Oil Diplomacy
Oil Diplomacy or Petroleum Politics has been an important aspect in the geopolitics of the
Middle East since the early 20th century. But with the advent of alternative sources of fuel and
concerns regarding climate change, the balance of powers regarding Oil Diplomacy is likely to
change in the 21st century.
This article will give details about Oil Diplomacy within the IAS Exam.
Overview of Oil Diplomacy
Oil became an important commodity during the later stages of the Industrial Revolution in the
early 20th century. When modern warfare evolved to accommodate the growing demand for
petroleum, it became an important aspect in diplomacy. Thus oil plays a key role in geopolitics
as nations around the world seek to secure oil supplies through trade, diplomacy, armed
conquest or any other method it sees fit to employ. Usually, the country that has the largest
number of oil reserves can virtually dictate any terms it sees fit. Such petrol-rich nations can
also initiate international conflicts, which is termed as petro-aggression.
An example of this is the Iraqi invasion of Iran and the Gulf War of 1991.
Nationalisation of Oil Supplies
Nationalisation of oil supplies refers to the process of assessing complete control over oil
production methods or reports related to the sad production in order to obtain revenue. This is
different from restriction on crude oil exports Nationalisation removes any private business
operations and allows oil producing countries to gain total control over methods of production,
which was earlier a monopoly of private energy companies Once these countries become the
sole owners of these confiscated resources, they have to decide how to maximize the net
present value of their known stock of oil in the ground
Politics on Alternative Resources
It has been argued that the political interests of environmental advocates, agricultural
businesses, energy security advocates and automakers, are all aligned for the increased
production of ethanol. The reason can vary from climate change apprehensions to geopolitical
necessities. In additional alternate fuels such as ethanols are far more cheaper to produce and
safe for the environment as they can reduce greenhouse gases by 80%
From around 2015 onwards, there was increasing discussion about whether the geopolitics of
oil and gas would be replaced by the geopolitics of renewable energy resources and critical
materials for renewable energy technologies.
Some experts are of the opinion that compared to the geopolitics of fossil fuels, renewable
energy may cause more small-scale conflicts but reduce the risk of large inter-state conflicts.
Conclusion
Oil Diplomacy can have macroeconomic implications on account of the inflow and outflow of
petroleum money. This gives oil producing nations an undue advantage when it comes to
exerting their influence on the world stage.
But the rise in alternative fuels has the potential to render Oil Diplomacy Obsolete as former oil
producing countries are expected to lose e power, while the positions of former fossil fuel
importers and countries rich in renewable energy resources is expected to strengthen.
Relevant Questions related to Oil Diplomacy
Who controls most of the World's oil reserves?
Mostly OPEC nations (Saudi Arabia, UAE etc) and Russia. According to BP, the global authority
on the subject, this collective group of 16 countries owns 1.35 trillion barrels of proven oil
reserves, or nearly 80 percent of the world's total.
How will OPEC benefit politically by controlling the production of oil?
OPEC aims to regulate the supply of oil in order to set the price on the world market. OPEC
came into existence, in part, to counteract other nation's capacity to produce oil, which could
limit their ability to control supply and price.
Who is the largest consumer of oil?
The United States and China are two of the largest consumers of oil in the world, totaling 19.4
million barrels per day and 14 million barrels per day, respectively.
