New IEA chief economist says extremists pose major challenge for Middle East oil
17 February 2015
On February 17, the International Energy Agency's Chief Economist Fatih Birol said the rise of Islamic State (IS) in Iraq and Syria presented a major challenge for the investment necessary to prevent an oil shortage in the next decade. In a speech to Japan's gas industry association he said: "The appetite for investments in the Middle East is close to zero, mainly as a result of the unpredictability of the region.”
The IEA has consistently said that Middle East crude production will need to rise in the 2020s to meet predicted demand, particularly in Iraq, but Birol said the security problems caused by IS were creating a major challenge for the new investments in the Middle East.
IS extremists have disrupted oil production in northern Iraq, although output in the south - where most of the country's crude comes from - has so far been largely unaffected.
Attacks by Islamist groups with suspected ties to IS are spreading, including to an oilfield in Libya in which France's Total has a stake. And Italy's Eni has said it had reduced the number of expatriates working in Libya but was continuing to produce oil and gas in a regular way in the country. The Italian company is limiting expatriates to certain offshore facilities.
Escalating violence has had serious repercussions on Libya's oil production, with several recent attacks on oil facilities and pipelines in the country.