Middle Eastern counties possess 47% of the world’s proven oil reserves. For Saudi Arabia the oil industry accounts for 87% of budget revenues. And the picture is almost the same with other Middle Eastern countries. So it’s not really a surprise that whoever controls the oil will effectively control the Middle East. However Saudis are beginning to lose market share and since 2015 they’ve experienced huge deficits. This has only increased the issue of debt and the Kingdom had to draw from reserves. This is very bad timing for the country, as Saudi Arabia biggest oil company – Aramco is preparing for an IPO next year. They are slowly losing market share to Iran and Iraq.
How is the market changing?
U.S. companies like Exxon Mobil have been the dominant players on the ground for many years, but that is starting to change now. Since Russia entered the geopolitical clusterfuck around Iraq and Syria, Gazprom (Russia’s biggest oil and gas company) signed a deal to monopolize the whole Syrian oil industry, which is estimated to produce over 400,000 barrels a day. Shortly after that the SAA (Syrian Arab Army) with the huge help of the Russian Airforce and Russian Special Forces on the ground started liberating all the gas and oil fields around Palmyra.
This comes only after months of negotiation between Gazprom and the Syrian government, which only goes to show you that there is no free lunch in this world – especially when it comes to the Russians. Moreover, this is one more win for the Russian’s in Syria – they seem to be the biggest beneficiaries of the war.
Who is the biggest winner from the war in Syria?
With only a handful of planes they managed to revive the Assad regime, take over the oil industry and cement there foreign gun export industry in the region. Do you think that they are giving all these tanks, rockets, air defense system and ammunition for free? When we draw the line and this bloody conflict is finally over, it would seem that Russia’s profits from the war would have skyrocketed after their involvement in 2015.
Russian companies are also cooperating with Kurds on the ground and are exploring this option as well – as Iraqi Kurdistan oil industry is estimated that it can produce over 600,000 barrels a day.
So will there be a new hegemon in the Middle East?
In a word – NO. United States arch enemy – Iran has also taken over Iraq. This is bad news for the U.S., that’s why we have seen a shift in the U.S.’s policy recently. They have changed their support from Iraq’s central government to the Kurds in the north and east parts of the country. After all, they control 50% of the oil in the country and have been very effective on the ground against ISIS. The U.S. is also still a close Ally to Saudi Arabia, Qatar and UAE, so to say that the U.S. is losing its grip on the whole situation is over exaggerated. However, there’re emerging new players on the ground that currently are controlling a small portion of the market, but are growing ever faster and there is certainly a trend to be noticed here.