In their last debate before Election Day, President Obama and Mitt Romney argued over issues in foreign policy – and by issues in foreign policy, I mean issues in the Middle East. The debate was fully dominated by talk of the region, including the civil war in Syria, the growing threat of a nuclear Iran, and the winding-down war in Afghanistan.
But despite the overwhelming focus on the Middle East, noticeably absent from the debate was any explicit discussion of the resource that defines the importance of the Middle East in the global economy: oil.
Much of the national discussion over oil in the past year or so has centered on domestic, offshore, and Canadian production. The boom in domestic oil production is of particular interest to politicians and has global economic ramifications; the US is projected to spar for the title of world’s largest oil producer in the coming years, as domestic daily production is projected to be 11.4 million barrels next year (Saudi Arabia is expected to produce 11.6 million per day).
While this means more domestically-produced energy (and therefore more American jobs), the Middle East, and specifically the Organization of the Petroleum Exporting Countries, still dominates the global oil market. OPEC, which includes the expected Middle Eastern oil giants like Saudi Arabia and Iraq but also several African and Latin American countries, collectively has 81 percent of the world’s proven oil reserves. Roughly 20 percent of the world’s oil is shipped by tankers through the Strait of Hormuz alone.
Considering how important oil is to the global economy (in the case of a severe shortage, industrialized countries would literally come to a standstill), having so much of it concentrated in the Middle East makes the region the natural powder keg of the modern world. It has been this way at least since the Persian Gulf War. The geopolitical importance of Middle Eastern oil has lead the US to do some pretty inconsistent things, such as taking the fifth regarding the virtue of regional medieval monarchies like Saudi Arabia (that is, amidst our otherwise perpetual calls for representative government) and, at least according to Bush Administration critics, invading Iraq to take its oil (exactly how such a misappropriation could have actually been part of the rationale still eludes me…).
But with the numerous ongoing international conflicts and strained rivalries between Middle Eastern countries, the regularity of the oil market often falls victim to regional disturbances and rumors of war. Now that it is becoming increasingly isolated and marginalized, Iran becomes more and more inclined to utilize its ability to cause regional chaos as a threat against the global economy. For example, if Iran got desperate enough due to increasingly tough international sanctions, it would not have to attack a US base to strike back at us; instead, it could “attempt” to close the Strait of Hormuz with warships and possibly mine the Strait as well. Such an operation would be quickly ended by US forces, but the damage would be done – the stability of the global oil market would be dealt a stunning blow and the entire global economy would suffer because of it. In other words, Iran knows that they can use their ability to disrupt oil flow, if only very briefly, to harm the US and much of the rest of the world — which, due to international cooperation, is more and more becoming Iran’s generalized foe as well.
Of course, discussing the value of Middle Eastern oil and its ability to affect the economy is not exactly a popular talking point for politicians. Examining how Iran’s saber rattling and potential offenses could hurt energy markets comes across as a monetization of an issue of human safety, and no politician, including Obama and Romney, wants to appear that callous. Also, no politician would want to appear as if they care more about Middle Eastern oil than they care about our strongest ally in the region – Israel – the defense and support of which has indeed become a major talking point for the likes of both Obama and Romney (which is interesting considering how Obama’s liberal base often brands Israel an apartheid state). But regardless of whether it is openly discussed or not, as long as the world’s economy runs on oil, as it seems will be the case for at least the next few decades, Middle Eastern conflicts will continue to have a disproportionate impact on the global economy.