More Arab oil seen heading to the US

 

The crude oil supertanker Abqaiq - Kevin H Tierney/US Navy

 

Even calamities can provide windfalls for those in the right place to pick up the pieces, and so it is with BP's giant oil spill in the Gulf of Mexico.

 

In North America, the most obvious winners would be producers of alternative transportation fuels, including ethanol and other biofuels, as well as the developers of more fuel efficient cars. But the world will continue to need petroleum products, which creates another set of beneficiaries: Middle East and North African oil exporters.

 

As the  Economist Intelligence Unit

points out

, the region already accounts for almost 40 per cent of current crude production, yet has ample spare capacity. Moreover, Middle East producers pump oil mainly from onshore reserves, and even their big offshore fields are mainly in shallow water. That means they will be largely unaffected by any new international standards for deepwater drilling that push up the cost of such operations.

 

In the short term, Saudi Arabia and other MENA producer are well positioned to supply any increased US appetite for oil imports resulting from that country's moratorium on new deepwater drilling.

 

In the medium term, the Economist Intelligence Unit suggests that Iraq could benefit, if it makes headway will its plan to add 10 million barrels per day of oil production capacity over the next decade from onshore fields.

 

A surge in biofuels production capability could still constrain global demand for petroleum-based transportation fuels in the long-term, especially if higher drilling costs make biofuels more cost competitive. But with many land-use and technological challenges facing biofuel developers, that transition is likely to take decades.

 

For a US president whose energy policy has incorporated a large element of anti-Middle East rhetoric, it could be time to mend fences.