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Bringing Libyan crude oil back to market will ease world prices and provide much-needed funding for Libya's new government. But getting the pumps flowing again will not be easy.
As political upheaval spreads across North Africa and into the Persian Gulf, 2011 may turn out to be as momentous a year for global oil markets as 1971, the year when the nature of the region's petro-states first took shape.
Despite common assumptions, oil prices are likely to remain low for a while: key producers, especially Saudi Arabia, have been boosting their production, and demand growth in top consumers like the United States and China will be more modest than expected.
Thanks to a steady increase in oil output in recent years, Russia is now poised to displace Saudi Arabia as the key energy supplier to the West. But the kingdom has not welcomed Russia's gain. The emerging contest for oil dominance between Russia and Saudi Arabia will profoundly affect U.S. energy security, Russia's global role, Saudi power, and the Organization of Petroleum Exporting Countries, not to mention the global economy.
Predicts that oil prices will rise sharply in the 1990s, with "more bargaining leverage again falling into the hands of exporting countries". Whatever the outcome of the Kuwait crisis, OPEC will never be the same again. For French version, see Edward L Morse 'La révolution pétrolière à venir' Politique Étrangère 55/4 Winter 1990 pp793-798.
The most startling surprise in the international economy during the 1980s has been the fulfillment of prophecies made five years ago--often voiced, seldom believed--that oil prices would decline significantly from their peak price of over $40 a barrel in 1980-81. Prices have, in fact, fallen to less than $12 a barrel on the spot market this past winter.
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