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.
 
'Decisive Storm' - a major game changer
Source : Arab News  
Date : 2015-03-30
Author : Hassan Barari
During the past few years, the political and security landscape of the Middle East underwent massive changes. Since the beginning of the so-called Arab Spring, the region is faced with...
So much for Iranian plans
Source : Arab News  
Date : 2015-03-30
Author : Salman Aldossary
There is nothing strange in Iran and its allies being the only ones who are standing with the Houthis, while it is the rest of the world that is standing...
You're welcome as Haj and Umrah pilgrims but…
Source : Saudi Gazette  
Date : 2015-03-30
Author : Walid Arab Hashim
It is said that few days ago, a spokesman for the Houthi rebels appeared on the British Broadcasting Corporation (BBC) Arabic news channel. He pointed his hands towards the north...
Appreciation matters
Source : Arab News  
Date : 2015-03-30
Author : Hatoon Kadi
Last week, I once again visited the United Arab Emirates. This time around, it was to my all-time favorite Dubai to attend the first Arab Social Media Influencers Summit organized...
Making hard choices for preservation of peace
Source : Arab News  
Date : 2015-03-30
Author : Saad Dosari
As George Washington once said, "To be prepared for war is one of the most effective means of preserving peace." This is the dilemma of peace, sometimes in order to...
Egypt summit: Beginning of a new era
Source : Arab News  
Date : 2015-03-30
Author : Mohammed Fahad Al-Harthi
The Arab Summit, held recently at Sharm El-Sheikh, can be the beginning of a new phase in joint Arab action and the credibility of Arab countries if decisions are translated...
Salute to our heroes liberating Yemen...
Source : Gulf Daily News  
Date : 2015-03-29
Author : Khalaf Ahmed Al Habtoor
"And prepare against them whatever you are able of power and steeds of war by which you may terrify the enemy of Allah and your enemy and others besides them...
Iran's allies are the Houthis' allies
Source : Asharq Al-Awsat  
Date : 2015-03-29
Author : Salman Aldossary
There is nothing strange in Iran and its allies being the only ones who are standing with the Houthis, while it is the rest of the world that is standing...
Decisive Storm
Source : Kuwait Times  
Date : 2015-03-29
Author : Muna Al-Fuzai
I have received a lot of questions from expatriates here about Operation Decisive Storm, wondering if it will end safely. This article today represents the information I have and also...
Why I write
Source : Saudi Gazette  
Date : 2015-03-29
Author : Khaled Al Maeena
What compels writers or journalists to write? It is not money that motivates them. Perhaps Dani Shapiro sums up the answer well: "To shine a light, to right a wrong,...
Houthis paying the price for deceit
Source : Arab News  
Date : 2015-03-29
Author : Rasheed Abou-Alsamh
The sadness in the eyes of Yemeni Foreign Minister Riad Yassine said it all in the BBC interview he gave on Friday saying that the Saudi bombing of his country...
A war to achieve peace
Source : Arab News  
Date : 2015-03-29
Author : Abdulrahman al-Rashed
The response of regional and foreign leaders over the war in Yemen is beyond expectations. Various governments and international institutions have frankly expressed their views on the unfolding events in the...
An international storm to uproot the Houthis
Source : Asharq Al-Awsat  
Date : 2015-03-28
Author : Salman Aldossary
So, we have passed "Zero Hour" and the official start of the war against the Houthis in Yemen. This is a war that is taking place with Arab and Gulf...
After Yemen Intervention, a Negotiated Peace
Source : Asharq Al-Awsat  
Date : 2015-03-28
Author : Abdulrahman al-Rashed
The extent of regional and international concern over the war in Yemen has exceeded expectations. Anxious governments and international institutions have frankly expressed their views on the events. Most of...
Operation Storm Resolve: A new alliance in region
Source : The Peninsula  
Date : 2015-03-28
Author : Dr Khalid Al Jaber
Developments in Yemen have taken a dangerous turn with the military intervention, called Operation Storm of Resolve, led by Saudi Arabia with the support of five GCC states. The operation...
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 Mar 31, 2015| 10-جماد ثاني-1436هـ
Houthis should lay down arms, halt coup - GCC chief
Saudi banks post SR7 billion net profits in two months
Kuwaiti Panel: No entry to blasphemers
Qatar's GDP Estimated at QR 194.40 Billion
'Dangerous accord' with Iran worse than Israel feared: PM
Falling oil prices threaten mega projects worldwide: KPC
Arab leaders agree joint military force
Foreign assets rise to RO 6.471 bn in Oman
Syrian forces regroup after militants seize Idlib city
Dubai inspires world's tallest hotel in Switzerland
Bahrain's security top priority says Premier
Credit Suisse upgrades UAE stocks
Operation 'Decisive Storm' will help boost GCC security: UAE
Arabs back UAE on islands issue
Officials: Iran nuclear talks solving some issues, not others
Oman plans Opex show in Jeddah 
    Newspaper Editorials
A Pan-Arab military
Rescuing Yemen
More>>  
    Opinions
'Decisive Storm' - a major game changer
Egypt summit: Beginning of a new era
More>>  
    GCC Press Agencies
Day's main stories from the GCC Press Agencies
    Reports
Iranian Nuclear Program Negotiations : What Next?
More>>  
    Bank Reports
Saudi Arabia Banking Sector
GCC Equity Monitor - Global
More>>  
    GRC Analysis
Saudi Arabia and the ASEAN Periphery: Cambodia, Myanmar, and Brunei
NATO and the Future of Gulf Security.
Saudi-Vietnam Relations
    GRC Commentary
Price of not heeding Kingdom's advice
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
Evaluating Financial Literacy Training for Migrant Workers in the Gulf
The Socio-Political Background and Stakes of ‘Saudizing’ the Workforce in Saudi Arabia: the Nitaqat Policy
Current Progress in the Nationalisation Programmes in Saudi Arabia
    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  |   49-- 49 Middle Page :0  --   | Right : 49 - 49--en--sess-enreq-en-coming