Oil Prices Closely Linked to Global Politics

Talal Abu-Ghazaleh

The world of oil and energy consists of a complex network on interconnected factors that go beyond the traditional concepts of supply and demand. Although the rules of supply and demand play a role in determining the price of oil, yet there is a compelling argument that the geopolitical decisions made by the US have an enormous effect on the global oil prices. Such decisions, pushed by a complex interaction between the strategic options related to production, sanctions, and diplomatic ties, may cause significant fluctuations in the price of oil that challenge the traditional market forces.

It is interesting how the pivotal point in many of these oil-driven disputes goes beyond abstract definitions and restrictions, as it revolves largely around intellectual property rights. At the heart of these conflicts is a struggle for international influence and technological superiority between the US and China, which are both competing to achieve global dominance through technological and economic prowess.

Contrary to the popular perception, the oil price fluctuations are not solely dependent on traditional market dynamics. The US, as a major player in the global oil landscape, has an effective role through its strategic decisions, which are often made with geopolitical considerations in mind. This stresses the fact that oil prices are related closely to global politics. For example, sanctions may paralyze the production capabilities of oil producing countries, which leads to shifts in the meticulous balance between supply and balance.

Diplomatic ties and strategic options related to production may also affect oil prices significantly. Such geopolitical factors add a layer of complexity that goes beyond the standard economic models used to predict oil price fluctuations.

The importance of technology in the oil industry cannot be overstated, as technological advances can enhance production efficiency significantly, reduce costs, and improve environmental sustainability. Thus, the race to achieve technological dominance is not only limited to achieving economic gains, but also includes controlling the future of global energy production.

Thus, several key points should be considered when assessing the potential stability of oil industry in the Gulf States in the face of economic challenges and the emergence of new energy sources. The global economy is becoming increasingly diversified and the new energy sources, such as solar energy and wind power, are more efficient, in terms of cost; and they are environmentally friendly. The decisive climate change issue, moreover, is exacerbating the tensions inside the energy sector. The withdrawal of the US from the major international agreements, such as the Kyoto Protocol and Paris Agreement, is an added reason to raise concerns about the future of our planet. If effective solutions are not found quickly, humans might be on the verge of extinction within a decade. The looming environmental crisis is also adding a layer of complexity to the already complex world of oil and energy.