Download In the aftermath of the protests and revolts that have wracked North

In the aftermath of the protests and revolts that have wracked North Africa, much attention of late has
shifted to the Persian Gulf. The concern is simple: if the social instability spreads to the world’s primary
oil production zone, then the world could be in for a major supply shock.
But it is important to keep in mind that that the Persian Gulf is not North Africa.
North African stats are quite poor as a rule, while the Arab states of the Persian Gulf are among the
richest locations on the planet – largely due to their petroleum wealth. And while the Persian Gulf Arab
leadership certainly takes a large slice of the national wealth for themselves, they do not horde all of the
wealth like the regimes of Egypt and Libya traditionally have. For many of these states the elite realizes
full well that the groups they represent do not form a plurality, much less majority, of the populations of
their states. The ruling family of Saudi Arabia is only 100,000 (at the most) out of a population of roughly
20 million. Over 80 percent of the inhabitants of the United Arab Emirates are imported labor without
citizenship. At least two-thirds percent of Bahraini citizens are Shia while the ruling family is Sunni.
Their solution to this demographic mis-match is to mix an authoritarian political setup with an aggressive
sharing the petroleum largess. Subsidy rates – whether for food, electricity, housing or gasoline – are
lavish. The rulers of the Arab states of the Persian Gulf purchase political quietude.
The real reason Stratfor sees the Persian Gulf’s Arab states as being threatened has less to do with
spontaneous protests and more to do with foreign-instigated unrest. The would-be instigator is Iran. Iran
has struggled to increase its sway on the western shores of the Gulf since long before the mullahs rose to
power in 1979, and in this new viral protest age, <Tehran sees an awesome opportunity.
http://www.stratfor.com/geopolitical_diary/20110228-iran-and-continued-middle-east-unrest>
In recent days the Iranians have encourages unrest in the Persian Gulf state that has the highest proportion
of Shia: < http://www.stratfor.com/analysis/20110302-stalled-talks-bahrain-and-irans-growingassertiveness Bahrain>. Luckily for energy markets, Bahrain is practically a non-player in the energy
markets. The real game is in the energy heavyweights of Iraq, Kuwait and Saudi Arabia. In these states
we see three specific regions as being in potential danger as they are both large sources of oil, are
immediately adjacent to Shia population centers, and the oil export routes pass through Shia population
centers to Shia-populated ports.
There are three areas of particular concern. First is the Rumaila region of southern Iraq. The cluster of
fields around the Rumaila superfield are by far Iraq’s most productive, generating roughly 2 million bpd
of crude. Nearly all of that crude is funneled into pipes that run just south of Basra – Iraq’s second largest
(and Shia dominated) city – to loading platforms in the Persian Gulf.
The second area of concern is the Burgan region of southern Kuwait. The Greater Burgan field is far and
away Kuwait’s largest and is just inland from all of Kuwait’s population centers, which wrap from the
capital of Kuwait City down to the Saudi border. The population is more of a Sunni-Shia mix than
southern Iraq, but all of Kuwaits exports ship out from predominantly Shia regions on the southern coast
rather than the Sunni-dominated Kuwait city itself. Greater Burgan produces just under 1.7 million bpd,
and serves as the gathering point for all of Kuwait’s 2.5 million bpd of output.
Finally and most importantly is Saudi Arabia’s Ghawar superfield. With about 5 million bpd of output,
Ghawar is the largest oil field in not just Saudi Arabia or the Middle East, but the world. It also lies right
alongside the city of <Al Hofuf http://www.stratfor.com/analysis/20110301-saudi-arabia-arrest-couldlead-unrest>, whose 650,000 million population is majority Shia. Oil produced from Ghawar travels via
pipes to the northeast across and in parallel to major Saudi highways to reach a trio of tanker ports on the
Persian Gulf – all of which are within Shia-dominated areas.
There are only two possible routes for oil from these locations to be shipped should problems erupt within
the Shia populations. Iraq has the IPSA line (Iraq Saudi Arabian Pipeline) which could transfer 1.7
million bpd of oil from southern Iraq to the Saudi Red Sea port of Yanbu. In theory at least. The problem
is that IPSA has been closed since the earliest days of Desert Shield and it is not clear how soon it could
be rehabilitated, if at all. The second alternative is Saudi Arabia’s Petroline, which links Ghawar to
Yanbu. It can handle 5 million bpd, which is roughly half of all of Saudi Arabia’s production capacity.
Such disruptions could take three forms. The first are outright attacks by angry citizens or disgruntled
<http://www.stratfor.com/analysis/20090224_gulf_states_labor_policies_financial_crisis_and_security_c
oncerns guest workers>. By far the most vulnerable assets would be pipelines, whose routes are quite
obvious as the travel along transportation corridors or near population centers. To date this has only
happened once in recent weeks, against Egypt’s natural gas export line to Jordan and Israel. The second
would be disruptions caused by citizens – or guest workers – either not showing up to work or physical
restrictions on the ability of energy workers to reach their jobs. Such disruptions have taken roughly twothirds of Libya’s energy output offline. In the Persian Gulf the vulnerability varies greatly from location
to location, based on how close to the fields the workers live.
The final possibility is the most worrying. But bear in mind that the sort of protest that Stratfor is looking
for are not standard expressions of simple social discontent. Unlike the North Africa protests – which
were by people who wanted a better deal, and had no interest in burning their countries to the ground – in
the Persian Gulf any serious protests will have a heavy foreign component. As such, foreign sabotage
cannot be ruled out. Iran has every interest in limiting Iraqi, Kuwait and Saudi power, and if that means
taking the Arabs’ oil off line, then so be it.
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