President Barack Obama prompted his colleagues in the G-8 group of countries to affirm their readiness to use their strategic petroleum reserves if there are interruptions in the supply of oil in the coming future. This readiness, which was expressed in the G-8 final statement in Camp David, has two objectives. The first is to pressure and intimidate Iran before the Baghdad meeting on Wednesday of the Group of Six countries negotiating Iran's nuclear program. The second is to pressure markets, so that the price of oil drops. Iran's production of oil has been greatly affected by American and European financial sanctions. On 1 July, implementation of European sanctions on Iranian oil will begin; the sanctions on Iran are painful for the regime and the state, and on 1 August, the Iranian state will have to halt operations in some of its oil fields, which according to oil experts is something bad. This is because closing these fields could make it difficult to re-open them. Currently, Iranian production is down, but Iran has not halted production in a number of its oil fields. Production levels have now dropped by about 400,000 barrels a day, to 3.1 million barrels. Iran stores about 300,000 barrels on ships at sea, and cannot sell them. The G-8 countries' resolution about the readiness to use their strategic reserves is meant to scare Iran, but they cannot use their reserves if prices continue to rise, which will have a negative effect on the economic growth that Obama wants, in order to be re-elected. The US strategic reserve is 7,400 million barrels, and the US can quickly reduce this to 600 million. Even though Saudi Arabia produces about 10 million barrels a day, prices have remained high, although they fell noticeably the last week. The use of the strategic reserve took place upon the establishment of the International Energy Agency, at the initiative of Henry Kissinger, in order to combat any interruption in petroleum supplies during a blockage, or war. It is now a tool also for influencing prices. In fact, geostrategic conditions in the Middle East, with the likelihood of an Israeli strike against Iran and an ongoing war in Syria between the regime and its people, and its confrontation with the international community, and an Iraqi regime allied with Iran and Syria – all of these represent unstable conditions, which could keep oil prices high. The significance of the G-8 countries' readiness to use their petroleum reserves is to show Iran that they do not fear an interruption in Iranian oil, and that the Iranian regime is punishing itself and its people with its hostile policies in the region. The important development in the international oil arena is that since 2005, the biggest consumer market for oil and gas in the world, the US, has experienced an energy revolution, after it was able to produce shale oil in large quantities, which in a few years will make the US the world's leading producer of gas, ahead of Russia and Qatar. In addition, and as a result of the large drop in the price of gas in the US, a number of independent producers have discovered and produced shale oil. At the same time, the Obama administration wants to rely increasingly on oil imports from Mexico and Brazil, which will become a big producer in the space of several years, while Venezuela is pursuing an energy economy policy. Thus, America's reliance on Middle East oil will drop greatly by 2010, but the Middle East, and the events there, will see it remain fundamentally important for the US, because any incident there will affect international oil prices. The price level of oil will remain the key element that affects the pace of growth, or leads to recession.
