The GCC and stability of oil markets

Randa Takieddine
Randa Takieddine
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A number of global petroleum and economic agencies and organizations said the expected official petroleum production in the U.S. in 2020 will be between 9 to 11.8 million barrels per day, so the production will be as much as that of Saudi Arabia which is the largest world producer and exporter of petroleum.

Commenting on that, head of the French Petroleum Institute Olivier Appert said discovering and developing oil shale in the U.S. have caused a revolution in the biggest market of oil consumption as it gradually pushes America into self-sufficiency.

Appert added that in 2020, the U.S. will not need to import Arab and Saudi oil. According to statistics carried out in November last year by the U.S. Department of Energy, the U.S. currently and per day imports 1.3 million barrels from Saudi Arabia, 489,000 barrels from Iraq, 276,000 barrels from Kuwait and 30,000 barrels from Libya.

What some expect that there will be a revolution in the U.S. independency from Arab oil does not mean that the U.S. will count less on the stability of global markets that are a basis for its economy which is linked to the stability of world petroleum prices. The Chinese market will transform into the biggest market for consumption in the world as growth continues in Asia and particularly in China. China is currently increasing its dependency on the Middle East petroleum and even the U.S. has made an exception on sanctions on Iranian petroleum to China thus allowing the giant consumer to import petroleum from Iran although amounts imported have increased due to financial complications regarding paying for the purchases.

However, the Arab oil and particularly the Saudi one will remain the guarantor of reasonable and stable prices which are the most important factor for world economy including that of the United States.

The U.S. will maintain its concern in what is happening in the Middle East and the Gulf since the Strait of Hormuz is a path for Gulf petroleum which amounts to one fourth of the West’s consumption. Any catastrophe or destabilization of this path by Iran will flare up the region and cause a disaster to world economy. So the U.S. Administration will remain concerned over maintaining a strong relation with Gulf countries, like Saudi Arabia, UAE, Kuwait and Qatar, which are keen on the calmness and the stability of the Gulf petroleum region.

As for Iraq, although Saddam Hussein has been toppled, this oil country has fallen under the influence and dominance of Iran with the presence of a premier who belongs to the Iranian-Syrian axis which is the saboteur of the Middle East. Despite Iraq’s huge petroleum resources, Iraq’s petroleum location does not serve the region’s stability and Maliki’s support of the murderous Syrian and Iranian regimes is an indication of that.

Egypt with the policy of President Mohamed Mursi, whom the U.S. Administration bet on like it did on Iraq’s Nuri al-Maliki, has formed a threat to a vital and major path for the petroleum business through the Middle East and the Suez Canal. Events in Port Said on the Suez Canal raised fears across the world as the canal’s usage is major for West and Arab commerce through the Middle East.

The geopolitical situation in the Middle East will remain essential in specifying the world petroleum prices which are not only based on factors of supply and demand, which Saudi Arabia plays a major role in stabilizing, but also on threats made to paths of petroleum exportations causing prices to exceed $110 at some point.

All of this indicates that talks on the U.S. independency from Arab petroleum are tantamount to a major geopolitical transformation for the US. It is a mistake of estimation because destabilizing the Middle East represents a grave threat to world economy especially that that the world petroleum market’s major players which are Saudi and Gulf Cooperation Countries are a factor of stability for it.

This article was published on al-Hayat newspaper on Feb. 7, 2013.

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

Disclaimer: Views expressed by writers in this section are their own and do not reflect Al Arabiya English's point-of-view.
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