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Country Analysis Brief: Yemen

February 17, 2012

Country Analysis Brief: Yemen
Source: Energy Information Administration

Yemen is a relatively small oil and natural gas producer. However, it is important to the global oil trade because of its strategic location at the tip of the Arabian peninsula on the Bab el-Mandab, one of the world’s most important shipping lanes, through which an estimated 3.5 million barrels of oil passed daily in 2010. Disruption to shipping in the Bab el-Mandab could prevent tankers in the Persian Gulf and the Gulf of Aden from reaching the Suez Canal/Sumed pipeline complex, requiring a costly diversion around the southern tip of Africa to reach western markets.

In recent years, the region has seen rising piracy off the Somali coast, in the Gulf of Aden and southern Red Sea, reaching into the Indian Ocean. Security concerns in Yemen involving militant groups have deterred investment in recent years, with numerous attacks on energy infrastructure, particularly oil pipelines, slowing production and increasing costs.Yemen’s economy is heavily dependent on hydrocarbons, which accounted for 30 percent of GDP, nearly 75 percent of government revenues, and over 90 percent of foreign exchange earnings in 2010. As oil revenues decline, the government’s ability to provide basic services has been weakening. A political crisis occurred in 2011, inspired by similar public demonstrations in Tunisia and Egypt.

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Categories: energy, Energy Information Administration, Yemen
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