Page 5 - Al-Rashed Newsletter Sept 19

POTPOURRI
BLACK GOLD

For the past hundred years, oil has been a frequent reason for war. Nations have fought wars, or shaped their military strategy
during a war, to conquer oil fields or prevent rivals from controlling the commodity that is the lifeblood of industrial economies and
modern militaries.
But what good is capturing an oil field when you wreck your country in the process?
Several nations have learned the hard way that the price for capturing oil can be much greater than its value, destroying the U.S.
Pacific Fleet at Pearl Harbor did not solve Japan's oil problem. Capturing the Asian oil fields was easy, but shipping the oil back to
Japan was not. By 1945, the U.S. submarine blockade, as well as aerial mining of Japanese waters, had so decimated Japan's
tanker fleet that the Japanese cut down forests to make crude aviation fuel. Attacking America was supposed to guarantee Japan
unlimited oil, but instead it led to the destruction of the empire.

Saddam Hussein's Invasion of Kuwait
In 1991, Iraq invaded neighboring Kuwait over disputes about Iraqi war debts, Kuwaiti oil overproduction, Iraqi claims that Kuwait
was rightfully a part of Iraq and probably a desire to seize Kuwait's oil reserves. The Iraqi Army had little trouble disposing of its
little neighbor, but the invasion quickly put it at loggerheads with the United States, which had actually supported Iraq during the
Iran-Iraq War. Despite a UN ultimatum to withdraw from Kuwait, Saddam Hussein refused to budge. The result was 500,000 U.S.
troops in Saudi Arabia, the American-led blitzkrieg of Desert Storm and the devastation of Iraqi military power. Iraq had previously
been one of the major powers in the Arab world; Saddam Hussein's quest for oil left it broken and isolated.

OPEC is a permanent intergovernmental organization of oil-exporting developing nations that coordinates and unifies the petroleum
policies of its Member Countries. OPEC seeks to ensure the stabilization of oil prices in the international oil markets, with a view to
eliminating harmful and unnecessary fluctuations, due regard being given at all times to the interests of oil-producing nations and
to the necessity of securing a steady income for them. Equally important is OPEC’s role in securing an efficient, economic and
regular supply of petroleum to consuming nations and a fair return on capital to those investing in the petroleum industry.
OPEC was founded on September 14, 1960, the result of a meeting that took place in the Iraqi capital of Baghdad, attended by the
five Founder Members of the Organization: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. Once the original agreement for
establishing OPEC was signed, it was registered with the United Nations Secretariat on November 6, 1962, following UN
Resolution No. 6363.
Currently, the Organization comprises 15 Member Countries – namely Algeria, Angola, Congo, Ecuador, Equatorial Guinea,
Gabon, IR Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela, currently represents about
60 percent of world oil production. Key centers of non-OPEC production include North America, regions of the former Soviet Union,
and the North Sea ...
Global demand for crude oil (including biofuels) in 2018 amounted to 99.2 million barrels per day and is projected to increase to
100.6 million barrels per day in 2019.
The United States is the top oil-producing country in the world, with an average of 14.86 million b/d, which accounts for 15.3%
of the world's production.
The United States will lead oil-supply growth over the next six years, thanks to the incredible strength of its shale industry,
triggering a rapid transformation of global oil markets. By 2024, the United States will export more oil than Russia and will close in
on Saudi Arabia – a pivotal milestone that will bring greater diversity of supply in markets.
Meanwhile product markets are on the eve of one of the biggest shakeups ever seen, with the implementation of the International
Maritime Organisation’s new rules governing bunker fuel quality in 2020. Although the shipping and refining industries have had
several years notice, there have been fears of shortfalls when the rules come into effect.

Source: OPEC, Nationalinterest.org, jodidata.org

Goldy Chadha
Key Accounts Manager