Middle Eastern countries have lagged behind in investment in the production and refining sectors, do not have enough capacity, and will not be able to offset the decline in oil demand in Europe if the Russian embargo is imposed. World Economics Books.
As Europe tries to rein in Moscow and end aggression in Ukraine, talks continue over Russian oil supplies, and imports of Russian oil and petroleum products into the European Union will be canceled by the end of the year as part of the sixth sanctions package. He will get a delay.
Robin Mills, CEO of Qamar Energy, said that the Middle East is the only oil producer with enough surplus capacity to make up for the potential, and the United States would be the other option, but the very light crude oil imported from abroad would not meet European needs. in Dubai.
While Middle Eastern countries hold nearly half of the world’s proven oil reserves, analysts say the region will not be able to save Europe due to a lack of infrastructure investment, conflicts, political alliances and sanctions.
The global demand shock caused by the pandemic, as well as the shift toward clean energy sources, has hampered the expansion of oil production capacity. In 2020, oil producers spent a third less than planned on investments and 30 percent less than they did in 2019. In addition, the latest data from the International Energy Agency (IEA) indicates that some global oil and gas companies have started In diversifying its investments: Only about one percent of it went to clean energy in 2020, compared to an average of 4 percent. cent last year. percent.
The other major source of problems stems from the refining sector, where investment has also lagged.
Saudi Energy Minister Prince Abdulaziz bin Salman said in a statement to Bloomberg that its shortage has led to higher fuel prices around the world, with the difference between crude oil and fuel prices reaching 60% in some cases. Saudi Arabia and the United Arab Emirates have the largest share of OPEC spare capacity, at about 2.5 million barrels per day, but the Saudis have no plans to increase production. Although analysts
Some oil shipments to Asia could be diverted to Europe, but this would jeopardize the partnership between the region and its main buyer, China.
After the two Arab countries, Iran will be the next option, but US sanctions are still in place as negotiations to revive the 2015 nuclear deal have stalled, while neighboring Iraq is able to expand capacity – currently producing about 4.34 million barrels of crude oil per day with a maximum production capacity of 5 Millions – No such action can be expected due to infrastructure shortcomings, sectarian divisions and the political impasse in Baghdad. near future.
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