Middle East geopolitics and the great new game

The dynamics of supply and demand of OPEC oil was the focus of this presentation. The geopolitics involved in moving crude oil from land-locked Azerbaijan, Kazakhstan, Turkmenistan, and Uzbekistan was also discussed, along with the constraints imposed by the lack of adequate means to move land-locked crude oil and natural gas, and the reality of additional investments of $8 billion to $20 billion that will be needed over the next 10 to 20 years to establish a pipeline network. A look at U.S. crude oil imports shows that OPEC's share reached a high at 85 per cent of total imports in 1977, but declined steadily to bottom out at 41 per cent in 1985. Issues of supply security have been invoked in avoiding overdependence on Middle East (Gulf) oil imports, based on concern over the region's political instability, including inter-state conflicts. The heavy reliance of governments in the Gulf states on oil exports for much of their revenue, the implications of current demographics in the region, and the probability of unmet expectations leading to rising discontent, have important implications for future oil supply and demand from the Middle East. Much of the paper is devoted to the exploration of these implications. 6 tabs