Systemic Violence Threatens Middle East Oil Outlook

Even though there are vast, cheap reserves of oil and gas in the Middle East and North Africa (MENA), political instability remains as the main barrier to exploration and production. The current oil slump has hurt investment worldwide, nevertheless the recovery period appears to favor investment in North America, the Caspian, and Africa. The OPEC report issued in late May noted that “generally speaking, for non-OPEC fields already in production, even a severe low price environment will not result in production cuts, since high-cost producers will always seek to cover a part of their operating costs.”