Global oil dependency and Security risk: “The scramble for oil Resource”

Abstract

Exploration and production of crude oil is dependent on availability and access to reserves to enable a continued supply to satisfy the growing global demand for oil. Although oil is a depletable asset, it is a commodity that is irreplaceable with alternative sources such as natural gas and nuclear energy; therefore, there is the probability that in years to come people would live in a world without oil. Although many oil-producing nations have reserves, the Middle East seems to be more concentrated with oil reserves. The importance of oil has lead oil consuming nations to be concerned about the security of oil supplies from the major oil producing countries. The risk of oil supply has been a major security policy issue since the 1970’s. Most of the Organization for Economic Co-operation and Development (OECD) economies’ dependency on imported oil from the Middle East increased with the growth in political instability of the major oil exporting nations, OPEC’s rising influence, the 1973-1974 Arab oil embargo (U.S. Department of State, 1976), and the nationalization of the upstream oil supply chain. Regrettably, all these could lead to, or give rise to erratic oil supply risk.