Not all commodities can affect your life as much as Crude oil can.
While I am writing this, the War is going on in Ukraine. A simple tap turning can easily make a big difference in the War as Europe is largely dependent on Russian gas. The emergence of many other energy sources can’t change the fact that Russia still depends on 50% of its budget for oil money. Gazprom, Rosneft, tey are well-known gas gients. The country with which they are at war in Ukraine recently found some resources that can make it a leader in battery manyfacti9n.
On the other hand, Tesla owner Elonmusk just finalized to buy Twitter. So the man who makes the electric cars look cool is in the news. So War affects tesla also. For making a battery, aluminum is needed, mainly from Russia and Ukraine.
Norway, another biggest oil-producing country in Europe, is also having its issue. In 2019, petroleum and gas accounted for 48.1% of Norway’s export revenues, around USD$52.6 billion. But as the world is facing global warming problems, so does Norway. So much so that the country was planning to dismantle its oil industry. Moreover, thanks to the Russian War, the whole of Europe is in search of a new oil supplier. But still, what is the future of oil.
One thing is sure. Oil is changing the global scenario in many ways. Before 2001, the Role of the US was different in the oil market. Today, their role is different. The US tried to keep its military in all countries where oil was available or could sell it. OPEC, one organization that can drive the global economy in any direction, Holds a significant effect. But what is the future? It will be challenging to say that in the future also, We will stop using oil. Ask Russia. Prirazlomnoye is the best example.
But the future situation of oil production is not much good. One of the oldest Oil sources, Brent, is not looking good. Norwegian oil and gas industry was set to stop working due to its water pollution issues, and other bu Ukraine war made that even postpone. With their investments in the Arctic, Russian oil made it better to survive, but hostility and raging War on the land of their biggest customer, Europe, is not acceptable. The US can easily keep going, but some countries started things that as the SWIFT system becomes a weapon, what will be the guarantee that their oil supply cannot be used as a weapon.
While studying the subject, even though I am not an expert, I concluded that sooner rather than later, the Use of Petroleum will stop. This is because today’s fluctuations are not due to demand but to supply. I mean, why any commodity will follow a negative price when the future is bright.
My economics teacher taught me that the law of demand and supply is a significant force.
Like any other country, oil is not produced where it is consumed. Logistics and storage costs are actual. I am old enough to remember days when Oil prices depended on some OPEC countries’ whim. I didn’t blame them. Everyone needs money to run their country. For some that are taxed, for lucky ones like Saudi and Russia, it is oil and other commodities. While studying, I learned that Azerbaijan could be a great oil exporter. It was once supplying half of the oil demand to the world. But USSR ignored such a significant asset. It never happened in the future due to wild swings and extensive capital needs.
In us, Fracking made the miracle, showing the US started domination. Some small private drillers drills and gave headache to Russian Gazprom Rosneft and Aramco. But as those are deep-pocketed people, it is more like the death of small oil drills will become the death of an oil era.
As I am writing, the EU decided on an oil embargo on Russian oil. It does not just mean stopping using Russian oil, but also competition for OPEC oil between India and Europe. The insurance industry is another beneficiary of the oil industry. Now even that will be gone.
