As the old saying goes, you can’t tell the players without a scorecard. So in this week’s Oilgram News column New Frontiers, Tamsin Carlisle does just that, skipping through the Middle East to summarize the hot battles, and the cold ones, impacting oil across the region.
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The Middle East and North Africa region has wielded geopolitical clout far outweighing its share of global population since its early days. It has also had more than its share of armed conflicts, which more than once in modern times have threatened to disrupt global oil supplies.
Now the MENA region is again in flux as borders imposed by outsiders or local strongmen collapse and the artificial states they contained fragment, with substantial petroleum output offline or under threat.
The biggest impact on oil supplies resulting to date from the past three years of MENA-region turmoil has been in Libya, an OPEC producer with Africa’s biggest reserves. Following the removal of the country’s late dictator, Muammar Qadhafi, Libya has been torn apart by rival militias acting for disaffected tribal and regional groups. Ports and oil terminals have been blockaded and output from major oil fields disrupted. Neither Arab nor international powers have been willing to intervene, so the current state of chaos seems set to persist.
Next door in populous Egypt, the 2011 revolution that toppled military dictator Hosni Mubarak was followed by the failed presidency of the Muslim Brotherhood’s Mohammed Morsi. The Brotherhood was outlawed after the military intervened to oust Morsi, and coup leader Abdulfattah el-Sisi was in due course elected president. However, Egypt is still deeply divided along secularist and Islamist lines which has prompted Saudi Arabia and its Persian Gulf allies to bolster Sisi’s government with massive aid packages.
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Riyadh is deeply concerned that Brotherhood sympathizers might not only derail Egypt’s fragile recovery but also seek to interfere in Saudi internal affairs. Nonetheless, Riyadh’s self-interested intervention could help Egypt re-establish itself as a regional power, and a prosperous, self-confident Egypt is seen as a stabilizing force for the entire Gulf region, indirectly affecting security of global oil supply.
However, there are limits to the security blanket that even Riyadh can purchase. Increasingly Saudi Arabia and its oil is surrounded by trouble spots.
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Concurrently, offshore eastern Saudi Arabia, Shiite unrest continues to simmer in Bahrain, which due to its strategic position near the main Saudi Persian Gulf oil export terminal at Ras Tanura is effectively a Saudi protectorate. Riyadh could not countenance a revolution in Shiite-majority Bahrain, so it supports the island’s Sunni ruling family. The Saudi government has also dealt harshly with Shiite protesters in its own eastern oil-producing province.On its southwest flank is Yemen, a failing state and haven for Al-Qaeda jihadists ideologically opposed to the Saudi political system of an executive ruling family advised but not governed by clerics.
Another potential trouble spot is Kuwait, a traditional Saudi ally hamstrung by an ineffective political system. Kuwait and its large oil fields are at risk of being caught up in three-way animosities between Riyadh, an Iranian-supported government in Shiite southern Iraq and Islamic State jihadists sweeping down from the north.
However, even if Riyadh’s resources were stretched too thinly to continue warding off domestic political turmoil, its state oil machine, insulated by multiple layers of security, would still pump and export millions of barrels per day of crude. Moreover, the kingdom’s long-nurtured spare production capacity would act as a safety cushion.
Then there is Iraq, already partitioned into Shiite South, Kurdish Northeast and a war-torn Sunni Arab-dominated region currently controlled by fighters from the Islamic State. At stake are oil and gas resources rivaling those of Saudi Arabia.
Yet this fight is not just about oil. Last week’s IS attacks on northern Iraqi towns, targeting non-Muslim Kurds and Christians, suggested the group’s immediate priority to be sectarian cleansing.
To be sure, Iraq’s Arab Shiites and Kurds are concerned about safeguarding oil resources and may yet iron out their differences to resist a common enemy. Iraqi, Syrian and Turkish Kurds have already done so in response to direct IS threats to Kurdish territory and enclaves.
The two rival regional superpowers, Saudi Arabia and Iran, may assist, although they are unlikely to collaborate directly. Qatar, meanwhile, will protect its ever vulnerable autonomy in the region by mediating. Even nervous Western powers may respond to Kurdish appeals for arms as the Kurdistan Regional Government has astutely portrayed its territory as a humanitarian haven for persecuted Iraqi minorities.
MENA-region borders are changing, and crude futures prices pop higher whenever fighting flares. Yet crude oil continues to find a way to flow to the market…for now.
—Tamsin Carlisle in Dubai
The post New Frontiers: Counting up all the battles in the Middle East appeared first on The Barrel Blog.