Recent major developments in the global oil space, particularly in the Americas, will not significantly impact the Middle East’s status as an energy leader in the long run, according to a report. Middle East will continue to dominate the energy sector even as US oil companies develop new oil production technologies and shale gas discoveries emerge from the Americas, the report published by Orient Planet said. It identifies strategic factors such as the increasing emphasis on the use of renewable energy  in the Middle East – a region abundant in solar and wind resources – as key to sustained dominance in the energy domain. Aside from having the largest proven crude oil reserves in the world (66 per cent of reserves of Opec members), the region enjoys close proximity to – and strong economic and cultural ties with – oil-hungry markets such as China and India. China alone is projected to account for half of global oil demand growth  in the next five years, the report said. In addition, while the region has vast oil reserves, it has not yet maximised its production potential. It can still boost output to match surges in global demand  as opposed to other countries where production is already at, or near, peak levels, it said. In its research, Orient Planet refers to a recent report from the International Energy Agency (IEA) that has managed to stir the global oil marketplace and draw mixed reactions from various industry players. The report claims that the surge in oil production in North America will be as transformative to the market over the next five years as was the rise of Chinese demand over the last 15. This development merits closer inspection from the Middle East and other key oil players given the constant shifts in market forces. “To say that the US oil boom will significantly impact the global economy is certainly a very bold statement to make, according to the study. Undoubtedly, it will have an influence, but the manner in which it has been discussed and portrayed in the media shows a certain degree of hype and overexcitement,” the report said. The US has depended on oil imports to sustain its economic growth for a very long time. The possibility of weaning the US off oil imports was therefore big news and the media feasted on it. US oil demand The US, despite being the world's biggest consumer, never had any major breakthrough in domestic production of oil. Until recently, up to 60 per cent of oil supply in the US was imported from other countries. On the other hand, the US imported up to 20 per cent of its natural gas needs based on 2010 records. However, as the IEA report points out, US oil companies have been able to develop new technologies and techniques that allowed them to produce oil from previously inaccessible locations. Specifically, the energy boom in the US is mainly due to shale gas and high concentration of unconventional oil deposits in various states such as North Dakota and Montana. Largely because of shale gas discoveries, the US is expected to become a natural gas exporter by 2035, according to the IEA. Moreover, oil imports are now expected account for 30 per cent of US energy needs, down from 60 per cent. Impact in the Middle East So how does all this affect the Middle East? The IEA and the US Energy Information Administration have already predicted the US to lead the world in oil production  as early as 2017, which is only four years away. Will it severely affect Middle East oil revenues as the US becomes the world’s largest oil producer, eclipsing the Saudi Arabia and Russia? Nidal Abou Zaki, managing director of Orient Planet, said: “An objective assessment of the emerging developments in the global oil space and the various economic indicators would reveal that even if the US increases its oil production, it will never dislodge the Middle East as the most influential block in the global oil trade. The primary reason for this is that the region still produces majority of the world’s oil supply. Saudi Arabia, in particular, remains the linchpin in global production because of its ability to increase production at a moment’s notice to augment any shortfall or disruption in the international supply chain.” He noted that the percentage of Middle East oil imported by the US is far less than one might expect: just around 16 per cent of total US oil imports. According to the Energy Information Administration (EIA), the statistical agency of the US Department of Energy, the US imported 58.2 per cent of its petroleum (including crude oil) in 2007. Of this figure, only 16.1 per cent came from GCC countries. Countries in the West accounted for 49 per cent of US oil imports, while 21 per cent came from African nations. The top two oil suppliers of the US in 2007 were Canada (18.2 per cent) and Mexico (11.4 per cent), with Saudi Arabia only running third (11 per cent). The figures above show that the US accounted for only a relatively small percentage of the Middle East oil exports. Arab oil exporters cater to a global marketplace, not a single customer. This means that given the global customer base of the Middle East, it would not be too difficult to find new markets that would make up for the drop in exports to the US. And this brings the discussion to Asia, particularly China, which is fast replacing the US as the world’s top oil consumer. Asian oil markets While the IEA expects the US to gradually become independent of oil imports, it also predicts Asian countries to end up consuming up to 90 per cent of the oil produced in the GCC region. In particular, the fast-expanding economies of China and India will be key markets with their rapidly growing demand for oil. Moreover, with the rest of Asia experiencing energetic economic growth, Arab oil exporters can expect a surge in revenues as they expand and strengthen their presence across East Asia. It has also been predicted by the IEA that developing countries will soon collectively consume more oil than developed countries for the first time. The Middle East itself will need more oil as the region Given the situation, a decline in oil demand is a distant possibility and certainly the least of Arab oil exporters’ worries, according to Orient Planet’s study. In the long run, global economies will continue to find ways to grow and recover from the recent global downturn.