The Falling Price of Crude Oil & Increasing Conflict
Saudi Arab and Russia oil war
“Control oil and you control nations; control food and you control the people”
For the last 10 years, the prices of crude oil have been steadily going down.
Crude oil was priced at around $ 140 a barrel in 2008, which has come down to around $ 26 a barrel in 2020.
Corona virus has diluted the condition of the oil industry.
Millions of vehicles, trains and airplanes in the world are halted. Due to which there has been a huge reduction in oil demand.
According to a survey, eight huge containers filled with crude oil are just circling the sea.
All countries have an oversupply of oil and their oil storage capacity is over.
Due to Corona virus, the oil already stored is not getting exhausted due to low demand.
Therefore, for the first time in history, the price of US crude oil went negative, which is very surprising.
A decade ago, the world was heavily dependent on Gulf countries such as Saudi Arabia, Iran, Iraq, Kuwait and Qatar for oil and these countries kept a balance in the demand and supply of oil all over the world.
America also used to buy huge amounts of oil from these countries.
But suddenly huge deposits of rock oil were found in America. And after that there was a huge decline in the consumption of oil from outside countries of America.
America also invested heavily in shale oil market and started selling oil to many countries.
Later Russia and Canada also jumped into this competition and oil prices kept falling.
Due to high oil production and low demand, the prices of oil started falling rapidly.
Recently, due to the oil war between Saudi Arabia and Russia, the prices of crude oil also fell significantly.
Both countries are not ready to reduce their oil production.
America also does not want to reduce its oil production.
Everyone wants to safeguard their oil industry because every country has invested heavy capital on the oil sector.
Due to this, there is an oversupply of oil in the market and prices are falling.
The entire economy of Venezuela was based on oil. It had no other means of income.
A large quantity of crude oil is available in Venezuela.
When the oil prices were increased, the government of Venezuela earned a lot of money and made country economical very strong.
The people also became financially strong and double their income.
But falling oil prices destroyed the economy there and now most of the people are struggling with hunger there.
The inflation rate there was 9500% in 2018, which is unimaginable. This shows that oil can make you both a king or a pauper.
China, India and Germany are the major importer of crude oil.
These countries have benefited greatly from falling oil prices. India, which spends about 60% of its income to buy oil.
This is a good opportunity for its to save and reduce the revenue deficit.
There is also a concern for India that millions of Indians work in the Gulf countries. But falling oil prices are reducing employment in Gulf countries.
Saudi Arabia is also concerned with falling oil prices and does not want to depend only on oil.
That is why he is also looking for other means of income so that it would not have the same condition as Venezuela.
The price of oil in the world should not fall sharply because the economy of the whole world runs with oil and many wars were fought for it.
If this kind of tension is going on in the oil producer countries then a big struggle can also happen which will be fatal for the world.