Price dynamics, production and trade

The Mediterranean region plays a strategic role for energy due to the presence of Libya and Algeria that have large reserves of oil and gas, and the discovery of new offshore gas fields in Egypt, Israel and Cyprus. The Mediterranean region is also an important energy transit due to the presence of strategic chokepoints for maritime traffic of oil tankers, such as the Suez Canal and Turkish straits. The role of the Mediterranean region as an energy corridor is reinforced by the presence of pipelines that transport oil and gas from the Middle East, Russia, Azerbaijan and other former Soviet Union States, to the main supply markets, including Europe. Libyan oil production, exports and related revenues sharply reduced after the end of the Gaddafi regime, which was deposed in October 2011. In recent months, the involvement of Russia and Turkey in the Libyan crisis, also from a military point of view, has become considerable. From the energy crises of the 1970s to the riots of the Arab Spring, one of the main unsustainable factors of the energy system was the high price of oil. Starting from 2014 the price of oil has plummeted, creating major problems for the producing countries, where the reduction in oil revenues translates into an increase both in the fiscal deficit and public debt. The collapse in the price of hydrocarbons is having not only economic repercussions, but also effects in terms of balances between powers within the energy market. Saudi Arabia, Iran, Russia, Algeria and Libya, for example, need to sell their hydrocarbons to support their economies and are therefore dependent on their exports just as the Western countries depend on their imports. In this context which has changed in just a few years, the governments of the various countries now need to examine the security of energy supplies, putting in place new policies that finally take note of the close interdependence between producer and consumer countries. The drop in oil prices could have greater social and economic consequences than the Arab Spring in 2011.