Will the US be able to say goodbye to its costly military involvement in the energy-rich Middle East because of the shale oil revolution at home?
The question is not only important for diplomats and soldiers, but also for the oil market, which for the past 60 years has become accustomed to the idea that Washington would patrol the world’s most important production region.
On the surface, some evidence suggests the answer is yes. US crude oil imports have dropped recently to a 15-year low of 7.7 million barrels a day. At the same time, the Pentagon will reduce the number of aircraft carriers it operates in the Gulf and the Strait of Hormuz, the crucial oil shipping lane, from two to one.
Yet the appearances are somewhat misleading. As Carlos Pasqual, co-ordinator for international energy affairs at the US state department, told a recent conference: “We’re dealing with global commodities.” He added: “When there is instability or insecurity in any part of the world, it drives up the global prices of those commodities.”
Moreover, the US is still importing nearly as much crude oil from the Gulf as it has done in the past. The latest monthly data from the US Energy Information Administration, indicate Washington bought 2.1m bpd, equal to 25 per cent of its crude oil imports, from the region.
Although Middle East crude oil imports are down from the peak of the early 2000s, they are still much higher than in the 1990s, a time of significant US involvement in the region, including the first Iraq war. As a percentage of total US imports, the Middle East is in line with the 20-year average.
Speaking at the annual Munich Security Conference earlier this month, Jorma Ollila, chairman of Royal Dutch Shell, said: “It is hard to see a scenario in which the United States abandons its interests in the Middle East.”
US crude oil imports from Saudi Arabia, at roughly 1.4m-1.6m bpd in recent months, are in line with the average of the past 25 years, only below the peaks of 1991 and 2003 during the two wars with Iraq, as Riyadh boosted production significantly to offset the loss of Baghdad’s oil production. Saudi oil shipments to the US are also sharply up from the recession-induced low of 0.7m bpd of 2009.
In reality, the US shale revolution would allow Washington to say goodbye to its minimal political and military involvement in west Africa, the region that is shouldering most of the reduction in US oil imports. Oil shipments from countries such as Nigeria and Angola have halved as they produce exactly the same kind of high quality, low sulphur crude oil as the US shale fields.
— Financial Times
