The importance of oil as an energy source can hardly be exaggerated and it is difficult to imagine a world without oil, notwithstanding the relentless search for affordable alternatives. The world as we know is heavily dependent on relatively cheap oil. Experience tells us that any sharp increase in the prices of oil would have a negative effect on the world economy.
Oil prices have been extremely volatile. The first “oil shock” in 1973 pales in comparison with subsequent sharp increases. Oil prices per barrel breached the $40 level in 1980, before plunging to slightly above the $10 benchmark in 1985. During the Gulf War in 1990, oil prices shot up but fell short of $40 per barrel, after which prices trended down again close to the $10 mark in 1998. In an apparent aftermath of the war in Iraq and the war on terror, oil prices have reached an all-time high of over $42 per barrel before cooling somewhat.
Oil prices have been hitting the roof of late, mainly because of increased demand from China and some supply disruptions in the oil producing countries. The world is much better position to face an oil shock today than it was in the 1970’s because oil intensity has reduced considerably over that period of time.
Oil has been a major driving force in the dynamics of global politics and economics. Being a major driver of growth, oil is also one of the most potential causes of conflict. This report on the Assets & Politics in the Oil Industry assesses the global markets for oil, the power that lies behind the countries possessing these natural reserves and the global politics that are driving the market. Based on factual data and analysis, this report gives an impartial look into the landmark events fostered by the production and distribution of oil. Economic perspective of oil forms the core of the report as it analyses the benefits that accrues through the production of oil and its impact on the global economy.