Atif Zahoor Arsh
The Middle East continues to hold a pivotal role in global energy markets, thanks to its vast reserves of oil and natural gas, strategic geographic location, and evolving energy policies. This part of the world provides approximately thirty-one percent of the world oil and accounts for nearly forty percent of the reported natural gas resources, thus maintaining a dominant hold on the fossil fuel sector. But it also has considerable problems as the global market trends toward renewable energy and low-carbon diets. In 2023, Saudi Arabia and Iraq were amongst the top producers of oil in the world where Saudi Arabia produced approximately 10.3m barrels per day. OPEC, which is largely dominated by the Middle Eastern Countries, controls the world oil supplies in order to stabilize oil prices, such as the measure of production cuts which was adopted by OPEC in early 2023 indicating reduced demands across the globe. In addition, Qatar continues to be among the largest producers of liquefied natural gas (LNG) which plays an important role in supplying energy needs Europe in the times of uncertainty caused by the Russia Ukraine war.
Today, Middle East is aggressively leveraging geographical relations to make the region the epicenter of renewable energy. Current Saudi Arabia’s Vision 2030 acknowledges the need to diversify the nation’s income sources through the creation of numerous renewable energy projects such as the NEOM city generated by green hydrogen. A few months ago, Abu Dhabi showcased one of the biggest solar farms worldwide and due to its consistent climate and vast deserts, solar power is set to have immense potential for growth throughout the region. The access of energy trade through the Persian Gulf especially through the Strait of Hormuz has remained valid to global supply since approximately 20% of the global supply passes through this severely restricted strip. But there remains political risk, geographical conflicts for instance between the United States and Iran or conflicts in the Yemen area which affect energy security and price stability. These relationships are crisp as Middle East is in search of investment in sustainable energy technologies.
Global call for renewable energy as can be seen is both a threat and an opportunity for the Middle East. Although fossil fuel revenues continue to be crucial, the decreasing costs of renewable energy and growing pressure from the global climate change agreements call for strategic changes. Though investing heavily in green hydrogen and solar energy, the region also seems committed to occupying an important place in a post-carbon world. Pakistan still heavily relies on the Middle East as source of its energy needs especially in Oil and LNG. The new energy environment might present potential partners for cooperation in renewable power generation in Pakistan; at the same time, it introduced fluctuating oil prices and supply chain risks associated with South Asian geopolitics. In a nutshell, the Middle East is still the power-house of the global energy market; however, it has to overcome geopolitical tensions, transform into a renewable energy market in order to meet international climate change goals.
The Author is a freelance content writer and foreign policy analyst with a strong academic background in English Literature, Political Science, and History.
