5 Politics of Oil Affecting/Related Global Business Global Oil politics impacting/related global business

Politics of Oil
affecting/related global
business

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Global Oil politics impacting Global Business
Natural resources are decreasing so is the conventional fuels. In the time when every country
is trying to become a stronger economic power the oil crisis in the world has deeper impact
on the operations of the firm. Due to this huge political drama is going on all across the globe
which is also affecting the global business and trade. Organisation of Petroleum Exporting
Countries has several nations and it is these countries that are heavy indulged in the politics.
It is not that the politics for oil has started in decade or so there has been long history of wars
and political tensions among countries over the issue of oil (Umbach, 2010). Bigger nations
like United States had been interfering in the matters of the major oil exporters. The political
interests of these big nations have made the problem to be bigger. These big nations demand
that they should be getting oils at lower prices and when they fail in this, they find alternative
routes to disturb the operations and peace of these oil producing nations. Some of the
example nations that have been the part of the world’s oil politics are United States, Russia,
The Former Soviet Union (particularly The Ukraine), Turkey, Britain, Germany, Norway,
The Netherlands, France, Italy, Japan, Saudi Arabia, Iran, United Arab Emirates,
Afghanistan, Kuwait, Iraq, Mexico, Venezuela, Indonesia, Nigeria, Algeria and Libya and
many of them have entered into the war. The most common examples of wars include Iraq’s
invasion of Kuwait and Iran; Libya’s repeated incursions into chad in the 1970-80s (Colgan,
2014).
Oil is understood as power and money as there has been no permanent alternative for it. It has
been a primary factor that plays a critical role in maintaining and asserting political control
and dominance in the world. Since Oil is needed from Agriculture to Space endeavours, from
manufacturing to transportation hence has been acting as a lubricant in the international
politics. Countries that are able to sell oil at best prices are able to have advantage in the
market. Since every industry requires oil for their operations hence lack of easy availability
of the oil can result in business and trade a international levels (Andrews-Speed &
Dannreuther, 2011).
It is expected in the next two decades all the oil wells are going to get empty. This is going to
create much larger problems for the mankind. It is due to this that every nation is demanding

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for the oil and gas reserves to be protected. What countries like America do when they do not
find that any of these oil producing nations are following their suggestion is that they impose
heavy trade barriers on that country. The most recent example of it is the tension between
Iran and US. American interest in the Middle East is world known. In the name of working
for the peace in the Middle East, America has always tried to control the oil market (Filis,
Degiannakis & Floros, 2011). Due to the sanctions on these oil producing nations, most of the
companies are not able to do their business. It is not that it just has impact on the companies it
is also affecting the countries that imports or exports their fuel from these countries. For
instance in the time when the OPEC countries have reduced their production of oil and the
international crude oil prices have gone up, such sanction on Iran have created problem for
the countries like India who was one of the major importers of oil from Iran. The exploration
being done in the South China Sea is another example of how oil is acting as a medium for
confrontation between the bigger nations. China does not want any other countries to take
part in the exploration campaigns (Ebrahim, Inderwildi & King, 2014). There are many oil
rich areas that need to be discovered in different parts of the world hence every country is
trying to run their own politics so as to remain an effective player in the crude oil politics.
Due to this oil politics, most of the companies are not getting oil at lower prices which are
having impact on their operations especially in the areas like transportation and logistics. This
again has an impact on the cost of operations and hence overall prices of the products are
increasing. Countries are forcing companies to make oil trades as per their political interests
only. In the time when the companies are already facing a lot of pressure due to slow growth
in the world, such political tensions are increasing the burden on the companies. In the
bilateral trade talks oil diplomacy has taken greater space (Kilian & Murphy, 2014). Nobody
wants to reduce their stake in the oil market. Oil companies are already under the pressure of
the global trade war between bigger nations like China and USA which will put fiery taxes on
the oil production. This will have impact on other products prices since the cost of
transportation and construction will enhance. The impact also gets bigger in terms of the fact
that Russia is facing currency crisis, Venezuela is facing huge economic disasters and Iran is
facing challenges related to funding. In these condition countries like Saudi Arabia is being
pressurised that they need to enhance their crude oil production. Falling oil prices have force
the central banks to raise the interest rates which again has impact on the business. The
emerging economies like Indonesia have stated that it will no longer be going subsidise
gasoline and it has lowered its subsidy for diesel (Johnson & Turner, 2010). This will be