With the world's largest combined hydrocarbon reserves, any change in the politics of the Middle East and North Africa would have a detrimental impact on world's energy supply. It is hard to predict where the protests will be headed next, yet it is obvious that the burning anger of the protesters might well cause another oil shock like in the 1970s. This possibility has indeed been addressed by the International Energy Agency Chief Economist Fatih Birol stating that "there could be a knock-on effect from the regional turmoil and higher oil prices that could put extra pressure on European gas markets."
On one hand, the toppling of the regimes of oil and gas exporter countries caused a domino effect not only through the spread of the uprisings but also via the possibility of another oil shock. There are financial commentators saying protests did not, and would not, harm the energy flow to the West. Yet, it is hard to predict the spread of the revolutionary spirit in the Arab world, and hence the safety of the energy flow. If we think about the countries in the region one by one, a clear picture on energy security occurs. Egypt, for one, as a significant oil producer and a rapidly growing natural gas producer, is a crucial transit corridor via the Suez Canal and Sumed Pipeline. Algeria, yet another dictatorship with a huge population with unfulfilled demands, is holding the second largest natural gas reserve in Africa and third largest in oil. Libya, where the protests grew in such a rapid fashion, has the largest proven oil reserves in Africa. Qaddafi's regime is going through a serious set of protests. According to a recent article in the Financial Times, "around 50,000 barrels per day of crude production have been shut in because of the anti-Qaddafi protests and the regime's response to them." Moreover, BP Plc and ENI SpA (the largest foreign oil producer in Libya) has also decided to suspend exploration of oil due to the rising violence in the region.
On the other hand, there are countries who are not playing in the major league but are very fragile to any disruptions in the energy flow. Yemen, especially, is vulnerable against any interruption on energy business as the country relies on oil revenues for about 90% of export earnings. Any interruption to its income from the oil exports would be detrimental for an economy which is already in need of economic aid.
Then there are the "big guys" who are not disturbed by uprisings, yet. Qatar as the world's second largest holder of gas reserves behind Russia, and Iran as the world's third largest natural gas reserve, do not yet face any threat to their regimes. Yet there is no safety net for any soft regime changes, nor do we have any guarantee regarding the occurrence of another oil shock. Any disruption in the regime of Saudi Arabia, the oil kingdom of the world, is out of sight right now. Saudi Arabia is the world's largest oil exporter, hence if the regime goes down we all may go down with it. A new oil shock would be the last straw on the back of the camel of world economy, which is barely recovering. The events in Libya may as well spread to the oil kingdom, and that has now become a possibility rather than a distant threat.
In sum, the revolution in Egypt may indeed leave no damage on the current energy flow, yet one thing is for sure, the cat is out of the bag, and all the regimes in the region are facing a cloud of uncertainty. One thing is certain that anyone, any regime, under threat would defend itself, no matter what. The response of a dictator might be submission to the demands of his resignation, yet it might as well be holding to the power even more and cutting its ties with outside, and cutting the energy flow to the outside as well. The response of markets, on the other hand, follows the same rule. The suspension of oil explorations might as well grow in number, unless the angry crowd is cooled down.
Ece Ozkan is studying for an MA in politics at New York University.
This article was submitted for the atlantic-community.org's competition: "Empowering Women in International Relations." It coincides with the 10th Anniversary of UN resolution 1325 calling for an increased influence of women in all aspects of peace and security. The contest is sponsored by the U.S. Mission to NATO and the NATO Public Diplomacy Division.
You can read more submissions from the competition here.
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