DUBAI: Shale oil production could pose a threat to exports from the Gulf region, whose energy wealth has given it pivotal role in the global market and a geopolitical importance, experts say.
Saudi Arabia is the world’s top oil producer, but is only marginally ahead of the United States, whose output is gaining rapidly thanks in part to development of oil shale reserves.
That could significantly alter Saudi Arabia’s export mix, as the kingdom’s oil accounted for a whopping 16 percent of US imports last year.
Saudi billionaire Prince Alwaleed bin Talal has joined in raising the alarm over the kingdom’s dependence on oil exports to generate revenue, warning that the threat from shale oil and gas is “definitely coming”.
But medium-term demand is likely to continue, propped up by Asian countries’ hunger for energy, if economic growth keeps its rapid pace.
The International Monetary Fund, in a July paper on the kingdom, said that, “over the medium term, Saudi Arabia will retain a central position in the global oil market that will be shaped by both supply and demand factors.”
But it warned that the “shale gas revolution in North America” could reduce demand for oil products “going forward”.