New Geopolitics – US as Top Oil Exporter Wins By Reducing Iran Oil Exports

The IEA (International Energy Agency) has forecasted that not only will the US remain energy independent, but that the US will be competing with Saudi Arabia and Russia as the World’s biggest oil exporter. The US will be producing far more oil than Saudi Arabia and Russia and supplying its own huge oil need but have excess oil for export.

Gross US oil exports will be in the 8 million barrel per day range by 2021-2024. The US will also be exporting liquid natural gas.

The United States to provide 70% of the increase in global oil supply over next five years, with Iraq, Brazil, Norway & Guyana other major contributors.

This will be driven by the second wave of US shale oil.

The power of Shale Oil 2.0 to increase oil production means the US can provide growing world demand and gives the US an economic win if it squeezes Iran out as an oil supply competitor on a longterm basis.

This development also means that geopolitical analysts who talked about the US losing economic motivation to be a global superpower are wrong. Peter Zeihan and others have talked about the US retreating to isolationism. The argument was that the US would not need to import oil so the US would not need to police the Middle East or police the oceans for world trade.

The US as a top world oil and gas exporter will remain motivated to police the world and keep world trade flowing in order to get its oil and gas to China and India and Asia.

SOURCES- IEA Oil 2019, Nextbigfuture analysis
Written By Brian Wang, Nextbigfuture.com

48 thoughts on “New Geopolitics – US as Top Oil Exporter Wins By Reducing Iran Oil Exports”

  1. By constantly harrassing Iran, the US has painted the entire planet in a corner: under the threat of an all-out war, Saudi Arabia keeps trading oil in dollars (and at low prices) to get protection from an otherwise dominant regional rival; it shouldn’t, since now its main customer is China, but will still do so.
    As long as oil keeps on being traded in dollars (the “exorbitant privilege” that forces the US to have a commercial deficit, but allows US residents to have higher living standards than they otherwise could have), the yuan cannot become a reserve currency and China cannot meaningfully become a rival to US hegemony, being it destined to keep on being merely an oversized emerging country vulnerable to shocks.
    In the meanwhile (decades) low oil prices will keep Russia muted. When Iran and Venezuela collapse (not if, but when), the US will have less competitors and may even enjoy higher oil prices, which will damage China, while affecting less the US economy. By the time this happens Russia will have a collapsing society due to aging, corruption, internal turmoil and lack of diversification in its economy, and rottening military equipment; improving public finance due to higher oil prices won’t do much in terms of ability to challenge the US.

    In simpler words, that spells for another US-led century, perhaps the last one before the planet gets unified by AI/aliens/maturity.

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  2. Because congress changed the law to allow us to export crude oil and our refineries are designed to use garbage crude oil instead o shale oil. So shale oil is selling for a discount domestically and at a premium overseas. You want to shatter the global oil cartel? Start buulding modular refineries to refine shale for domestic consumption and import junk crude to refine and export to the rest of the world while using the navy and airforce to remove hostile oil producing countries from the marketplace (such as Iran and Qatar).

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  3. Also the russian people are dying out and if it was not for nuclear weapons they would not be a serious threat to anyone and in fact the would be a serious question of the russian state surviving until 2050.

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  4. Never said we would have a smaller navy. As for other countries outside of adrica yoi have only a small number of counteies tied to the global system that have stable or growing demographics and as such their comsumption economies will shrink and the u.s. is one of the least exposed economies when it comes to global disruptions. There is a reason so many companies are shift production from asia to mexico.

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  5. Surely peace would have to break out first? Before war could start up again?

    Referencing a war that would disrupt oil supplies vs the constant warfare that does not.

    A Saudi-Iranian war would do this, as missiles will be flying across (and into) the PG, targeting oil facilities and oil tankers.

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  6. Sorry, I don’t understand the phrase “if war broke out in the ME”

    Surely peace would have to break out first? Before war could start up again?

    Noah didn’t let his neighbours on the Ark and the survivors have been furious ever since. There may have been a year or two without fighting under the control of the Ottomans… or maybe not.

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  7. Yes, for US interests and because globalists in Congress haven’t been purged yet. But if war broke out in the ME, Trump would say, “We are taking bids on US naval protection of oil tankers starting right…now” or something like that.

    If we don’t need ME oil, Americans will not tolerate sending our boys and girls to die in the sandbox for Europeans and Asians who do need that oil. Idiot states like California and Hawaii that import ME oil will just have to suffer as well.

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  8. I think the labour intensive nature of fracking is a very important issue that isn’t adequately discussed.

    The multitude of small wells is so different from a few very large wells on the nature of the industry that it could well change the entire politics and economics about how oil wealth can go wrong.

    The vulnerability of oil is that there are a very few, obvious, wells. They need capital to set up but then they generate for years. What does this mean?

    1. Governments can grab said wells and exploit them. Either your own government, or the one over the border who have tanks.
    2. Monopolistic big capital can create said wells, and then exploit them

    In both cases there is a lot of wealth, but it’s easy for a single or very few entities to control them and horde wealth, take the wealth out of the region, out of the country, use said wealth for political power etc. At this point the difference between “government with corruption leading to great wealth and luxury” and “private wealth that buys political power” is almost just a matter of opinion.

    But that doesn’t work so well when you have many, many thousands, even 10s of thousands of highly skilled = highly paid people who need to be working continuously to keep the fields operating. A great deal of the wealth has to go to the “labour” in this case. (Where labour includes a whole bunch of small businesses. But people who work for a living.) It can’t all be diverted into Swiss bank accounts, political bribes and the like.

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  9. Errrr… I’d look again at the current US budget if you think that they are only spending money on things that are vital needs for the nation.

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  10. Technically, yes, but it may not require any less ships. I suppose you could do convoys instead if things got messy but that is less than optimal.
    Also, if other country’s tankers are being sunk, it could do a lot of environmental damage. Loss like this also makes countries poorer, and the can not buy other things like our products.

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  11. Every night?
    What ever the electricity source, I think EVs should be built with battery packs in one standard size that can be swapped out, so the charging can be done whenever the electricity supply is greater than the demand.

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  12. Just for your information, but most car owners around the world would consider themselves extremely lucky if they could fill up at $ 4 per gallon. And many of these countries have flourishing economies and a high standard of living.

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  13. As the sheik said: “The stone age did not end because there were no more stones, and the oil age will not end because there is no more oil.”

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  14. When it is said the U.S. is the largest provider of oil, what you mean to say is multinational corporations operating in the U.S are producing more oil. Most countries that produce oil do so for the indigenous peoples benefit and that will be a larger problem for them remaining independent. Gasoline in the U.S is reaching $4.00 per gallon imagine the economic implications of high energy costs going forward. How can a nation produce the most of a resource and pay more than where the resource is exported to? Enjoy

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  15. In order for the USA to export oil to Japan/CHina/India/Europe, the USA will have to ensure that the world’s oceans do not turn into free fire zones.

    No, it doesn’t. He referred to the ME. As for other areas, nations will have to start fielding their own navies or pay us. Oil is not something most nations can live w/o.

    The point is that it is no longer a VITAL US need. But a rich and powerful USA can (and regularly does) spend significant resources to support important, but not vital, needs.

    Not for the US anymore. The American public does and will not support such non-vital adventurism. The Neocons were all purged mostly. This is why Bill Kristol rants against Trump with his own TDS.

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  16. Shale Oil 3.0 is likely Oil Shale not Shale Oil. The US has at least 2 Trillion Barrels of recoverable Oil Shale in the Green River Basin or about 72% of the World’s current estimated recoverable Oil Shale reserves. Contrary to popular belief Hubbert’s Peak Oil formula was correct. However, he only considered conventional oil supplies. There are far more unconventional oil supplies than conventional oil. US Oil Shale alone is over 2x the amount of all estimated conventional oil globally and due to the roll of the geographic dice the US has the lion’s share of exploitable non-conventional oil. Russia for example has some very large shale oil formations but they are in the far North and unlike US supplies far from roads, infrastructure and population centers. Additionally it is buried under half a mile of Russian Tundra and muck in many cases where its quite simply impossible to build a proper road. So the US is better placed to dominate Oil 2.0 (Shale and unconventional deepwater) and Oil 3.0, Oil Shale and what happens after Shale Oil.

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  17. There are a couple of other factors that haven’t been mentioned by others here:

    • Existing infrastructure: with shale you need a lot of wells which means you need a lot of roads (paved or not) and pipelines to get from point A to point B. In the U.S. most of the shale resource lies under areas that were already previously developed intensively for one reason or another. Most other shale deposits lie under otherwise undeveloped, remote land.
    • Brackish aquifer: one of the largest cost savings experienced in the U.S. in the last five years was the discovery of brackish aquifers in close proximity to shale deposits. This meant that fresh water did not have to be trucked in and waste water trucked out. This appears to be a somewhat unique geological condition.
    • Manpower: shale is labor intensive. It’s not like we’re operating in the Ghawar field where a vertical rig and a ten-man crew can drill a well that will produce 2,500bpd for the next five years. Shale requires a lot more manpower to produce a well that will initially produce 1,000bpd but then quickly sputter down to 50-100bpd (hence the need for lots of wells). Lots of well = lots of well trained manpower and the U.S. has that on account of the size and nature of its legacy petroleum industry.
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  18. That is an inaccurate representation of Peter Zeihan. He said the US will defend its own trade interests but will step back from policing every conflict and trade at large. In fact, as you point out with Iran, we may now be a beneficiary of trade flow disruption from competitor nations.

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  19. Well will still have oil shale and a Canadian company has already figured out how to get it out of the ground economically. Just not competively with shale oil or saudi oil.

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  20. Obama tried to stop it. It fact Trump’s epa stopped the process to impose new regulations on fracking that the Obama epa started working on in order to kill fracking

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  21. No all it means is that the u.s. navy needs to protect u.s. shipping. In other words do exactly what we dis in the tanker war between iraq and iran. We only protected u.s. flagged shipping, not that of other counties. That way we could pretend we were a neutral party to the war. It is only post WWII that we startwd protecting other countries shipping as a mission. Of course if pirates attack someone in the immediate vicinity of a u.s. warship they have to respond in accordance with treaties. But if they were not there at all because no u.s. flagged vessel had requested escort then any ship attacked is sol.

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  22. All this was happening during Obama’s term. Trump simply rode the coattail and claiming the credit. In fact things could be even better if not for his self destructive ways.

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  23. EVs can be tuned to charge at night as a default when the grid is not busy and that will carry us through for quite a while.

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  24. I think you’re the one with a Derangment syndrome here.

    Brian was quite clear: In order for the USA to export oil to Japan/CHina/India/Europe, the USA will have to ensure that the world’s oceans do not turn into free fire zones.

    Sure, the North Western Indian ocean can largely devolve into cannibal warlords without the USA really caring (providing US tankers can get to western India) but the rest of the world’s oceans still serves a major US need.

    The point is that it is no longer a VITAL US need. But a rich and powerful USA can (and regularly does) spend significant resources to support important, but not vital, needs.

    A USN that has ensured the Exxon Condoleezza Rice free and safe passage to the oil ports of Qing Dao, has in the process ensured that the Chinese ships have free and safe passage to San Francisco. A USN that has crushed any attempt to raid US oil transport to England has ensured that English shipping can run to Brazil.

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  25. That isn’t stuff that R.Khimi forgot. That is a more detailed expansion of his succinct “financial system that supports it”.

    Though I’m not sure why private property including mineral rights is a plus or minus in this scenario.

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  26. But are “Jacksonians” in control of the USA? Or merely one strand of thought among others, many of which don’t think this way at all?

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  27. What happens to Russia when Shale Oil 2.0 is done and Shale Oil 3.0 comes around? That and global transport electrification initiated by Tesla?

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  28. Well at some point I am sure we will see enough EVs to diminish oil demand. Of course you’ll just see Methane demand go up to charge the EVs.

    Gotta get the energy somewhere and the whole “magic smart grid that charges all the cars during the day using PV” isn’t going to do it.

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  29. Where a war in the M.E. would raise oil prices (benefiting all oil producers not in the M.E.) it is worth pointing out that it would help some parts of the US economy and hurt others due to a global economic slowdown.

    Fracking has simply added a nice revenue stream to the US economy- one with real geopolitical advantages but the real strength of the US economy is that is diversified.

    If anything we seem willing to delegate the M.E. to allies instead of us being so hands on and that is just fine with me.

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  30. Yes but you forgot:

    • Private property in the US includes mineral rights.
    • Multiple well established oil companies, no need to bootstrap, lots of knowledge in this area.
    • Strong political will to produce our own oil ($ + independence from M.E.)
    • No state owned oil companies. This means that smaller players exist, are willing to bet everything on something new, and will simply pump as much oil as they can so long as they can even break even.
    • Market economics. Poorly run companies go bankrupt and assets are bought by well run companies.
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  31. This development also means that geopolitical analysts who talked about the US losing economic motivation to be a global superpower are wrong. Peter Zeihan and others have talked about the US retreating to isolationism. The argument was that the US would not need to import oil so the US would not need to police the Middle East or police the oceans for world trade.

    The US as a top world oil and gas exporter will remain motivated to police the world and keep world trade flowing in order to get its oil and gas to China and India and Asia.

    Brian once again is so enraged by Zeihan Derangement Syndrome [ZDS] that he just made that illogical assessment.

    The argument was that the US would not need to import oil so the US would not need to police the Middle East or police the oceans for world trade…The US as a top world oil and gas exporter will remain motivated to police the world and keep world trade flowing in order to get its oil and gas to China and India and Asia.

    Really? The ONLY way that ZDS statement makes sense is that the US EXPORTS the OIL IT PRODUCES from the Middle East. ZDS: It rots the logic centers in the brain!

    ME oil producers are now COMPETITORS of the US. So the next time things go tits up there, it is in the US’ national interest to just sit back and rake in the big $$$ for oil it sells. And the US public will not support sending troops there to die for Chinese, Indian, Japanese and European oil supplies or the price they pay for it.

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  32. The US has the perfect conditions for shale, both geologically and the development of the financial system that supports it. This does not say that there aren’t big reserves elsewhere nor that there aren’t other markets that are coming to life, albeit they are still way behind.

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  33. Petro politics is on the wane since the hey days of the 70’s, especially now, as we are heading toward peak oil demand in about 10 years. There cannot be long term supply shortages from now on and oil is becoming like any other commodity, less crucial for the global economy.

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  34. I have been wondering why we aren’t seeing the same kind of success with Shale oil anywhere else in the world? Surely there must be other similar geological formations like the ones in Texas and North Dakota in other locations? Why hasn’t there been a rush to exploit them?

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  35. Actually Zeihan and Brian agree on this one. Zeihan isn’t an isolationist, as the US was never truly isolationist. Before WWII, the US did after all defeat and destroy the Spanish Empire, acquire it’s own Empire, fight WWI, force Japan to open up to global trade, etc. What it didn’t do was maintain an extensive Global Alliance system based on free trade access to its home market. Rather it relied on a system of so called Dollar Diplomacy, where business and economic interest trumped ideological interest. So the US invaded Latin American countries plenty of times, but it was always geared towards protecting economic interest. What Zeihan sees happening is the US will return to a system of Dollar Diplomacy where the primary guiding principle wouldn’t be, so you oppose the Soviets, here’s a free trade deal, or you support human rights here’s a free trade deal for your cooperation. Dollar diplomacy was the system of US diplomacy after the Civil War until WWII, were foreign involvement was always weighed in cost and benefits (primarily economic), and the cost and risk of an alliance with a major European power was never worth it, so the US isolated itself from European major power politics not the World. Squeezing Iran out of the oil market so the US can hurt an enemy and benefit itself economically is actually a perfect example of the kind of Dollar Diplomacy Zeihan believes the US is moving towards.

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  36. Brian is confused on how Jacksonians think and what that means for how Americans behave. Ending the globalist world order does not mean the u.s. world withdraw from the world, but instead keep the world at arms length and maximize u.s. profitability amd exploitation of the world for our benefit. In the can of Iran than means preventing them from gaining nuclears weapons, stopping them from exporting oil and reduce their civilization to the stone age at the 1st opportunity.

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