Middle East oil goes East, but decline of US engagement “over stated”

Desert oil pumps1The rise of domestic oil and gas production in the United States is causing a rebalancing of global energy supply networks, says new research.

With the US less dependent on Middle Eastern oil, Asia will become a more important export partner for exporters such as Saudi Arabia, says the 2014 Oil and Gas Reality Check report by consultancy Deloitte.

“For the Middle East, crude cargoes are anticipating a shift as exports are increasingly being directed eastward toward Asia rather than westward toward the US and Europe,” says Kenneth McKellar, energy and resources leader at Deloitte Middle East.

However, McKellar claims that predictions of US disengagement from the Middle East are “over stated”.

It is true the US could become a net exporter of natural gas by 2020, according to the US Energy Information Administration, but the report argues the US will still be exposed to oil price shocks caused by instability in the Middle East, even if its imports from the region decline.

Meanwhile, Middle Eastern exporters can expect rising demand from Asian countries such as China, which is dependent on the Middle East for a large proportion of its crude imports.

©2014 funds global mena

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