'40% Global Oil Comes from Trouble Areas'
More than 40% of the world's daily oil output comes from countries that may be unreliable suppliers, according to a new report by the statistics arm of the U.S. Department of Energy, an accounting that highlights one of the factors driving prices to record highs.
For the first time, the Energy Information Administration (EIA's) annual "Areas to Watch" list includes Saudi Arabia. The kingdom's inclusion, along with Russia, a veteran of the list, means the world's top two oil producers face "significant economic, political or other issues" that could affect energy markets, the EIA said. Russia and Saudi Arabia together produce 18.6 million barrels per day, about 22% of the world's daily total.
The EIA list won't likely surprise a market that has pushed oil prices near $50 per barrel. But the report underscores just how many leading oil producers have become political flashpoints at a time when soaring demand has left little spare capacity to cover disruptions.
"There is no spare room for error, and there are a lot of places where there could be an error," EIA analyst Lowell Feld said. "What happens if Murphy's Law kicks in?"
Feld included Saudi Arabia this year because of recent terrorist attacks on foreign oil workers and questions surrounding the kingdom's ability to play its traditional role of providing extra oil if supply is disrupted elsewhere. The recent terrorist attacks rattled markets, but didn't directly impact supply.
"This is the first time they've really been attacked like this, and spare capacity has never been this low," Feld said. "The Saudis have always tried to maintain a couple of million barrels at least of spare capacity. Right now, there's a question of whether they can do much."
The EIA list included 11 oil producers in all, plus the increasingly important Caspian region.
Russia is "experiencing a considerable degree of uncertainty" due to an ongoing tax evasion case involving OAO Yukos, the country's leading producer, the report said. In Iraq, "violence has continued, with oil production and exports frequently affected," EIA said. Although Sudan, with 345,000 barrels per day, is a far smaller producer, the country's oil installations have been targeted amid the bloodshed by rebel forces.
The other countries listed are Algeria, Bolivia, Indonesia, Iran, Libya, Nigeria and Venezuela. The EIA also cited the Caspian region, a growing source of non-OPEC oil, because of tensions throughout the region, including in Georgia and Chechnya.
Feld said the list is updated about once a year and that some countries are easier to make decisions about than others. In the past, the list has included countries such as Angola, Colombia and Ecuador.
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