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.
Filed under: Gulf and Middle East Security, Pierre Noel
