Resumen de Oil Prices asd Word Geopolitics
Throughout its already long history, the oil market has always been an influential factor on World Geopolitics. The importance of this product as a catalyst for the development of countries has been a benchmark for changes in the dynamics of political decisions of producers and consumers alike. Its use in the transportation and in industry sectors has established its historically starting point. But let us take a look at more recent history and analyze its impact.
OPEC was created over 50 years ago in response to a Geopolitical issue by some oil producing countries, against the irrational and controlling position exerted by the companies known as the �Seven Sisters�.
If we go back to those historical dates, we would have to make reference to the initiative of certain producing countries such as Venezuela, Iran, Iraq and Saudi Arabia who decided to join forces to counteract on the dominant and imbalanced policies exerted by the oil companies in their countries.
From that moment on, OPEC has played a major role, not only in balancing the offer in the oil market, but also in the struggle for power, mainly between the countries in the Middle East area. The countries outside the axis of the Middle East and Africa have been far away from the relevant decisions by the Organization (Indonesia, Venezuela and Ecuador) and only in specific cases have they managed to agree and fight for their own interest and regional policies.
OPEC has undergone several significant political episodes throughout its history.
For example OPEC´s reaction as an organization during the Yom Kippur War, when it decided to block oil exports to the allies of Israel, i.e. the United States and the Netherlands, leading neutral countries such as Norway and Mexico to provide their support to Israel and causing the most spectacular increase of oil prices and the first Oil Crisis, of 1973, whose effects on the world�s economy were felt through to the early eighties. Another moment of high impact was the kidnapping and slaughter of some Algerian Ministers in 1975, by the infamous Venezuelan terrorist �Jackal�.
During the long war between two OPEC members, Iran and Iraq, the Organization also played a determining role. The war led the countries to establish the quota policy based on their production capacities. This system, which is still valid today but not enforced, has been progressively adjusted in accordance with the evolution of prices and political or capacity problems of its members. This policy was abandoned by the members last year, but it could be reinstated in a more flexible manner.
The war itself provoked that countries such as Saudi Arabia and its traditional allies in the Gulf supported the policy by dictator Hussein, financing the war against Iran over many years. This strategy was abandoned when Saddam Hussein began his expansion process in the region, rejecting Saudi guidance.
Nevertheless, it was after the price crisis of the eighties when OPEC sought dialogue and fostering of other independent producers such as Russia, Norway, Oman and Mexico. But this fostering strategy has only worked relatively well in very specific moments. Today, nearly members today reject the idea of reaching a common agreement because of the dissimilar agendas and strategies they each pursue.
Negotiations by the United States and its European partners concerning Iran could lead to sanctions being lifted and the possibilities of growth where the offer would be relative to the level of investment; but it is a country that has important oil reserves that will affect the balance within OPEC and therefore force its members to once again negotiate the necessary space so that countries with capacity can return to the market. We have to remember that before the war Iran was producing 4 million barrels per day, whereas its capacity today is only 2.3 million, i.e. almost half of what it was.
Saudi Arabia is the country which has undoubtedly benefited the most from the lack of control and disappearance of several countries from the region such as Iraq, Iran, Libya, Nigeria, etc., leading to enormous profits for the main producer within the Organization.
