Overseas crude oil production and transportation interruptions could be strategic warnings that are too important to ignore, a US Senate Energy and Natural Resources Committee minority staff report suggested.
Supply interruptions, which rose steadily in Iraq before ISIS seized Mosul in June, are occurring in many other countries, it said. Such unplanned oil production outages are not due solely to violence and instability, and can reflect natural disasters, production problems, and more benign causes, the Oct. 27 report conceded.
“But in many cases, unplanned outages reflect growing, or at least ongoing, turmoil,” it added.
Outages in Iraq, Yemen, Libya, and South Sudan, and ongoing challenges in Nigeria and Colombia reflect rising or persistent violence, the report said. Iran and Syria are special cases where interruptions illustrate international sanctions’ knock-on effects, it indicated.
The analytical utility of such outages lies not in prediction, but in providing strategic warnings, the report emphasized. Their impact on global petroleum markets depends largely on their scale and duration, it said.
“Sustained levels of such outages in other countries may constitute a degree of strategic warning to policymakers that attention is required, and ultimately are a reminder that record-breaking increases in North American oil production can enhance national security and stabilize global markets,” it concluded.
“Losses in oil production often reflect instability,” observed Lisa Murkowski (R-Alas.), the Energy and Natural Resources Committee’s ranking minority member, as the report was released.
“Energy reporting clearly pointed to Iraq’s deteriorating security years before the current collapse, and provides us strategic warning of violence in other countries and regions,” she said.
Contact Nick Snow at [email protected].
