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Iran appears committed to its hegemonic aspirations within the gulf, flexing its muscles regionally on an almost daily basis (most recently with the large scale naval exercises around the Straits of Hormuz) and continuing its policy of developing itself into a credible nuclear player.
As the price of crude (over the long term) continues to rise on the basis of several factors – the eradication of reserves, continued global security threats and the political instability of some of the world’s largest exporters (GCC, Nigeria and North Africa for example) – we can add to this equation that the new major oil importers, notably China and India, are expanding their demand and the oil market will simply have to expand its production capacity.
Put simply, 66% of the world’s oil reserves reside in the Arabian region, and ultimately oil remains the world’s dominant source of energy and will continue to be for some time to come.
This indubitably promises to increase the world’s dependence on the Persian Gulf members of the Opec, especially Saudi Arabia and maintain upward pressure on price, in conjunction with the continued sabre-rattling emanating from Iran.
On this basis, what alternative strategies if any, should we be exploring to reduce our dependency on our future, free access to the region?
Jonathan Mooney is the Senior Energy & Utilities Consultant at Interim Partners.
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