Resource World Magazine

o i l and ga s How Middle Eastern conflicts may affect the price and distribution of oil by A.J. Deus T he Middle East will have a defining influence on global resources in 2013. With upheaval underfoot in the region, it seems appropriate to explore the possible consequences of a full-fledged war that could disrupt the global balance. Although the importance of energy from the region ensures extended diplomacy to postpone an escalation, there are five main sources for conflict that could engulf the entire region in a chain of interconnected wars. The popular unrests in the Middle East have their origin in systemic poverty and mass unemployment. The youth had been particularly hard hit since the global downturn five years ago. However, except for Syria, the related unrest is locally contained. The Middle East will remain fiercely divided among Shi'ite and Sunni adversaries, which is why most terrorist victims of last year were Muslims. Even though there has been increased terrorist activity between the two main Muslim adversaries, a full escalation is not likely this year. Busy finding a new identity, Egypt and Libya presently are unlikely to enter the disputes. A central issue is Bashar al-Assad's minority government; which hangs on by a thread. Syria will eventually experience a political disintegration, instigated by the 75% Sunnis and their supporting nations. However, despite efforts, the opposition remains divided. If Syria falls, it will further destabilize, and the power balance in the Middle East will experience a major shift toward Sunni dominance. However, they (as elsewhere in the Middle East) will not be able to successfully address the economic problems of poverty and high unemployment for many years to come. The Kurds have been seeking indepen- 84 www.resourceworld.com dence for almost a century, and it was for the last decade that some sort of imposed peace had been achieved. In a Syrian power vacuum, the Kurds of western Iran, the Syrian and the Turkish Kurds will join forces and benefit from coveted support by the autonomous northern Iraqi Kurds. While the outcome for western resources from the Syrian civil war is fairly unimportant – its oil production has shrunk by 76% to about 140,000 barrels a day. Turkey will be first to be drawn into violent standoffs with the Kurds, probably The scenarios for the impact on resources – the question can be reduced to carbon energy – in the event of war can be illuminated through the two bottlenecks, the Strait of Hormuz and the Suez Canal. by the end of winter. At stake are not only large hydro dams but also its riches in carbon energy and minerals. The land of the Kurds holds the sixth largest reserve of oil, which is currently controlled by Iraq, and contains other significant resources such as coal, copper, gold, and iron. Iran will remain fused against the rest of the world, in particular since Syria and Bahrain are no longer reliable allies. For Iran, nuclear ambitions are a strategic necessity, outside of the Iran-Israel axis, to fend off the dangers of being obliterated by its Sunni neighbours that surround it and by nuclear weapons from Israel or Pakistan. Despite the rhetoric, Iran might like to stay at some distance from a stand- off as sanctions show their impact on the Persian economy. Other than the Kurds, the main issue lies thus in the restraint of Israel. Syria's disintegration is in the interest of Israel's eternal dream to annex the Golan Heights or larger territories for the argument of security. In reality, expansionist ambitions are in the pursuit of the re-conquest of the Promised Land (the biblical Canaan entails everything west of the Euphrates River down to the Sinai Peninsula). This move could lead to the unintended consequence that the Muslim world fuses into a united enemy against the Jewish homeland. This would pull America into a war with global consequences. It is one of the main reasons, other than energy, that diplomacy will likely prevail during 2013. The scenarios for the impact on resources – the question can be reduced to carbon energy – in the event of war can be illuminated through the two bottlenecks, the Strait of Hormuz and the Suez Canal. About 20% of the world's oil supply is passing through the Strait of Hormuz. A move of Israel to annex parts of Syria would not be tolerated by Iran, and it would likely lead to sealing of the strait. The expectation is that a closure would send an economic shock around the world. Iran has previously been threatening to close the strait before in the hopes that the sanctions against them would finally be lifted. However, the industrialized world has developed not only an increased awareness of its dependency on their enemies'" energy but also strategies to reduce it. Most alternative energies today are simply more expensive than oil and evolve based on subsidies. For four decades since the first oil shock in the early seventies, western governfebruary 2013

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