US oil boom reduces Middle East influence on oil price

Washington, Jan 6 (IANS) The US oil boom has changed the world’s geopolitics of energy, reducing the influence of the Middle East on oil prices, the American Petroleum Institute (API) said on Wednesday.

“The American energy renaissance” is the key reason why the recent conflicts between Saudi Arabia and Iran did not raise the world’s oil price, Xinhua cited Jack Gerard, president of the API, as saying.

“If such unrest happened 10 years ago, I believe there would be a significant movement in the price of oil,” he said.

Gerard said the geopolitics of energy has changed significantly over the last decade as the US has experienced an oil boom in recent years and the daily production is now around nine million barrels a day.

The US has been the world’s largest oil producer since 2013, surpassing Russia and Saudi Arabia, according to the data of the US Energy Information Administration (EIA).

The US government lifted the 40-year-old crude oil export ban in December last year, connecting the huge US oil output to the world market.

The United States has become “one alternative” for the world oil supply if some oil-producing countries were affected by unrest, Gerard said, adding the market “reflected that” over the past couple of days as unrest continued and tension increased in the Middle East.

On Sunday, Saudi Arabia cut off diplomatic relations with Iran after protesters stormed its embassy in Tehran to protest against the execution of the prominent Shia cleric Sheikh Nimr al-Nimr.

On Monday, three Sunni-led countries — Bahrain, Sudan and the United Arab Emirates — joined Saudi Arabia in severing or downgrading diplomatic ties with Iran, adding to the fraught atmosphere in the region.

The conflicts among major Middle East oil producers raised concerns about an oil price hike, but the international oil prices kept falling on Monday and Tuesday.

The US West Texas Intermediate (WTI) crude moved down 79 cents to settle at $35.97 a barrel on Tuesday, while Brent crude decreased 80 cents to close at $36.42 a barrel.

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