Free Maintaining OPEC’s Production Outputs Effects Oil Market Share And Political Influence Literature Review Example
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Control oil and rule the world. Oil is considered one of the most vital and essential commodity in the world today and the countries producing oil are considered so powerful since there are very many countries depending on them. Oil is used in almost every area in the running of the world. From the oil, energy through fuel is produced. The fuel is key in all the aspect of the day-to-day running of a country majorly in the transport sector, industries and mining not forgetting the agricultural sector. For this reason, the oil producing countries have the power, political, in ruling the less fortunate countries who do not produce the valuable commodity (Arora & Gupta, 2013). The focus of this study is to establish the effect of oil on the strength of the OPEC and GCC countries. This is based on the political impact and OPECs oil market share, and why did they maintain their oil production levels. The study involves the use of secondary data by through a combination of literature evaluation and in-depth interviews. The literature used in this area is small though references used are listed in the end of the report.
Most of the industries will not work without oil. Oil as a fuel is for modern capitalism. Now, most of the countries are spending billions of dollars in the exploration, production, refining and shipping this product. However, oil production has always been hampered by conflicts, violence, interventionism, and repression but this has not stopped most countries from exploring this lucrative commodity (Arora & Gupta, 2013). Oil is not found in any geographical location; there are areas with the resource while others that are less fortunate will depend on oil producing countries. OPEC and the GCC countries have the energy power, and this is the only weapon they have. Therefore, if they lose this weapon, OPEC and the GCC countries will lose the political influence on countries that depend on them. So maintaining the oil market share will keep OPEC and GCC countries powerful (Mitchell, 2011).
The OPEC and GCC countries like U.S, Iraq, Iran, Kuwait, and Saudi Arabia are considered the main producers and having the highest number of oil reserves in the world. These countries are considered very powerful, and they control most of the countries that depend on them. From 1990s, there has been a rapid growth of crude oil to modern industrial society due to the proliferation of automobiles. The turning point of the importance of oil came during world war one. It was evident when the British Secretary of Navy switched its navy from coal to oil that in the long run gave British and its Allies advantage over their enemies (Noreng, 2006). It was evident from the speech by the then British foreign secretary after the Allied victory that stated that the allies floated to victory on a wave of oil. It was the turning point in the oil industry, and it has remained to be the same.
U.S became the world superpower after the second world because of oil. After the First World War, oil production shifted from Texas, USA and the Caribbean basin to the Middle East where there was the vast discovery of oil reserves (Mitchell, 2011). The Allied movement including British, USA, and France then became great competitors in having the best prices of the century. At this time, Britain had all the advantage as the best contender since they already had control over the oil in Iran. There was a balance in the oil race that worked in favour of the U.S, the United States government, therefore, worked so tirelessly in gaining bases for their oil companies within the regions. After this war, Germany was destroyed, and most of the European countries overwhelmed (Arora & Gupta, 2013). The imperial powers like the Britain and France emerged very weakly after the war and only the United States ended so powerful and controlled more than half of the industrial production. For this reason, the U.S became and was recognised as the dominant power in the west while the junior partners of the past became Britain and France.
The OPEC and GCC countries have dominated the world with their oil production and at any given time, there is always fluctuation of the oil prices in the world. Saudi Arabia and Iran are small countries but very powerful because of oil. It has made the United States in making sure they have control over the Middle East. The Bush government invaded Iraq in establishing its base in the region. The U.S is making high profits and has conquered the world market (Noreng, 2006). The U.S government used the surrogate system in conquering most of these oil-producing countries in strengthening their political and economic base. The US have got three pillars in the Middle East, in Saudi Arabia which is the world highest producer of oil, in Iran where the US where the US installed their ally Shah to power through coup and lastly in Israel where they formed colonial settler state. US have their base in Israel give the Israelis much aid, and it is the highest recipient of the United States. (Mitchell, 2011). Saudi Arabia is the most protuberant member of OPEC and the oil market with the highest production and space capacity is the most prominent member. The OPEC countries always maintain their oil market share. In most cases where the prices of oil have to be changed, Saudi Arabia as one of the strong members has to be consulted. All of the OPEC members are encouraged to maintain their oil production levels in order to maintain their strengths worldwide.
Now, most of the leading oil producing countries either are at a serious loggerhead with the US or are politically unstable. The strength of most countries no longer relies on their military base but on its economy that has become very important. Oil is run by both militaries and the industrial economies and the turmoil within the financial sector have caused many insecurities in the world than ever before (Yergin, 2011). United States and China have taken advantage of the oil production, and now they have taken the resource in fuelling their power plants automobiles and companies. Ever country want any association with oil, Russia and Iran also want the pipeline to pass through their land in a way to claiming the transit fees and in using the resource as a political tool. Political development in countries like Egypt, Yemen, Iraq, and the other small nations in Arab have given another turn in the old geopolitics in the area (Arora & Gupta, 2013).
The recent fall in the prices of oil in the world is also a show of power among the oil producing countries. The prices of oil reduced by a staggering half the original price, this was aimed at showing who is who in the market and the world at all. It was much welcomed by non-oil producing countries and at the same time was not welcomed by high producers (Yergin, 2011). The United States started the exploration of their oil reserves that had been kept without exploration for much longer time. Being an oil producing country is a source of power and without this precious commodity, the country is doomed to survive on the others and always have to go by their rule. It goes to an extent where these countries are forced to import products from the oil producing countries just in maintaining this good relationship (Mitchell, 2011).
Without oil, the oil producing countries will lose this weapon, OPEC and the GCC countries will lose the political influence on countries that depend on them. So maintaining the oil market share will keep all oil producing countries, OPEC and GCC countries, powerful. Saudi Arabia being the most protuberant member of OPEC and the oil market with the highest production and space capacity is the most prominent member.
Arora, S., & Gupta, A. (2013). Control Oil-Rule the World!. Available at SSRN 2200815.
Mitchell, T. (2011). Carbon democracy: Political power in the age of oil. Verso Books.
Noreng, O. (2006). Crude power: politics and the oil market (Vol. 21). IB Tauris.
Yergin, D. (2011). The prize: The epic quest for oil, money & power. Simon and Schuster.
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