impact of arab spring on oil prices

impact of arab spring on oil prices ; Middle east The International Energy Agency says the Arab Spring has disrupted investment plans in oil and gas projects, as some regional governments have shifted their focus to meet increasing domestic demands from their population. This new trend, according to the IEA’s chief economist Fatih Birol, could push oil prices up.

“In some countries, because of the unrest, the projects are not going forward as much as we would like to see,” Birol added, during a media briefing on the sidelines of a two-day IEA-hosted ministerial meeting.

The agency estimates that the world needs to spend US$38 trillion to meet projected energy demand up to 2035, up 15 per cent from its 2010 forecast of US$33 trillion.

World energy ministers and industry leaders met at the late October meeting in Paris to discuss investment needs with energy-hungry emerging economies.

Birol said he is seeing reluctance from some oil producers to invest enough. “One of the question marks is over the Middle East and Northern Africa region, which is crucial to meet demand growth and to meet decline in the existing production,” he said.

“Some countries seem to follow different oil policies not to raise production as much as the market would like to see,” he said. “In other countries, they are not able to put money for projects on the table because they have other pressing issues in their countries to meet demands from the population.”
“In some countries because of the unrest the projects are not going forward as much as we would like to see.”

The IEA says 90 per cent of the growth in oil production in the next decade needs to come from Middle Eastern and North African countries.

Quoting from the soon to-be-published annual World Energy Outlook, the IEA said US$10 trillion would be needed for oil investments, $16.9 trillion for power, $9.5 trillion for natural gas from 2011 to 2035.

In a speech to the IEA’s ministerial delegates, Eni Chief Executive Paolo Scaroni said that while the impact of the Arab Spring on energy security was difficult to assess for now, he had good reasons to be optimistic.

“The first is that the way the crisis evolved in Libya is an exception, rather than the rule,” Scaroni said, adding that after months of fighting, Libya had returned to production very quickly. Eni was the largest foreign producer in Libya prior to this year’s civil war.

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