The future of oil

The increase in US oil and natural gas production could have a dramatic effect on world energy markets, according to Dr Pierre Noel, Sultan Hassanal Bolkiah Senior Fellow for Economic and Energy Security at IISS–Asia.

Dr Noel appeared on CNN yesterday to discuss the future of the global oil market, the effect of sanctions against Iran, and new figures released by the International Energy Agency indicating increased oil and gas production in the United States.

‘US unconventional liquid supply is growing by a million barrels a day each year, which has the potential to revive the growth of non-OPEC supplies,’ he explained. The effect on future oil prices however is unclear, and ‘depends on the supply–demand balance, and it is very difficult to know what’s ahead of us’, he said.

‘Demand is growing rapidly in emerging economies: China, India but also Southeast Asia – so you may actually need this rise in unconventional supply, especially if other parts of the supply picture disappoint.’ US and EU sanctions against Iran, for example, might also make this unconventional supply a necessity.

Dr Noel discussed the effect the sanctions might have on the Iranian presidential elections in June. He explained that the latest round of sanctions were ‘working’ – meaning that the situation was getting harder for the Iranian population – but that this would not necessarily mean the public would choose a leader more open to engaging with the West. ‘The risk that I see politically is that a larger and larger share of the population will actually reward a politician tempted by a hardening of the Iranian position, rather than a softening,’ he said.

He also discussed the security impact that a hard-line Iranian position would have on the region,  explaining that Iran’s neighbours were worried about the connection between Iran and the crisis in Syria. ‘I think the governments in this part of the world see the future as a very risky one geopolitically,’ he added.

Watch the video.

For more on this topic, watch the IISS’s May 15 panel discussion on the future of the Middle East oil environment, and read the IISS Strategic Comment on the United States’ falling need for foreign oil.

Venezuela after Chavez?

Hugo Chavez

Photo Credit: Flickr Creative Commons/mwasuk


By Virginia Comolli, Research Associate, Transnational Threats

Venezuela’s presidential election is rapidly approaching on 7 October, and observers cannot help but speculate whether the era of Hugo Chavez is coming to an end.

Chavez’s main challenger, Henrique Capriles, a lawyer and former governor of Miranda state, presents a rather different political model, one that is moderate and less confrontational (although perhaps less charismatic) and he appeals to a large portion of the population.

As governor of Miranda state, Capriles tried to replicate Brazilian President Luis Inacio ‘Lula’ da Silva’s approach of implementing pro-business policies while emphasising development and funding social programmes. He has also promised, if elected, to continue and to improve Chavez’s social programmes aimed at helping the poor.

But if elected he will face a number of challenges: forecasts of sluggish economic growth and high inflation resulting from deep structural damage done over the past few years; highly politicised armed forces, whose role as protectors of the country is linked to defending Chavez’s ‘revolution’ and the Bolivarian project; and relations with a far-from-independent Central Bank and entities such as the state oil corporation PDVSA. The latter’s management is closely linked with Chavez’s government, and Chavez is thought to be funnelling oil revenues into his government projects without approval from Congress. Read the rest of this entry »

Oil is key to Falklands’ future

UK military assets in the Falklands region

By Antonio Sampaio, Research Assistant, Survival and the Armed Conflict Database

It has been a busy year for oil and gas exploration around the Falklands Islands, and also a crucial moment for the islanders’ economy. Speaking at the IISS in London, Jan Cheek, member of the Legislative Assembly and Executive Council of the Falkland Islands, explained how the islands’ government is counting on oil revenues to develop and diversify the economy of this remote archipelago. Though the exploratory drilling that had taken place in 2012 had disappointed investors, she described herself as ‘cautiously optimistic about the future’, amid a diplomatic offensive by Argentina to exert its claim over the islands. Read the rest of this entry »

Oil at heart of Falklands dispute

UK military assets in the Falklands region

Argentina has been turning up the heat on its simmering row with the UK over the sovereignty of the Falkland Islands, as the 30th anniversary of the war approaches. In an effort to force the UK to the negotiating table, Cristina Kirchner’s government has persuaded its increasingly powerful Latin American neighbours to speak out in its favour and put pressure on domestic companies to cut off UK trade links. Even Hollywood actor Sean Penn has weighed in. But as the latest Strategic Comment explains, spurring on the dispute are the significant oil reserves that are thought to lie beneath the waters surrounding the islands.

Read the full article

Greenland: rare earth in the Arctic

Kangaamiut, Greenland. Photo from ilovegreenland/Greenland Tourism

By Sarah Johnstone, Assistant editor, online

A weak Greenland could offer major powers like China and the United States a back door into the Arctic region, Dr Damien Degeorges said during a recent talk at the IISS. Rich in resources, covering a vast area but sparsely populated, the autonomous Danish territory would need to ensure its long-term economic viability as it moved towards full independence. It also needed to raise educational levels and make arrangements for its future defence.

Half the size of Europe, Greenland had enough of the rare-earth elements vital to many high-tech devices to supply an estimated 25% of global requirements for 50 years, Degeorges said. The island was becoming ‘a hypermarket of natural resources’ as a warming climate melted the ice sheet and made mining easier.

Read the rest of this entry »


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