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Oil Markets At Stake As The Syria Debate Rages On

The U.S. pullout from Syria sparked strong—and opposing—reactions, as a move of that magnitude was bound to do. Trump bashers bashed Trump for quitting and Trump supporters cheered the America First agenda. And some pointed to the fact that this may be part of a larger reshuffling of priorities that could result in the United States effectively leaving the Middle East. Either way, the aftershock in the oil industry could be wide reaching.

It also could form strange alliances. In a recent story for Bloomberg, Liam Denning noted the unexpected unanimity between President Trump and one of the more popular Democratic contenders for the White House, Elizabeth Warren, on the troop pullout.

“The methods and language may be different,” Denning wrote. “But neither looks committed to the U.S. presence that has endured in the Middle East for decades.”

Indeed, it seems that Washington’s attention is shifting away from the Middle East and towards home. Even the troops Trump sent to Saudi Arabia after the attacks on its oil infrastructure were paid for by Riyadh, leading one analyst to call the move “Americans going pseudo-mercenary,” Denning writes.

That Trump and Warren agree on anything may be surprising at first, but a deeper look might suggest this agreement reflects the shifting priorities of their voters. The people who voted Trump into the White House wanted, among other things, of course, jobs, even in doomed industries such as coal. People who vote Democrat and may vote for Warren, care more about climate change than the never-ending conflicts in the Middle East. Related: Iraq's Return To Oil's Top Table

Besides, there is Trump’s weakness for tariff and sanction action. These have become his weapons of choice in international disputes, which are not as violent as troop deployment. The question of whether sanctions work is a different matter, but the fact remains that for all the alarm about Trump starting a war basically as soon as he enters office, he has mostly reserved his belligerence for Twitter.

So, what happens if the American troop exodus from the Middle East continues? The power balance there is already changing. Russia has expanded its influence in the region through its alliance with the Syrian government and its closeness with Iran.

China has been reluctant to stir this particular geopolitical pot directly, but it will sure step into premises vacated by the U.S. After all, China has the most to lose from an escalation of violence in its main supplier of crude oil. Related: There’s Tremendous Room For Growth In Offshore Oil & Gas

Speaking of oil supply, that’s a big part of the reason why Trump feels confident he can pull out U.S. troops from the Middle East. Whole still importing quite a lot of oil, the United States is nowhere as import-dependent as in the early 70s when the Arab oil embargo almost caused an economic collapse because of the spike in oil prices. It imports 6 million barrels daily, according to the EIA’s latest petroleum status report, and produces 12.6 million bpd.

True energy independence may be still out of reach, but the U.S. is no longer vitally dependent on Middle Eastern oil. It will certainly keep its allies—and arms buyers, of course—there close but thinking in Washington may be changing to reflect this reduced need for securing Middle Eastern oil flows with a presence on the ground.

By Irina Slav for Oilprice.com

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Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More

Comments

  • Mamdouh Salameh - 20th Oct 2019 at 1:05pm:
    The United States has no reason to stay in Syria occupying Syria’s oilfields in the Deir Ezzor region. The occupation is a spiteful act to deprive Syria of oil resources.

    Syria’s oil reserves are a drop in the ocean in terms of global reserves. They don’t, therefore, register on the global oil radar but they are still important for Syria’s oil needs. Therefore, there will be no reaction from the global oil market to America’s withdrawal from Syria other than to say good riddance. Russia on the other hand is in Syria at the invitation of the legitimate government of Syria.

    And with the way the United States treats its allies, it will soon have no allies in the Middle East. Against shifting sands under the historic relations between the United States and Saudi Arabia and an imperceptible shift in the global balance of power, Saudi Arabia is already seeking more dependable allies, hence its courting of Russia and China on the belief that the Russian-Chinese strategic alliance will be the real global power that will shape the world in the next two decades.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
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