Geopolitics in the Middle East are a crucial element of global oil markets. Future production in the region and, therefore, the global supply-demand balance depends on investment by international and national oil companies. But geopolitics can complicate these capital flows through its impact on paper markets beyond what physical market balances would otherwise indicate.
Despite the recent softening of oil markets, geopolitics in the Middle East are a rising area of concern. At present, many of the region’s economies are failing to meet the expectations of their growing young populations. Saudi Arabia is facing serious domestic challenges and is attempting fundamental economic reform, which may well challenge the existing order. Iran’s position in the region is uncertain, highlighted by the lack of clarity on the future of the Joint Comprehensive Plan of Action nuclear agreement and how Iran will react to deteriorating relations with the United States. The Gulf Cooperation Council faces serious issues, with the Qatari crisis a centerpiece of the current divisions. In sum, the sources of existing and potential instability are significant and growing.
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Kristian Coates Ulrichsen, Ph.D.
Fellow for the Middle East, Baker Institute; Associate Fellow, Middle East and North Africa Programme, Chatham House
Jim Krane, Ph.D.
Wallace S. Wilson Fellow for Energy Studies, Baker Institute Center for Energy Studies
Paul Stevens, Ph.D.
Distinguished Fellow in Energy, Environment and Resources, Chatham House
Business Columnist, Houston Chronicle