Black gold’s reign continues
By Ebrahim Beheshti
Staff writer
In the most recent BRICS summit, the bloc approved the membership of six countries, namely, Iran, Saudi Arabia, the United Arab Emirates (UAE), Egypt, Ethiopia, and Argentina. Of these six new members, Iran, Saudi Arabia, and the UAE are all major oil producers and are about to join forces with another major oil producer, Russia.
Before the expansion, BRICS was comprised of the five so-called emerging markets of Brazil, Russia, India, China, and South Africa. As a mainly economic organization, BRICS has the potential to become a major economic and political axis in the international arena considering its economic growth as well as its varied geographic and demographic potential, according to many analysts.
In an exclusive interview with Iran Daily, the international affairs expert Shuaib Bahman stressed that this process is currently underway since “the BRICS five contribute 31.5% of global GDP, while the G7 share has fallen to 30%, making them roughly on par when it comes to dominating the global economy”.
Despite hearing that oil no longer plays a major role in the global economy as the most important source of energy, it seems that its time on the throne has not yet ended. Inviting three of the world’s largest producers of crude oil to join BRICS is not unrelated to the significance of this strategic resource in global competitions.
Based on the outlooks provided by various credible international institutes, particularly the US Energy Information Administration (EIA), which is a part of the US Department of Energy, oil demands will continue to rise by 2050. The predicted population growth and considerable economic growth in some parts of the world have been cited as evidence for the claim. Even though energy (oil) consumption in the member states of the Organization for Economic Cooperation and Development will see a low, negligible growth by 2050, oil demands in non-member states, especially in the East and Africa, will show a sharp increase.
The forecast, of course, is tightly linked to what the recent report of Goldman Sachs referred to as “a dramatic shift in the balance of global economic power in the coming decades”. Most importantly, it has been predicted that the share of Asian economies in the global economy will increase while the European countries will have less of a say. Besides China and India, Indonesia is one such Asian country that is expected to experience substantial growth by 2050, to become the fourth largest economy in the world.
Energy is still the driving force behind the economy. Despite the projected rise in the use of renewable energies in the future, oil will not be replaced by renewable energies by 2050. In fact, it is forecast that oil will remain the most important source of energy in 2050.
India, which has become the most populated country on Earth since a few months ago, is anticipated to demand 14 million barrels of crude oil per day by 2050, 12 million barrels of which it must import. By that time, China’s daily oil demands will probably reach 17 million barrels per day, only four million barrels of which it will produce. It is estimated that by 2050, some other developing Asian countries including Indonesia, Bangladesh, Malaysia, and Pakistan will require 15 million barrels of oil combined each day. Although Africa will not experience a population growth that would be on par with Asia’s, its oil demands will double by then.
The same forecasts suggest that the Middle East will produce the most crude oil. OPEC member states will produce 43 million barrels of crude oil per day, while OPEC non-member states produce around 58 million barrels of crude oil.
With this background, the membership of the three major oil producers in BRICS can be better understood. As an alliance of emerging non-Western markets that claim to compete with international organizations of the West, BRICS needs energy to overtake its competitors. In fact, the presence of major oil producers in the bloc will be its relative advantage to stimulate economic growth.
According to Fars News Agency, through this recent expansion, BRICS will have a hold on nearly half (47.6 percent) of the crude oil that is supplied to the global market. Moreover, half of the world’s proven oil reserves will be in the hands of BRICS members, amounting to 719 billion barrels.
Meanwhile, members of the G7 (the United States, Canada, France, Germany, Italy, Japan, and the United Kingdom) have control of only 3.9 percent of the world’s supplied oil in total. Of course, that relative advantage paves the way for BRICS members to realize their goal of replacing the US dollar in trade.
Therefore, in defiance of some assessments, oil will continue to play its role in the competition between major global powers or alliances for at least a few more decades. This means that Iran, as a large producer of crude oil, can also play a key role in regional and international arenas through BRICS.
That is why Jafar Qannadbashi, an international affairs expert, told Iran Daily that Iran’s admission into BRICS is not a one-sided privilege that is handed down to the country, but rather, it is a win-win deal that has its advantages for all sides.
“Iran’s geopolitical position and its energy advantage are factors that would give more weight to BRICS by its admission,” he said.
Shuaib Bahman also believes that Iran’s geographical position, rich energy resources, and relatively large population are “interesting and advantageous” for BRICS members.