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.
 
A prayer for peace
Source : Kuwait Times  
Date : 2014-07-28
Author : Abd Al-Rahman Alyan
Ramadan is a time of worship and a time to feel the pain of those who are unfortunate; those who cannot eat or drink when their body needs it; those...
Iran knows better than to jeopardize the nuke talks
Source : Al Arabiya TV  
Date : 2014-07-28
Author : Camelia Entekhabi-Fard
Mohammad Javad Zarif, Iran's foreign minister, holds one of the heaviest duties in the Islamic Republic – the leading of negotiations over its nuclear program. In the past year, since he...
Learning the Lessons of the Past
Source : Asharq Al-Awsat  
Date : 2014-07-28
Author : Fayez Sara
The General Secretariat of the Syrian National Coalition decided to dismiss the interim government of the Syrian opposition led by Ahmad Tu’mah by a two-thirds majority in its last meeting....
Maybe…!
Source : Saudi Gazette  
Date : 2014-07-28
Author : Hussein Shobokshi
Again we write about Israel attacking and killing innocent civilians, again we write how Israel continues destroying homes using its enormous military might against innocent women and children....
Thank Allah for every blessing
Source : Gulf Today  
Date : 2014-07-28
Author : Harun Yahya
Every person is in need of Allah at every instant of life. From the air one breathes to the food he eats, from the ability to use one’s hands to...
A democratic imam
Source : Saudi Gazette  
Date : 2014-07-28
Author : Raja Al-Otaibi
It may be the first such incident in our country. A mosque imam in east Riyadh asked worshippers to decide the time of the Tahajjud (predawn voluntary prayers) by voting...
Humanitarian breakthrough in Syria?
Source : The Peninsula  
Date : 2014-07-27
Author : Madeleine Albright & David Miliband
The Middle East suffers a new trauma every week. Iraq is disintegrating, as the Syrian conflict crashes across its borders. Gaza is in flames, as long-term neglect takes its toll....
Kerry's political dilemma
Source : Asharq Al-Awsat  
Date : 2014-07-27
Author : Samir Atallah
There can be no doubts about the intentions of US Secretary of State John Kerry. From his actions as head of the US State Department, it is clear that he...
ISIS and the world
Source : Kuwait Times  
Date : 2014-07-27
Author : Muna Al-Fuzai
ISIS militants have formally declared an "Islamic State" with a new caliphate in Syria and Iraq demanding that all Muslims "pledge allegiance" its leader. Few weeks ago, I wrote about...
The Arab world has lost its soul
Source : Saudi Gazette  
Date : 2014-07-27
Author : Khaled Al Maeena
For those Arabs born in the early fifties no decade in their history passed off without any major event. The 1956 invasion of Suez by Israel, Britain and France referred...
Israel should accept Hamas’ demands
Source : Arab News  
Date : 2014-07-27
Author : Rasheed Abou-Alsamh
It is amazing that more than three weeks after the start of this Israeli aggression on Gaza, no one is discussing the proposal of the Palestinian group to put an...
Does Iran genuinely support Hamas and the Palestinians?
Source : Al Arabiya TV  
Date : 2014-07-25
Author : Majid Rafizadeh
Recently, Iranian President Hassan Rowani rhetorically projected Iran's leadership by calling Kuwaiti Emir Sabah al-Ahmad al-Jaber al-Sabah, and stating that the Arab League, the Organization of the Islamic Cooperation, and...
From Gaza to Mosul, the Killing Continues
Source : Asharq Al-Awsat  
Date : 2014-07-25
Author : Bakir Oweida
Nothing justifies the tanks of the Israeli "Defense" Force shelling thirty Palestinian families, none of whom had any chance of taking shelter or running away....
Peace gets a serious chance
Source : Gulf Today  
Date : 2014-07-25
Author : Michael Jansen
Negotiations on a deal over Iran's nuclear programme between Iran and the five permanent Security Council members plus Germany have been extended for four months beyond the July 20 deadline...
Lack of morals
Source : Kuwait Times  
Date : 2014-07-25
Author : Muna Al-Fuzai
A friend called me asking to write about a lack of morals among people as they call for good manners, while they fail to show any in their everyday life....
Total 200 Results in 14 Pages
1 
For more news, views and reports about this topic, please subscribe
to GRC website: www.grc.net
Tue Jul 29, 2014| 01-شوال-1435هـ
'Reject extremism, defeat terrorism' : King Abdullah
Makkah hotel room rates break records
Iraqi Shia militiamen display jihadists' bodies
Bulls overpower bears on results at the DFM
Kuwait embassy issues UK travel advice
Qatar state spending up 12.7pc last fiscal
Morning prayers held across the UAE to mark Eid Al Fitr
SAMA net foreign assets reach SR2.737 trillion
10 militants, 2 soldiers dead in Yemen clashes
Non-energy projects propel GCC development
Taliban chief praises achievements of Doha office
New laws urged to boost investments
King Abdullah meets with Palestinian president
Companies from five countries negotiating to invest in Iran's FTZs
UAE leaders greet new Iraqi President
Dubai property buoyant in first half of the year
    Newspaper Editorials
Libya on the brink
Hunger in South Sudan
More>>  
    Opinions
A prayer for peace
Learning the Lessons of the Past
More>>  
    GCC Press Agencies
Day's main stories from the GCC Press Agencies
    Reports
Iraq Crisis and U.S. Policy
Iraq's Jihadi Jack-in-the-Box
More>>  
    Bank Reports
GCC Markets Performance – May 2014
Saudi Arabia: Baseline Macroeconomic Forecast 2014-16
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 Middle East and North Africa: Change and Upheaval 2014
The Legal Framework of the Sponsorship Systems of Qatar, Saudi Arabia and Kuwait: A Comparative Examination
In Search of Stability: Saudi Arabia and the Arab Spring
    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:0  |   03-- 03 Middle Page :0  --   | Right : 03 - 03--en--sess-enreq-en-coming