Coll 30/204 ‘Persian Gulf Oil. Future of oil in its relation to the Middle East – Admiralty Memorandum on –’ [‎20r] (39/66)

SEC RET
THE P U T U R E 0 F Oil- IN ITS
R E L A T ION T 0 THE
MIDDLE E P, S T
SIBD/IARY OP MEMORANDUM
(1) Since oil is a factor of the very highest
importance in world economics, anything which threatens
the adequacy of world supplies or the major sources of
supply, is of great practical significance,
(2) Aggregate world demands are such that the
world ? s aggregate reserves may only suffice to meet them
uninterruptedly for a feiv decades longer; the effects
of a prospective oil shortage will be felt long before
actual exhaustion by those countries which lack controlled
resources, indigenous or otherwise. For such countries
the value of any simple world-reserve/time ratio must be
heavily discounted, and leads to entirely erroneous
deductions as to the actual situation,
( 5 ) There is, in general, an extreme regional
disequilibrium between the physical distribution of oil
resources and the industrial demand. Apart from the
U.S.S.R., which is in a class by itself, three of the
five continents depend, and will continue to depend, on
the great producing areas of the remaining two,
viz, America (North and South) and Asia (Middle East),
(4) The net exportable surplus of the Western
Hemisphere will gradually decrease as a result of the
cumulative effect of (a) the heavy strain imposed by
the very high level of U.S.A. consumption, (b) adoption
of a policy of conservation in U.S.A, owing to gradual
depletion of the national oilfields, (c) absorption in
U.S.A. markets of supplementary supplies from South
America,
(5) The threat ultimately implied to the security
of supplies elsewhere, notably to Europe, is however
countered to a great extent by the very high promise of
the petroliferous areas in the Middle East where the
developed and undeveloped reserves are so considerable
that they may eventually have a marked effect on the
period of sufficiency referred to at ( 2 ) above.
( 6 ) The fulcrum of the world’s export market,
hitherto established in the West by virtue of the
preponderance of surplus American resources, may
therefore be expected to shift to the Middle East at
no distant date, possibly within one decade; almost
certainly within two.
(7) The political and economic implications of
such a change, and, equally, the need for a gradual but
timely adjustment of plans and policy to meet it, should
be obvious.