THE MIDDLE EAST

The Importance ofOil & OPEC

An Important Question

What do you feel is the United States’ interest in the Middle East?

a. oil b. protection of Israelc. humanitarian efforts d. a genuine interest in spreading democracye. all of the above

OIL• Oil is the most important energy

source in the world today.• Oil has changed the Middle East.

– Modern, wealth, armies, weapons.

• Oil is a finite (exhaustible) resource

• Creates a need to regulate and monitor production/distribution

COMMUNISM vs. DEMOCRACY• The Cold War was portrayed as a fight for Democracy

and freedom. • However, one of its main goals was to make sure that

communism didn’t reach the Middle East• Although there were many communist countries, the

biggest concern and threat was USSR/Soviet Union.• Leaders of western countries didn’t want communism

to spread to the Middle East.• Because they didn’t want the Soviet Union to gain

control over the region.• They didn’t want the majority of the world’s wealth in

the control of communists.

OPEC• Organization of Petroleum Exporting Countries• In 1960, all the major oil producing countries got together to form a

cartel. OPEC was founded in Baghdad, Iraq.• They wanted to control the price of oil to ensure that they could get

the highest profit.• Members agree to sell oil at set prices and abide by production limits.

cartel-an association of manufacturers or suppliers with the purpose of maintaining prices at a high level and restricting competition

• Algeria• Angola• Ecuador• Iran• Iraq• Kuwait

OPEC currently

consists of 12

members• Libya• Nigeria• Qatar• Saudi Arabia• United Arab

Emirates• Venezuela

Where has all the oil gone?

Projected life of oil reserves by country

Less than 10 yearsUnited States

ArgentinaCanada AustraliaUnited Kingdom Ecuador*IndonesiaNorwayEgypt

*OPEC member

Where has all the oil gone?

Projected life of oil reserves by country

Less than 50 yearsChina IndiaNigeria* Qatar*Algeria* Angola*Malaysia

RomaniaColombia YemenOman Brunei

*OPEC member

Where has all the oil gone?

Projected life of oil reserves by country

Less than 100 yearsSaudi Arabia* BrazilRussia

AzerbaijanIran* TrinidadVenezuela*MexicoLibya*

*OPEC member

Where do WE get our oil?

Saudi Arabia* BrazilRussia

AzerbaijanIran* TrinidadCanadaVenezuela*MexicoLibya*

Note: Country size is determined by world reserves of oil

• This has been used as a political tool.• OPEC punished Western nations by not supplying

any oil when they supported Israel in the 1973 Arab-Israeli wars.

• In August 1990, Iraq invaded Kuwait to keep it from selling more oil than OPEC had allowed.

• The US fought in the Gulf War to protect Kuwait and its oil supply.

GULF WAR