With 810 billion barrels in proven reserves (50~% of global total) and 28 million b/d in production (30% of global total), the Middle East has long been the center of the global oil market. The region (defined as the 12 countries listed here that excludes Egypt) accounts for about half of the 37.8 million b/d international crude oil market. Yet, the Middle East’s future capacity to export might be more constrained than some realize. Growing populations, expanding middle classes, and increasing consumerism have transformed the Gulf states into key energy consumers. The Middle East now uses nearly 33% of the oil that it produces, compared to just 20% in 2000. The overall population is about 260 million, growing 2.2% per year. But, it’s the youth Westerners must take notice of. The Middle East has a rising young population that is educated, Internet savvy, and demands a more open society than the one their parents had. Exporting a combined 12 million b/d, Iran, Iraq, and Saudi Arabia all have about a third of their population between the ages of 15 and 29. High oil prices have driven strong economic growth, and living standards will rise rapidly in the coming decades. Annual GDP growth rates are expected at 4-6%, while real (2010$) GDP/capita is projected to extend from $11,000 today to $16,00o in 2030.
As the Middle East’s economy goes, so does its need for more petroleum. Oil and gas are the only energy sources in the Middle East (i.e., the only ones that register a %), each meeting 50% of supply. And the region has very cheap production costs that promote use. In Saudi Arabia, for instance, it can cost just $5 to extract a barrel of oil. Additionally, huge oil subsidies encourage demand while also encouraging wasteful habits. Saudi Arabia ($50 billion) and Iran ($45 billion) easily hand out the most in oil subsidies that keep prices artificially low. These policies don’t allow the “conservation ethic” to sink into the Middle Eastern psyche.
The Middle East is Young