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Volatile world

Trump ditched Paris, Paris got Macron, Isis lost Mosul

America

On 1 June, President Donald Trump fulfilled one of his election promises by pulling the US out of the Paris Accord on climate change. He said the agreement had put America at a "very, very big economic disadvantage". The move was widely criticised. Later in the year parts of the US and nearby islands were battered by a larger-than-normal number of hurricanes and tropical storms—a clear sign, many said, of climate change. Earlier in the year, Trump's "America First" plan saw him pull the US out of the Trans-Pacific Partnership. He maintained throughout 2017 that he could do the same with Nafta too.

Venezuela

President Nicolás Maduro spent the year tightening his grip on power and casting aside democratic institutions as the country's economic crisis deepened. Widespread unrest followed constituent assembly elections in late July which were condemned by the US as a sham and a further step towards dictatorship. The imposition of US financial sanctions hurt Venezuela still more, as oil output slipped further to beneath 2m b/d. Around $3bn in bond payments hit the cash-strapped state oil company's finances.

France

Emmanuel Macron's convincing victory in the May presidential elections changed the character of French politics. Many of the old guard were swept away, as members of his En Marche! party, founded only a year earlier, entered parliament. Macron's success flew in the face of expanding right-wing populist movements elsewhere in the world. But when he started introducing promised labour reforms and spending cuts his appeal waned. By October his approval rating had sunk to 36%, down from 64% in June. He said he wanted to ban all new oil and gas drilling in France.

South Africa

Widespread anti-corruption demonstrations were seen as a public vote of no confidence in President Jacob Zuma. He and the African National Congress (ANC) were accused of stealing vast amounts of state funds. Political instability increased during the year as infighting broke out among senior ANC figures and several politicians were murdered.

Libya

Field Marshal Khalifa Hafter became the dominant force in Libya's fractured political landscape, as his Libyan National Army extended its territorial control over the country. Islamic State jihadists resurfaced again in Libya's centre, threatening renewed mayhem despite their earlier expulsion from Sirte. In the absence of clear US policy on Libya, other countries competed for influence in shaping the international approach to the country. The UN tried to revive its peacemaking efforts, but by end-2017 Libya's divisions seemed to be deepening. Oil output defied the political chaos, occasionally topping 1m b/d in 2017.

Iran

Hassan Rouhani's emphatic re-election in June appeared to offer a period of political and economic stability. Oil production averaged around 3.8m barrels a day and was set to rise to 4m b/d. But optimism was overshadowed by menacing statements from the Trump White House—made manifest when the US President said in October he would pull out of the nuclear deal with Tehran. The possibility of renewed sanctions—or even war—started, once again, to look less remote.

Saudi Arabia

In June, Mohammed bin Salman, the young son of King Salman, consolidated his grip on power when he was named crown prince in place of Mohammed bin Naif. In the same month, Saudi Arabia, along with the UAE, Bahrain and Egypt, imposed a blockade on Qatar, destroying the image of Gulf unity and calling into question the future of the Gulf Cooperation Council. With Qatar refusing demands to change its regional and domestic policies, the Gulf faced a long and damaging crisis—but the region's energy sector remained unscathed.

Iraq

The recapture in July of Mosul, the capital of the Islamic State (IS) caliphate, was followed by the defeat of the jihadists elsewhere. But northern Iraq in the post-IS period was still unstable. Iranian-backed Shia militiamen, major players in the rout of IS, remained in the region. Things disintegrated further in the autumn. In September, a referendum of Iraqi Kurds, held in the face of strong international opposition, backed calls for independence. Baghdad, Ankara and Tehran took punitive measures, and the future of Kurdish oil exports through Turkey became uncertain. A few weeks later, Iraqi federal forces recaptured from Kurdish Peshmerga the disputed territories between Iraqi Kurdistan and the rest of the country—including Kirkuk and its oilfields. By late October, Baghdad had politically boxed in the Kurdistan Regional Government, which said it would "freeze" its referendum.

Myanmar

In late August, an attack by Rohingya Muslim militants on a police station in Rakhine state sparked what the UN called a "textbook example of ethnic cleansing". Myanmar's military carried out a wave of attacks on Rohingyas and their properties, claiming to be cleansing the region of terrorists. An estimated half a million Rohingyas fled across the border into Bangladesh. Aung San Suu Kyi's indifference to the military action tarnished the international reputation of the Nobel-prize-winning leader.

North Korea

The testing of North Korean missiles and the country's resolve to manufacture nuclear weapons met with strong international protests. But Pyongyang's determination seemed undented, and inflammatory tweets from President Trump were met with the firing of missiles over Japan in preparation, it was said, for an attack on US facilities on Guam. China joined other nations in imposing sanctions on North Korea, but was criticised by Trump for not doing more to coerce the Pyongyang regime. By year-end, the possibility of a conflict seemed real.

This article is part of Outlook 2018, our annual book looking at energy market trends for the year ahead. To purchase a copy, click here

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