Oil and Gas Global Impact Series: The Impact of the Middle East

It is far too simple to suggest that all the geopolitical tensions within the Middle East are a result of oil and gas. There are tribal and religious tensions that pre-date any discovery of energy fields.

However, the millions and millions of barrels of oil that sit beneath the Middle East are a significant influence on regional tensions and the reason the wider international community pay attention. Whether the influence of the Middle East is as vital as it was is now questioned. However, a review of conflicts in recent history can illustrate the influence of events in this region.

Past conflicts

The war against Iraq in the 1990s, and again in 2003, is closely linked to the need for stability in the region. The first war was a result of Iraq’s invasion of Kuwait, an oil-rich nation, the second was a successful attempt at regime change.

The consequence of these wars and the rise in global terrorism have also been documented. Although religious fundamentalism has a considerable influence on terrorism, it could also be perceived as a result of Western countries continued presence in the region due to the riches to be made from energy.

Current conflicts

The current conflict in Syria may not seem directly correlated to oil and gas. There are thought to be no oil reserves under the country. However, the territorial position within the Middle East might explain the interest of Europe, Russia and the US in the civil war raging there – even China is starting to show an interest. Syria sits alongside the Mediterranean Sea and is, therefore, a significant potential trade route for the energy sector. Most experts perceive this conflict to be a proxy war that is being fought to change the balance of influence in the region. Internal tensions in Libya, on the other hand, can be directly linked to the vast oil reserves beneath the country. The UAE has a significant influence on these domestic conflicts.

The blockade of Qatar, with its coastal port and energy reserves, must be perceived as a consequence of oil and gas. This has a lot to do with the competing visions of how the region should be managed, specifically through OPEC. Qatar has frustrated Saudi Arabia by increasing its international independence by pursuing export trade in Liquid Natural Gas.

The current tensions with Iran are a direct result of oil and gas. The US tariffs are stifling Iran’s ability to trade oil and, in return, Iran is causing tension in the Strait of Hormuz. There is some credibility in the argument that the US decision to pull out of the Iran deal may have something to do with US ambitions to become an exporter of oil.

Middle East impact

Despite the considerable international interest in the region, many perceive the impact of the Middle East on oil and gas has lessened. The recent tensions with Iran did not impact oil futures. This may be a result of US and China’s increase in domestic production. Self-reliance in energy reduces a country’s vulnerability to global instability.

The Middle East is a complex region, and this is only a cursory glance at the interplay of regional and international powerplays. However, the immense reserves of oil and gas in the region do explain much of the influence of such countries as the UAE and Saudi Arabia in world politics.

Ex~i Flow Measurement specialises in products for the gas and liquid measurement industry – manufacturing, researching and developing with a focus on continuous project development and enhancement. To speak to us about how we can help you, call +44 (0)1243 554920 or contact us here.