Opec is heading for a final showdown with shale. Its grand alliance with Russia to cut output has revived its own fortunes temporarily by boosting prices but it has also cranked up drilling across America. That’s good for the world’s largest economy and biggest consumer of crude but bad news for some of the major producers in the Middle East, especially Saudi Arabia. Despite its own vast defence spending, the kingdom still depends heavily on US military power for its security and to protect the Strait of Hormuz: a narrow sea lane through which most of its crude and that of Iran is shipped to markets. Although the US Fifth Fleet is unlikely to suddenly sail away from the Gulf, a key pillar underpinning the reasons for it to remain has started to crumble. Freed from the need to secure access to Arabia’s vast stores of crude in order to guarantee affordable gasoline for America’s motorists, Washington may begin to care less about what happens in the politically volatile region in the future.
Telegraph 23rd Feb 2018 read more »