Occasions in Syria over the weekend may affect the crude market and enhance the geopolitical danger premium on oil costs within the weeks and months to come back amid but extra instability within the Center East area.
That’s what Rystad Power’s Head of Geopolitical Evaluation, Jorge Leon, mentioned in a Rystad Power oil market replace, which was despatched to Rigzone by the Rystad crew late Monday. Leon highlighted within the replace that Syria “isn’t a significant oil producer” however famous that it “holds enormous geopolitical clout on account of its location and ties with Russia and Iran”.
“Combined with the tensions elsewhere within the area, the regime change has the potential to spill over into neighboring territories,” Leon said within the replace.
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“Sectarian tensions and instability in neighboring Iraq, a significant oil producing nation that produced virtually 4.1 million barrels per day of crude in November, might be additional exacerbated,” he added.
“Iran has misplaced one other regional ally and is turning into more and more remoted and extra uncovered to home revolts. This might embolden the upcoming Donald Trump administration to go for a ‘most stress’ stance in opposition to Iran,” he went on to state.
The replace famous that Syrian oil manufacturing “shrunk quickly after the civil warfare began in 2011 in the course of the Arab Spring motion”. Syria’s oil output peaked in 1996 at 605,000 barrels per day, in response to the replace, which outlined that the nation’s output then “began to say no progressively to 430,000 barrels per day by 2010 earlier than abruptly plummeting to round 30,000 barrels per day within the years following the civil warfare”.
Based on the Power Institute’s (EI) newest statistical overview of world power, which was launched earlier this 12 months, Syria’s oil manufacturing averaged 40,000 barrels per day in 2023. That determine marked a 6.6 p.c 12 months on 12 months drop and fewer than 0.05 p.c of worldwide oil manufacturing in 2023, the overview outlined. From 2013 to 2023, Syria’s oil manufacturing dropped by a mean of three.8 p.c yearly, the overview confirmed.
Syria’s crude oil and condensate manufacturing averaged 30,000 barrels per day final 12 months, the overview revealed. That determine represented a 7.7 p.c 12 months on 12 months drop and fewer than 0.05 p.c of the world’s crude oil and condensate output in 2023, in response to the overview. Syria’s crude oil and condensate manufacturing declined by a mean of three.8 p.c yearly from 2013 to 2023, the overview highlighted.
The EI’s oil manufacturing determine contains crude oil, shale oil, oil sands, condensates (lease condensate or fuel condensates that require additional refining), and NGLs (pure fuel liquids – ethane, LPG, and naphtha separated from the manufacturing of pure fuel), the overview factors out.
It excludes liquid fuels from different sources reminiscent of biofuels and artificial derivatives of coal and pure fuel. It additionally excludes liquid gas adjustment components reminiscent of refinery processing achieve and oil shales/kerogen extracted in stable type.
The EI’s crude oil and condensate determine contains crude oil, shale/tight oil, oil sands, and lease condensate or fuel condensates that require additional refining, the overview highlights. It excludes liquid fuels from different sources reminiscent of biomass and artificial derivatives of coal and pure fuel.
Fast Seizure
Rystad Power’s replace famous that the “speedy seizure of … Syria’s capital … introduced a sudden finish to the 50 12 months rule of the Assad household on Sunday”. It outlined that the insurgent advance will be defined “by a number of causes”.
“Latest Israeli assaults on Iranian proxies in Syria in the previous few weeks helped to weaken the preventing capabilities of Assad supporters,” the replace identified.
“Intensified preventing between Russia and Ukraine additionally prevented Moscow from offering speedy army help to the now former president,” it added.
“After months of Israeli assaults, a severely weakened Hezbollah – a key Assad supporter – meant the Syrian rebels encountered little resistance on their technique to Damascus,” it continued.
“And at last, a cautious Iran opted to not intervene in help of Assad to keep away from yet one more army escalation within the area,” the replace went on to state.
Lowered Geopolitical Danger?
Rystad additionally famous in its replace that it might be argued that the occasions in Syria “may considerably cut back the geopolitical danger premium nicely into subsequent 12 months”.
“A weakened Iranian regime is likely to be extra prepared to succeed in an settlement with the U.S. to keep away from financial pressures which may result in extra anger domestically,” it mentioned.
“On the similar time, Russia’s incapability or unwillingness to supply army help to Assad’s regime raises questions on Moscow’s personal army capabilities, having discovered itself slowed down in its warfare with Ukraine,” it added.
“This may add to Russian willingness to finish its warfare with its neighbor, which, if materialized, would cut back the geopolitical danger premium within the oil markets,” Rystad went on to state.
In a market evaluation despatched to Rigzone on Monday, Samer Hasn, a senior market analyst at XS.com, mentioned, “after the autumn of Bashar al-Assad’s regime in Syria, Iran has turn into much less succesful than ever of threatening Israel”.
“Syrian territory was a lifeline for Hezbollah in Lebanon, and the latter is now besieged after being Iran’s key arm within the area,” Hasn added.
To contact the writer, e mail andreas.exarheas@rigzone.com
