Syria and crude oil
Russian officials indicated a possible crude oil production cut meeting with OPEC (Organization of the Petroleum Exporting Countries). However, there hasn’t been an official response from OPEC. If the peace talks are successful, it directly impacts Saudi Arabia’s expenditure in Syria’s civil war. If the status quo on the Syrian front continues, it could add high stockpiles of crude oil all over the world. Saudi Arabia has the second-lowest cost of extraction of about $9.90 per barrel after Qatar. The data was compiled by Rystad Energy as of November 2015.
The above graph shows the performance of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) since Russia’s engagement on Syrian soil.
Renewable energy growth could concern the economy. It depends on crude. The Middle East’s regional powers are Saudi Arabia and Iran. They plan to diversify their economies. In the future, the crude oil demand could be impacted by renewable energy growth. As a result, oil exporters can’t keep a high reserve for the future.
Changing dynamics in the crude oil market
Experts think that after the secondary sanctions on Iran were lifted, the whole dynamics of the crude oil market changed. Iran is in search of a new market. Led by OPEC, Russia wants to talk with Saudi Arabia about a possible production cut. China’s closeness with Iran, with an addition of a $600 billion trade deal over the next ten years, could hamper Russian interest in the Chinese crude energy market. Iran’s president visiting Europe could alarm Russian energy exports to Europe (FEZ).