A premium in the oil price of somewhere between 10 to 15 dollars a barrel reflects this heightened anxiety.

In a world of increasing interdependence, energy security will depend much on how countries manage their relations with one another. That is why energy security will be one of the main challenges of foreign policy in the years ahead. Oil and gas have always been political commodities.

But the key thing is that Iraq, while it's got very large oil reserves, has marginalized itself as an oil exporter and these days its exports are only about one tenth that of neighboring Saudi Arabia.

The world has produced about 1 trillion barrels of oil since the start of the industry in the nineteenth century. Currently, it is thought that there are at least 5 trillion barrels of petroleum resources, of which 1.4 trillion is sufficiently developed and technically and economically accessible.

I think the producers, for the most part, don't want to see prices skyrocket because that will only create problems for them down the road and would also be a, you know, would be a very serious shock for a world economy that can't afford serious shocks right now.

Clearly, the Chinese need the resources, but I don't think they want to clash with the industrial world which happens to be the market for their goods.

The bulk of extra supplies that could be put into the market come from two places. One, they come from other Persian Gulf suppliers, of which Saudi Arabia is at the top of the list.