Future oil prices to be determined by global politics.

• Author: Nisar, Ahsan

Byline: Ahsan Nisar

Predicting the oil prices is a million dollar question; in fact, it's a game of billions of dollars literally. The task is difficult because of involvement of too many economic variables but sometimes it gets even more difficult because of global politics. Global storage capacity has enhanced and this has become the single biggest business opportunity for the investors, particularly in Pakistan, as that would determine the energysecurity levels and dependence on the international oil supplies and the price volatility in future.

The oil price movement is largely dependent on the global politics. This is also a fact that the US is driving the world politics, and their future actions will drive where the prices will settle. The dependence of USA on the Middle Eastern, more specifically Saudi, oil is minimal - merely 16%.

This was all achieved in a very strategic way in the last decade by the administration of USA - imposing ban on exports, focusing on indigenous EandP activities and enhancing the storage capacities. This development helped USA in driving the global foreign policy more effectively and efficiently. The fact is that the foreign policy of USA will also play a major role in driving the world politics and; therefore, the international oil prices. The fear of and rivalry with China is today one of the primary drivers of American foreign policy.

There have been conspiracy theories that the recent oil tanker attacks in the Gulf of Oman were apparently 'managed' to tighten the noose around Iran, on one hand, whereas in actual, they were meant to restrict China's access to Strait of Hormuz.

Crude oil is the driving engine of Chinese economy and any threats to energy security will inflict a heavy blow to the country's economic growth. The statistics show that some 43 percent of the crude oil imported by China passes through the Persian Gulf. At present, China is the second largest energy consuming and the third largest oil importing country in the world. Despite Beijing's efforts to ensure its energy security by diversifying its energy sources during the past years, the country is still...