Are oil interests driving the price of oil up by using the Syrian conflict as an excuse? Even a simple look at the market reveals some uncomfortable insights. If true, the cynical manipulation of the market, and the blatant disregard for human lives would place the international community on course to repeat the upheavals and tragedies that have come to define the last 30 years with multiple wars for oil.
Syria is ranked a very distant 32nd among oil producing nations in 2009, with a downward trend towards reserves and will, according to analysts, become an oil importer by the end of the decade. The war in Syria has not affected oil prices so far, despite nearly two years of bloody fighting. No oil routes are affected by the current fighting, and international intervention would secure even more any routes potentially threatened shipping routes.
The U.S. Energy Information Agency reported ‘that Syrian government revenues are severely limited by the loss of oil export capabilities, particularly the lost access to European markets, which in 2011 imported $3.6 billion worth of oil from Syria according to news reports.’ http://www.eia.gov/countries/cab.cfm?fips=SY. Again, these numbers reflect exports before sanctions, and that up to now no significant impact was realized in energy markets from the conflict, until now.
In 2009 the Oxford Business Group’s Syria Report showed that oil exports accounted for 23% of government revenues, 20% of exports, and 22% of GDP in 2008. Syria exported about 150,000 barrels per day in 2008, and oil accounted for a majority of the country’s export income. Since March 2011 production of oil has been down more than 50%, costing the nation more than $3.5 billion in revenue.
Assad has however secured foreign investment in its oil industry aimed at boosting output. It is the investment from countries like Iraq, Iran, Venezuela, Russia, China and India that is at risk. According to the EIA report :
The SPC operates through several subsidiaries, with the most notable being the Al-Furat Petroleum Company (AFPC), which is a joint venture between the SPC, Royal Dutch Shell, the Chinese National Petroleum Company (CNPC), and India’s Oil and Natural Gas Corporation (ONGC). Other SPC subsidiaries include the Deir Ez-zor Petroleum Company, the Syria-Sino Alkawkab Oil Company, the Hayan Petroleum Company, the Oudeh Petroleum Company, and the Dijla Petroleum Company. Other international oil companies with interests in Syria include Gulfsands, Sinopec, and Total, and several other smaller companies also have stakes in the Syrian oil sector.
It is notable that Royal Dutch Shell appears to have maintained an interest in the market despite European sanctions against Syrian oil imports into European markets.
Despite all of this, in part on news of a possible international military response to the conflict in Syrian that crude oil prices spiked to an 18 month high. Why now? Why not at any point previously in the conflict. Crude oil prices have been trending downward recently.
Taken together, it would seem to indicate a massive manipulation of the market, and that the Syrian conflict offers a prime excuse and cover for that manipulation. The reason that becomes problematic is that it reveals greater concern for markets than lives, which ultimately drives irresponsible short-term action and inaction by market-focused governments. This strategy is pragmatically based and short-sighted, as was all too evident with Western support of Afghani-freedom fighters during the Soviet occupation. The West became involved for self-serving reasons and then abandoned the Afghan and Pakistani people victimized by the conflict. That led subsequently to a rise of the Taliban, Osama bin Laden and more than a decade of disaster.