The Geopolitics of Energy and Latest Oil Price Crisis

The geopolitics of oil over the past 50 years has played a central role in energy markets. The recent oil price crisis clearly shows the scope of energy geopolitics. Because this crisis affects exporting countries in different ways. Oil price crisis happened lots of times but this time is different because of a huge demand and supply shock.  At the OPEC + meeting held on March 9, Saudi Arabia and Russia's disagreement continues to influence the markets more than ever before. The most important reason that makes this crisis different from the others is the Corona virus effect. In this crisis, oil prices have reduced almost 20 dollars. The results of the geopolitical tension between Saudi Arabia and Russia, oil price crisis continue increasingly.

Saudi Arabia wanted to prevent the fall in oil prices caused by the economic slowdown caused by the Coronavirus. But OPEC+ meeting to reduce oil production was failed. Saudi Arabia, who received a negative response from Russia, announced that they would increase their oil production. This was a call for a price war. 24 days have passed since the failed meeting and now the price of oil has become cheaper than water. This price decrease seems to be against the exporting countries.

When we look at the causes and consequences of the last oil price crisis within the framework of energy geopolitics, Russia, Saudi Arabia and the USA play an important role. Although Saudi Arabia and Russia are often mentioned in every news or discussion content, actually the key point here is the USA. One of the luckiest countries in the crisis will be the USA. Especially considering shale oil, major US oil companies will make significant profits from this conflict. In the oil geopolitics, the United States has some possible market-oriented ways its sleeve every time.

Also we cannot forget Middle East countries. Especially Iran energy market is important in this condition. Iran nowadays fighting with several problems that are sanctions, reduction oil revenues, and the spread of Coronavirus.

Lastly, oil price crisis it remains unclear how long the rout in energy markets. Which country will take the first step to regain agreement? and Which countries other than America will benefit from this crisis? The answers to these questions will give us clear information about the background of energy geopolitics.[1]

References

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[1] This paper has been prepared for ESD 540 Class which is Energy and Sustainable Development department at Kadir Has University.