The Arab uprisings and MENA political instability: Implications for oil & gas markets
The Arab uprisings and MENA political instability: Implications for oil & gas markets / Laura El-Katiri, Bassam Fattouh and Richard Mallinson. Oxford Institute for Energy Studies, March 2014, 38 p. (OIES paper ; MEP 8)
Abstract (© OIES) :
The political turmoil that has swept across many parts of the Middle East and North Africa (MENA) since the beginning of the Arab Spring in December 2010 and the tightening of international sanctions against Iran in 2012 have reignited the recurring debate about energy security and the reliability of MENA as an energy supplier. In this paper, we examine the impact of the past three years of political turmoil in MENA on oil and gas markets. We argue that although many disruptions did occur and oil prices did rise, especially following the Libyan revolution in 2011 and when fears of a potential military confrontation between Iran and the USA intensified in early 2012, the short-term effects on oil and gas markets of recent events in the region have been less dramatic than originally feared. The Arab Spring did not destabilize the large Gulf oil and gas producers; the rise in oil price induced by political and geopolitical factors proved to be transient; and oil and gas markets have shown relative resilience in filling the supply gap and in redirecting oil and gas trade flows. Beyond the immediate impact of the past three years of political turmoil in the MENA, however, we argue that it is the more subtle, long-term effects of regional political instability and international sanctions that are likely to leave the most lasting mark on regional oil and gas markets. Potential repercussions are likely to be felt through several years of an unstable regulatory and investment environment, policy uncertainty, deteriorating security, and a lack of much needed energy pricing reform that will impact the long-term production and export capacity of various MENA oil and gas producers, including some of those unaffected directly by the Arab Spring and sanctions.