The Arab uprisings and the international oil markets
The Arab uprisings and the international oil markets / Paul Stevens, Chatham House, February 2012, 16 p. (Briefing Paper)
Summary points (© Chatham House) :
- Although there have been no serious threats to global supplies since the Arab uprisings started, oil prices will remain volatile as political developments combine with global economic gloom, and surviving regimes spend to pacify populations.
- Physical oil markets managed the loss of Libyan crude exports well. However, in the paper markets, concerns over major Gulf Cooperation Council countries caused prices to strengthen.
- Under two long-term scenarios – ‘Business as Usual’ and ‘Democracy Develops’ – governments will seek higher production to provide more revenue. This could open the upstream to foreign investment, although democracy could create a nationalist backlash. There are also questions over whether democracies choose faster rates of depletion.
- With democracy, there will be a greater role for the private sector, with important implications for the reform of the upstream and the role of national oil companies.
- A growing Sunni–Shi’a split within OPEC may threaten the management of the oil market in the event of downward pressure on prices if the global economy reverts to recession.
- Ultimately the Arab uprisings could lead to an increase in oil supplies if depletion policies change and there is a greater role for the international oil companies.