has already been reflected by a surge in oil prices, but the world hopes that this will be the only short-term effect of the transitional phase that the region is currently experiencing.
Consider the case of Libya – a member of Opec, which has the largest national reserves in Africa. Libya is blessed with some of the world’s highest quality crude oil, and its geographical proximity to Europe has always placed the country in a favourable position in the global oil market.
In 2010, Libya was exporting around 1.8mn barrels of oil per day in addition to substantial amounts of natural gas. It is therefore no coincidence that the Libyan revolution has been a key reason for the recent rise in oil prices, despite Saudi attempts to bridge the oil production gap.
As a result of the escalation of events in Syria, among other factors, Iran’s oil production has begun to be negatively affected. Additionally, the European Union voted earlier this year to stop buying Iranian oil from this summer, but the Iranians did not wait and cut off oil sales early.
From its position as the global “swing producer”, Saudi Arabia has recently reiterated its pledge to keep the oil market well supplied if sanctions hit Iran. However, any military sanction on Iran is likely to cause a host of serious events, which may include closure of the Strait of Hormuz.
Speak to any oil professional who works on shipping oil through the Strait of Hormuz and they will tell you of its importance to the oil industry. Around 18mn barrels of oil – originating from Saudi Arabia, Iran, Kuwait, Iraq and the United Arab Emirates – pass through the Strait on a daily basis. An alternative route could be the Fujairah Pipeline (currently under construction), which upon completion should be able to deliver most of Abu Dhabi’s oil exports to the Indian Ocean.
To put this into perspective, the amount of oil that could be shipped through this pipeline represents only 10% of the total oil currently transiting this strait. Another alternative route – albeit an operational one – is the Saudi pipeline, known as Petroline. However, presently, this pipeline can only carry around 25% of the amount of oil shipped through the Strait of Hormuz.
The closure of this Strait will not only result in “skyrocketing” oil prices with disastrous effects on the global economy, but will also hurt the Iranian economy which currently relies on the Strait to transport oil, food and other essential goods.
Thus, apart from being blessed with the vast majority of the world’s hydrocarbon reserves, the Mena region has a major geographic significance due to its influence on key oil and gas shipping routes, which include the Strait of Hormuz as well as the Suez Canal and Bab-el-Mandeb.
Moreover, bearing in mind that production in many of the non-Mena oil fields has already peaked, and with Iraq and Libya now offering high production targets, many industry analysts anticipate that the Mena region will be responsible for supplying at least 90% of global oil production over the next 20 years.
Substantial investment will be needed to develop oil and gas fields in the region, which adds to the challenges currently facing those GCC governments that seem to face a relatively lower chance of revolutions taking place within their territories.
Taking such factors into account, one can only envision an increasingly important position for the Mena region.
However, without greater effort to respond to increasing pressures, particularly with regard to issues related to transparency, social equality, democracy and unemployment, the region is destined to witness endless public uprisings breaking out with a disastrous impact on the global economy.

Dr Yasser al-Saleh, senior research fellow at INSEAD Innovation and Policy Initiative in Abu Dhabi.
 
Qatar: the return of prodigal son
Source : Al Arabiya TV  
Date : 2014-04-23
Author : Faisal J. Abbas
There might not have been a better opportunity for Qatar to find its way back to the bosom of its neighbors than the last GCC foreign ministers meeting in Riyadh....
20 years later, Rwandan genocide echoes Syria bloodbath
Source : Al Arabiya TV  
Date : 2014-04-23
Author : Yossi Mekelberg
Twenty years have passed since the world witnessed both in horror and haplessness as a genocide unfolded in Rwanda. An estimated 800,000 Tutsis and moderate Hutus were massacred brutally by Hutu...
Saudi Arabia's healthcare model and U.S. Republicans
Source : Al Arabiya TV  
Date : 2014-04-23
Author : Jamal Khashoggi
Years ago during a business dinner in Washington D.C., I asked a senator from the Republican Party about what distinguishes his party from its rival, the Democratic Party. In a...
Vote or Die: Syria's reelection of a mass murderer
Source : Al Arabiya TV  
Date : 2014-04-23
Author : Brooklyn Middleton
At the same time the world is applauding the Syrian regime for reportedly shipping out 80 percent of its chemical weapons and as Bashar al-Assad announces he will run in...
Dealing with MERS outbreak requires firm measures
Source : Al Arabiya TV  
Date : 2014-04-23
Author : Abdulrahman al-Rashed
When signs of an epidemic appear, people have the right to know what's happening in the utmost transparency. This is a life or death issue. Empty reassurances and procrastination are...
Bahrain: tighten your belt...
Source : Gulf Daily News  
Date : 2014-04-23
Author : Rizwan Malik
Bahrain has been ranked fourth according to the Islamic Finance Country Index (IFCI), a composite ranking of more than 40 countries, published in Global Islamic Finance Report (GIFR) 2014....
Two Racist Proposals
Source : Kuwait Times  
Date : 2014-04-23
Author : Dr Hassan Abbas
No one can blame lawmakers for acting towards the benefit of citizens and the nation. But at the same time, that does not give them the right to practice discrimination...
A cultural program cementing Saudi-Pakistan friendship
Source : Saudi Gazette  
Date : 2014-04-23
Author : Ali Al-Ghamdi
The Karachi-based World Muslim Congress (WMC) recently organized, in cooperation with the Pakistan consulate, a cultural event called the “First Saudi-Pakistan friendship program” in Jeddah....
A dependence resulting from prosperity
Source : Saudi Gazette  
Date : 2014-04-23
Author : Tariq A. Al-Maeena
Following the oil boom years of the 1970s and 80s which translated into a lot of cash flowing into the Kingdom, a new social trend began to manifest itself. Households...
KSA needs land reforms
Source : Arab News  
Date : 2014-04-23
Author : Abdulateef Al-Mulhim
Saudi Arabia is one of the biggest countries in terms of landmass spread over an area of around one million square miles with a population of about 30 million....
Jordan ups the ante against infiltrators
Source : Arab News  
Date : 2014-04-23
Author : Osama Al Sharif
In an extraordinary development, Jordanian air force intercepted and then destroyed at least four vehicles last Wednesday that tried to cross the border from the Syrian side into Jordan....
Iraq's New Wave of Suicide Bombers
Source : The Counter Punch  
Date : 2014-04-22
Author : Patrick Cockburn
A wave of suicide bombings carried out by foreign volunteers entering Iraq from Syria is killing some 1,000 civilians a month, bringing the country back to the brink of civil...
Boston and Baghdad
Source : The Antiwar.com  
Date : 2014-04-22
Author : Ralph Nader
Greater Boston and its citizens are the focus of media attention in recognition of the first anniversary of the Boston Marathon bombings that took three innocent lives and injured over...
The closing of Abu Ghraib and the U.S. failure in Iraq
Source : Los Angeles Times-U.S.A  
Date : 2014-04-22
Author : Andrew J. Bacevich
The government of Iraq last week announced that it had padlocked the infamous prison at Abu Ghraib. The gates are closed. The inmates moved. Whether the closure is permanent or...
The dividend policies and their impact on securities market
Source : Oman Daily Observer  
Date : 2014-04-22
Author : Lo'ai Batainah
The gross profits of the 74 MSM listed companies stood at about RO481.2 million; a growth by more than 10 per cent compared to 2012. This means that the cash...
Total 200 Results in 14 Pages
1 
For more news, views and reports about this topic, please subscribe
to GRC website: www.grc.net
Thu Apr 24, 2014| 23-جماد ثاني-1435هـ
UN, Arab League oppose Syrian poll plan
Pakistan must cope with rapid changes in Saudi Arabia: Minister
Iran MPs seek inquiry into jail assaults
Oman expects 5% growth with steady oil prices
Barrak claims billions in Kuwaiti public funds siphoned off
Non-hydrocarbon sector set to account for 57.2% of Qatar GDP in 2016: QNB
Amnesty urges Qatar to protect migrant workers
Emaar first quarter profit climbs 55%
MERS: Fakieh assures transparency
Top speakers set for refining, petchem forum in Bahrain
Mohammed, Michel witness arms deals
Iran to complete gas export pipeline to Iraq by next 4 months: official
Five people killed, 13 injured in Baghdad blast
Consortium in $ 500m deal for National Petroleum Services
Turkey to boost electricity imports from Iran: energy minister
Syria's chemical weapons wild card: chlorine gas
`
    Newspaper Editorials
America's Asian concerns
Ballot in Syria
More>>  
    Opinions
KSA needs land reforms
Jordan ups the ante against infiltrators
More>>  
    GCC Press Agencies
Day's main stories from the GCC Press Agencies
    Reports
The Legal Classification of the Armed Conflicts in Syria, Yemen and Libya
More>>  
    Bank Reports
GCC Markets Performance – March 2014
GCC Earnings Review – 2013
More>>  
    GRC Analysis
Saudi-Vietnam Relations
Saudi-Philippines Relations
Enhancing Saudi-Japan Relations
    GRC Commentary
On Relations between Rulers and Citizens: The Need for a New Social/Political Contract in the GCC States
Key Issue Facing the Saudi Ruling House.
    GRC Book Review
Beyond Regionalism? Regional Cooperation, Regionalism and Regionalization in the Middle East
India, GCC and the Global Energy Regime: Exploring Interdependence and Outlook for Collaboration.
    GRC Press Release
Gulf Research Center press releases to the media
    GRC Publications
The EU and the GCC in Global Governance: Limitations and Future Potential
Saudi Arabia’s Legal Framework of Migration
Kuwait’s Legal Framework of Migration
    GRC Newsletters/Bulletins

Enter your email to get the Newsletter
Go
      
Privacy Policy | Contact Us | Terms & Conditions | About Us |
Weather | Qibla Directions | Hijri Date Conversion Tool
Full Page :total time:1  |   29-- 30 Middle Page :0  --   | Right : 29 - 29--en--sess-enreq-en-coming