Abstract
The Middle East, the world’s only major source of low-cost oil, will remain at the core of the long-term prospects of the world oil market. The IEA went too far referring to the “shale hydrocarbon revolution born in the USA”. For the time being, the global energy landscape has not been turned upside down. It is China’s soaring energy consumption rather than the US’ rising production that will fundamentally shift the world energy order. Some analysts claim that the Sino-Russian relationship will truly shift global energy boundaries: pipelines are turning east. Global oil prices may fall if and when significant volumes of additional Iranian oil return to the market. A new petroleum frontier in the Eastern Mediterranean complicates the manifold conflicts, but opens up new chances for cooperation. There are huge opportunities created by the discovery of gas in the Eastern Mediterranean — not least for countries that are short of both money and energy. Developing these opportunities will require cooperation, and could be both a lucrative and politically rewarding confidence-building measure.
Highlights
Despite all the geopolitical unrest in resource rich regions, we witness a 25% drop of the average global oil-price
Some voices claim that this price decline might be due to the increase in supply because of the rise in unconventional production in North America. This type of exploration is more vulnerable to a low price level than conventional, i.e. relatively easy to drill and thereby “cheap” oil and gas
US dependence on imported oil and other liquid fuels is projected to shrink from 60% in 2005 to about 25% by 2016
Summary
Commemorating World War I has just started, but the repercussions of World War I are still going on. This type of exploration is more vulnerable to a low price level than conventional, i.e. relatively easy to drill and thereby “cheap” oil and gas. Since drilling in the unconventional sector requires much higher costs than conventional oil and gas exploration, a drop of the average global oil price below 70 USD pb could jeopardize companies’ investments. Crude oil production of 10.3 mbpd enables Saudi Arabia to earn 1 bn USD per day This is the highest output in 32 years and Riyadh affirms it can go further as the world’s swing producer.
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