Mideast security fears may fuel oil flux

Many oil producing countries and OPEC members are currently witnessing political and security destabilization, raising questions about their oil future. Leading the list of Arab OPEC members, Iraq and Libya are experiencing a dangerous level of instability. Iraq, which wants to produce 6-9 million barrels a day by the end of this decade, is on the brink of a civil war led by its prime minister, Nuri al-Maliki, who controls money and power in the country, according to all western and Arab sources following the developments in Iraq. When U.S. Secretary of State John Kerry visited his French counterpart Laurent Fabius, they agreed that al-Maliki was dragging his country toward a new dictatorship. He has dominated the key ministries such as defense and security, and appointed acting ministers when unable to secure the approval of Parliament. Al-Maliki has destroyed the Iraqi mosaic, after Sunni ministers left the government and the Kurds pulled out. Al-Maliki has benefited from the balance that President Jalal Talabani helped construct, before Talabani's absence from the arena due to health problems.

Sectarian tension in Iraq is now at its peak, and al-Maliki is responsible. The Kurds were negotiating with the government over the budget and had arrived at a quasi-final agreement, but al-Maliki rejected everything, without respecting the division of revenues with the Kurds. Iraq is on the verge of war because of the policy of al-Maliki, who has deliberately relied on Iran since the American withdrawal from Iraq. Sectarian tension and the dispute with the Kurds could lead to a civil war. Oil production and exports are threatened under such conditions; Iraq currently produces about 3 million barrels a day and exports more than 2.5 million barrels, but there is no stability.

Oil powerhouses fear volatility

The same goes for Libya, where the absence of security and the confusion reigning there are blocking the work of international companies to develop oil fields. Due to the lack of security, these firms have decided to not send employees to Libya, where undisciplined armed gangs, and not the government, control the situation. Libya's estimated production of more than 1.5 million barrels a day is threatened by the lack of security in oil fields and the ports from which oil is exported, and the control wielded by armed groups. The health problems suffered by Algeria's president, Abdel-Aziz Bouteflika, have not produced anxiety about that country's oil and gas production because everyone knows that the group of generals call the shots and can quickly appoint a successor to Bouteflika, if there is a need for this. If the president is absent from power, oil and gas production in Algeria will not be affected, because the ruling military group always has other options.

In other, non-Arab states, political conditions are leading to question marks as well. Venezuela has seen Hugo Chavez succeeded by his political heir, and this might generate security instability in the country along with deterioration in its oil sector. In Iran, the regime's policy has led to an international embargo of that country's oil and prevented Tehran from developing its oil industry. Nigeria is another OPEC member in which the lack of security, and near-daily fighting, are preventing the sound development of the oil industry. All of these conditions in OPEC members are leading to speculation about a surplus in supply in markets and the industrial world's freedom from OPEC oil.

The absence of stability in these countries is making consuming countries uncomfortable; only Gulf states, led by Saudi Arabia, are able to secure the stability of supplies for international markets. However, the developments in several OPEC countries are one of the reasons for seeing oil prices remain at $100 a barrel, despite the global economic recession. Countries require fuel, and instability in supplying countries is a worrying factor for them. This indicates that the future of OPEC countries and the political developments they are experiencing constitute a fundamentally-important factor in the price of oil in international markets.

This article was first published in al-Hayat on May 1, 2013.

________
Randa Takieddine is a Lebanese writer and the director of Al-Hayat newspaper office in Paris

SHOW MORE
Last Update: Friday, 03 May 2013 KSA 10:27 - GMT 07:27
Disclaimer: Views expressed by writers in this section are their own and do not reflect Al Arabiya English's point-of-view.
Top