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Energy Geopolitics in the Middle East After the Opec Summit[#340299]-344817.pdf
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Title: Reshaping Energy Geopolitics: Middle East Post-2016 OPEC Summit
Description: Explore the intricate web of power struggles, economic reforms, and strategic maneuvers unfolding in the Middle East post-2016 OPEC Summit. From Saudi Arabia's financial strains to Iran's diversified economy and the shifting dynamics between regional powerhouses, witness how political rivalries and global economic trends converge to reshape energy geopolitics and security in the region.
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TESPAM APRIL 2017
ENERGY GEOPOLITICS IN THE
MIDDLE EAST AFTER THE OPEC
SUMMIT
Serhat S. CUBUKCUOGLU
(Tufts University, Researcher & Strategist)
Overview of the OPEC Summit's Implications
The Middl...
Pragmatism has prevailed and paved
the way towards a well-coordinated effort to provide breathing space to oil producers of
the Gulf at an international summit in 2016. In accordance with market expec...
context:
Energy geopolitics in the Middle East after the 2016 OPEC Summit.
fact:
Middle East home to 65% of OPEC’s oil reserves and provides over a third of global oil supplies.
fact:
GCC countries, led by Saudi Arabia, adopted a new strategy at the 2016 OPEC Summit by agreeing to cut oil output by 1.2 million b/d.
fact:
Low oil prices induced budget deficits, increased demand for motor vehicles, and hindered resource diversification.
fact:
Global economic slowdown and low oil prices impacted growth in Gulf oil exporting countries.
fact:
Gulf oil producers announced measures like cost-cutting, VAT introduction, privatization, and subsidy removal to address fiscal deficits.
fact:
Saudi Arabia faced financial strain due to persistent low oil prices and extensive foreign aid and engagements.
fact:
Iran's nuclear accord with the P5+1 impacted the dynamics in the Gulf region, leading to strategic reconsiderations by policymakers.
This will only add to the global oil glut and will potentially
depress oil prices in the long term,* effectively undermining OPEC’s efforts. In addi-
tion, any move to cut oil production sends a signa...
fact:
American shale producers have a break-even oil price below $30 and are quick to ramp up production in response to signals of production cuts.
fact:
US shale production profitability at oil prices within $50-$55 band, supported by 1.3% oil demand growth in 2017 according to IEA estimates.
fact:
Saudi Arabia's crude reserves of 266.5 bb are estimated to last for only 70 years, prompting radical reforms to reduce oil reliance, sell state-owned assets, and leverage markets.
fact:
Riyadh's fiscal break-even price of oil has dropped by 14% from $92.90 pb to $79.70 pb, showing the effects of reforms.
fact:
Iran's more diversified economy resulted in a break-even oil price of $55.30 pb, exceeding IMF's expectations.
fact:
Mutually hurting stalemate of low oil prices facilitated a financial deal within OPEC despite political differences.
Iran, at the time, certainly appeared to
be better equipped to weather oil-price shocks. Nevertheless, Donald Trump’s protectionist trade policies and fiscal stimulus package
at home are expected to r...
fact:
Saudi Arabia is preparing for a prolonged period of low oil prices through economic diversification, leaner public administration, reduced military spending, and stronger regional alliances.
Saudi Ara-
bia and Israel formed a de facto united front, joined by Turkey, for a new push against
Iran, signaling a growing alignment in their interests, while US lawmakers promised
to seek new sanct...
The change of course in US foreign
policy entails detachment from idealistic democracy-building experiments, limitation to
subsidizing alliances, and adoption of a more antagonistic stance towards Ira...
fact:
Global oil glut expected to depress oil prices in the long term, potentially undermining OPEC's efforts.
fact:
Saudi Arabia and Iran are finding opportunities to improve their standing in the Middle East, often in zero-sum ways.
fact:
Donald Trump’s protectionist trade policies and fiscal stimulus package are expected to reduce demand for foreign goods and slow down the global recovery, stimulate FED interest rate hike, support US dollar’s appreciation, and cap further rise in oil prices.
fact:
Iran faces challenges due to stagnant oil prices, rising interest rates, reduced windfalls, and squeezed liquidity, impacting its plans for economic revival, foreign investment attraction, and oil sector development.
fact:
US aims to counter Iran’s rising regional influence and support Israel's security by aligning with Saudi Arabia, Israel, and Turkey against Iran, with promises of new sanctions.
fact:
Iran's geopolitical position has shifted negatively post-nuclear accord, being perceived as a major source of destabilization and a potential spoiler in regional political deals.
From this perspective,
Turkey’s rapprochement with the Russian-Iranian axis and successful incursion into
northern Syria under the operation code-named “Euphrates Shield” has worried the US
administra...
fact:
The recent developments in Syria involving Turkey, Russia, Iran, and the US have significant implications for the regional power struggles and alliances.
*
Seae
TESPAM APRIL 2017
agreement at the OPEC summit in November 2016. The interplay between geopolitics
of oil, economic reforms, and security requires vigilance to shifting regional dynamics
and...
context:
Discussion on shifting regional dynamics and their impact on energy geopolitics and security post-2016 OPEC Summit.
fact:
Great power politics plays a smaller role in world affairs compared to unipolar or bipolar orders, with regional alliances forming more flexibly.
fact:
The US functions as an offshore balancer with a focus on the Asia-Pacific region, while the Middle East shows increasing division along ethnic, religious, and sectarian lines.
fact:
Iran and Saudi Arabia are rival powers in the Gulf region seeking to enhance their positions, while Turkey and Israel have crucial roles in influencing regional developments.
fact:
Power dynamics in the Middle East, particularly in Syria, are influenced by negotiating skills of intervening parties aiming for a framework agreement without clear winners or losers.
Tatiana Mitrova, “GCC Oil in World Energy Markets,” The Emirates Center for Strategic
Studies and Research, 24-25 November 2015. 3 The Economist, “OPEC Reaches a Deal to Cut Production,’ December 3, 2...
11 Bloomberg, “IMF Sees Saudi Break-Even Oil Price Drop Less Than Forecast,” October
19, 2017 (accessed February 22, 2017); available from https://www.bloomberg.com/news/
articles/2016-10-19/imf-sees-...
Ahmet Kasim Han, Teke Tek “El Bab’da Son Durum Ne?” (Habertiirk: Istanbul,
2017), 21:00; available from http://www.haberturk.tv/programlar/video/teke-tek-14-subat-
1bolum/233724. 7 Al Jazeera News, “I...
7 Al Jazeera News, “Iran and Turkey Trade Barbs Over Syria and Iraq,” February 21, 2017
(accessed February 26, 2017); available from http://www.aljazeera.com/news/2017/02/iran-
turkey-trade-barbs-syri...