Oil keeps the world economy going. Hence, having control over oil reserves and leverage over global oil prices translates into geopolitical clout. Political economist Anand Toprani takes an in-depth look at the complex political and economic facets that make oil a unique commodity. His essay will be of interest to anyone interested in the politics of oil.
As the world’s most important source of energy, oil distinguishes itself from other commodities for its crucial role in global geopolitics. Global oil supply isn’t solely governed by demand and supply principles. A hike in oil prices, for example, won’t immediately reduce oil demand from cars, and oil producers have only limited ability to adjust oil supply to sudden changes in demand. Demand also isn’t the only factor determining the price of oil, which is also influenced by economic forecasts and geopolitical risk assessments. Furthermore, the notion that there is a unified, global oil market is a misconception. States have a big hand in regulating...
Anand Toprani, PhD, is a specialist in energy geopolitics and political economy at the US Naval War College.
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