The oil magician!

Hard Talk

October 21, 2019
The oil magician!

Hussein Shobokshi

WHEN the history of oil and its impact on the world's economy is reviewed, important milestones need to be considered. While oil was first discovered in China in 600 BC, the history of oil shaping economy began in North America, specifically in Canada, Ontario, in 1858.

But oil became a serious industry when oil was discovered in America, Pennsylvania in 1859, and that in commercial quantities.

The US and European giants began exploring prospecting opportunities, giving birth to BP, Royal Dutch Shell, Standard Oil, Texaco, Mobil and Exxon. Gradually, oil has become the most important economic commodity that harnesses political action around the world.

For a long time, the commodity was driven by the rules of market economies based on supply and demand. This situation continued until the Arab boycott and the ban on oil exports to the West because of its support for Israel in the 1973 war.

Then came the era of the 1980s, in which the role of investment banks emerged as the most influence in determining the market prices with the future pricing of oil in violent speculations that defeated the producing countries and OPEC.

Then came the phase of oil production by the North Sea countries and then the gradual rise of Russia's influence in the oil market as an influential and effective player, before the advent of the era of shale oil that too proved very influential.

During all this, we have seen significant political events such as Khomeini's revolution, the Iran-Iraq war, the occupation and freedom of Kuwait, the invasion of Iraq, the fall of Qaddafi, the war in Libya, the climate crisis and alternative energy and its increasing influence in various fields.

But there is a very important figure who does not receive enough reference even though the decision and the policy adopted is still one of the most important influences on the oil market today.

I mean here, former US Secretary of Energy Bill Richardson during the era of US President Bill Clinton, who introduced the policy of "using" the very abundant US stockpile as a political tool to pricing oil globally.

The market, at cheap prices, has a surplus, and therefore strategic stock has become an influential tool in the global oil market and is still operating today.

Richardson's policy has been described by some experts as "magic," which proved to be effective and this unconventional thinking changed the rules of the market until further notice.

There is an oil policy and there is politicization of oil and the difference between them is seen in the open market.

October 21, 2019
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