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Middle East to Dominate World Oil for Many Years
Bright E. Okogu
Oil has dominated world energy consumption for many decades, although its share has declined from almost 50 percent in 1975 to about 40 percent at present. This decline is due to improvements in energy efficiency; consumers' switch to substitutes, including coal and natural gas; a desire to reduce dependency on foreign oil, largely because of the oil price increases of the mid-1970s to the early 1980s; and recent concerns about global warming and climate change.
The International Energy Agency (IEA) predicts that, by 2020, world energy demand will increase by about half from its current level, with the share of oil holding at 40 percent—still the dominant fuel—while the share of gas will increase from about 23 percent to about 26 percent. Demand growth will be fastest in developing regions, where income growth and industrialization have continued to gather pace.
With oil exports from MENA projected to more than double by 2020, this region will continue to dominate the oil market for the foreseeable future.
The world's largest consumers are the United States, 26 percent; European industrial countries, 20 percent; and Japan and Korea, 11 percent. In 2020, according to IEA projections, these countries' dependency on imports to meet their oil needs will rise from 53 percent of total oil consumed currently to 70 percent, highlighting the growing lack of congruence between the location of oil reserves and the major consumers of oil.
The Middle East and North Africa region has the world's largest proven reserves of crude oil, accounting for almost 70 percent of global reserves at the end of 2001, but it produces only about 35 percent of global oil output. The Middle Eastern members of the Organization of the Petroleum Exporting Countries hold 95 percent of the organization's existing spare capacity, making them the suppliers of last resort. Indeed, most other producers are operating at close to full capacity and play only a marginal role in meeting unexpected supply shortfalls. While oil exploration and production in the former Soviet Union, Africa, and South America have increased in recent years, production in the North Sea and elsewhere is declining.