By Aiza Ijaz
Economic welfare of states hugely lies in oil diplomacy since this product is rich in demand and it is priced in U.S. dollars, the petrodollar helped raise the greenback as the world’s dominant currency. Other countries are intellectually keeping themselves sustainable with world’s trade and imports and exports. We owe to oil, in almost every day of our lives such as at school, homes, in offices, for our health, for building, while cooking and out for shopping, on the move from one place to other, at our leisure, in gardens and many more.
13 OPEC members, Saudi Arabia, Venezuela, Iran, Iraq, Congo including 8 more, out of these 13, Venezuela in 2019, produced the largest amount of oil with 266.5 billion barrels. While Russia, China and U.S. are also oil producing countries but they have not associated them with OPEC. The Indo-Iran relationship in worth discussing in oil diplomacy as Iran is an oil rich country and India is a consumer. It produces 10 percent of the world’s oil. Around 2000, Iran was counted among top five states that exported oil to India and then from 2007 to 2010, Iran maintained its second position as energy supplier to India and U.S. has always acted as a hanger-on in Indo-Iran relationship.
After Second World War, there have been Middle East crisis that threw the oil supply system into disarray. At the time of oil crisis in 1973, U.S. imported 36 percent of its oil. Almost now, it is over 50 percent. This crisis happened during the Arab-Israeli war when OAPEC banned the trade of oil. Another major energy crisis happened in the consequence of Iranian Revolution. In 2000s, the prices of oil increased instantly and affected economic growth. Due to instability on global level, OPEC continued to keep prices sky-high. There are such states that have been backed by some of OPEC states in times of need which helped them to maintain their annual GDP and national policy to be flexible enough to get down with a needy time. Countries like Third World, should be having a sense of responsibility to absorb their budget and time to grow their economy whether in OIL Industry or in terms of improving their exports and imports.
As of now, when we talk about April 2020, crude oil prices experienced negative pricing due to less demand in COVID-19 and also because of lack of capacity to store the excessive oil. Suddenly the oil crisis occurred again as the whole country experienced lockdown, resulting less vehicles on roads and shutdown of industries and other institutions. Our transportation and industrial sector almost comprises more than 90 percent of our crude oil demand which according to the situation being seen in near future, seems more likely to remain gloomy. But now that the lockdown is getting soft and uplifted slowly, oil consumption has increased and now prices are climbing a little.
The writer is a student of MSc Digital Media at Institute of Communication Studies, University of the Punjab, Lahore, Pakistan.