Threats to the World's Oil Supply

In a new report from the Council on Foreign Relations, staff writer Toni Johnson identifies geographical locations where oil supplies are especially vulnerable to disruption.

Causes of Instability

The steady supply of oil can be disrupted due to a number of factors, says the report, citing the Center for Strategic and International Studies' Sarah Ladislaw. Those factors include political instability, accidents, terrorism, the effects of weather, infrastructure neglect, and a lack of long-term investment.

The Russian Bear

In the CFR report, Johnson lists several of the world's most volatile regions as holding the most likelihood for oil supply disruption. First listed includes those areas that are host to Russian pipelines, like the -stans (all former Soviet republics), Ukraine, and the Caucasus nations of Georgia and Azerbaijan.

Russia has been known to use its supply of energy to European and former Soviet nations as leverage in geopolitical disputes, and Russia's resurgence on the international stage has caused significant concerns about steady energy supplies. In particular, some European nations are actively seeking new sources of energy to reduce the current dependence on supplies from Russia.

The Persian Gulf

Next on the list is the Strait of Hormuz, which many, including the United States, fear could be closed in a conflict, resulting in a significant disruption to a large percentage of the world's oil supply. According to the report, the Persian Gulf is home to over 60 percent of the proven oil reserves in the world, and about 40 percent of the proven natural gas reserves in the world.

Iran, which is one of the largest oil producers in the world, is also cause for concern. In addition to Iran taking actions to close the Strait of Hormuz, a military strike by either the United States or Israel against Iranian nuclear facilities could cause a serious disruption to the world's oil supplies.

Significant economic sanctions, if imposed by the United Nations as a punitive measure to deal with Iranian noncompliance with U.N. Security Council resolutions, could also have a serious effect on the supply of oil available to global markets.

Africa

The Niger Delta also has the potential for significant oil supply disruption due to internal conflict that has resulted in the targeting of oil facilities and oil workers. The report states that Nigeria has fallen from the eighth largest oil producer in the world to the twelfth largest in just the past two years as a result of ongoing strife.

South America

Venezuela under Hugo Chavez has taken steps to progressively nationalize the oil industry, shifting control away from international investors and to Venezuelan state-owned companies. Such measures have discouraged foreign investment while Venezuela's oil infrastructure suffers a decline in its condition. The end result could be reduced production, followed by supply interruption if the Venezuelan government does not reinvest in its oil industry.

Rounding Out the List

Also listed in the report are Iraq, which is still struggling to get its oil production levels back to the levels that existed before the 2003 U.S.-led invasion, and the Gulf of Mexico, home to a significant portion of U.S. oil production capacity, but also vulnerable to natural disasters such as hurricanes.