|The four major country groups within which disruption is likely to occur.|
In testimony before the Senate Foreign Relations Committee last week, Hillard Huntington, Executive Director Energy Modeling Forum (EMF), Stanford University, told the senators that based on its research, the EMF assesses that the probability of a major oil supply disruption (2 million barrels or more per day) lasting at least one month during the next ten years is approximately 80%.
The EMF only assessed disruption resulting from geopolitical, military, and terrorist causes for disruptions outside of the US. It did not assess the potential for domestic and weather-related oil disruptions.
Based on its studies, the EMF also concluded that:
The probability of a net disruption of 2 million barrels or more per day lasting at least 6 months is approximately 70%;
The probability of a net disruption of 2 million barrels or more per day lasting at least 18 months is approximately 35%;
The chance of a 3 million barrels or more per day net disruption or more lasting at least 1 month is 65%; the chance of 5 million barrels or more per day or more is about 50%.
EMF categorized the countries in which the disruptions are the most likely to occur into four regions:
West of Suez, comprising Algeria, Angola, Libya, Mexico, Nigeria and Venezuela;
Other Persian Gulf Region, including Iran, Iraq, Kuwait, Qatar, UAE and Oman; and
Russia and the Caspian States.
EMF concluded that there is a greater probability for any disruption lasting >1 month in the Other Persian Gulf Region (83%) or the West of Suez region (72%) than in Saudi Arabia (49%).
It also concluded that there is a lesser probability for any disruption lasting >1 month in Russia and the Caspian State (17%) than in Saudi Arabia (49%).
The chance of a 5 MMBD disruption size (or greater) is 60% for active war in the Middle East, 34% for no conflict in the Middle East, and 47% assuming base case assumptions.
The EMF conducted a similar risk assessment in 1996. The current assessment covers four regions of the world instead of two regions, has updated probabilities to reflect current world conditions, and has modified excess capacity and oil supply forecasts. The net effect of these changes shows an increased likelihood of disruptions for all sizes up to 10 million barrels or more per day, but the same estimate as 1996 for disruption sizes of greater than 10 million barrels or more per day (7-8% or lower).
...The nation is vulnerable to another major disruption not because the economy imports oil but primarily because it uses a lot of oil, primarily for gasoline and jet fuel. Even if domestic production could replace all oil imports, which I am not advocating, the economy would remain vulnerable to the types of disruptions discussed here.—Hillard Huntington