Oil as a Strategic commodity

• “Strategic Commodity” is a commodity that is

indispensable and an essential part of any
nation’s success
• The list of battles fought for oil and the
casualties that resulted from those battles was
long
• majority of the world’s oil reserves to have an
enormous amount of influence on the global
economy
• The organization that has been able to take
control of this market is OPEC
Worlds Oil Reserve’s
 OPEC
• The Organization of the Petroleum Exporting Countries (OPEC) is
a permanent, intergovernmental Organization, created at the
Baghdad Conference on September 10–14, 1960

• The five Founding Members were by Iran, Iraq, Kuwait, Saudi

Arabia and Venezuela.
• OPEC has maintained its headquarters in Vienna since 1965
• OPEC was founded to unify and coordinate members' petroleum
policies
Oil Embargo
HISTORY AND KEY EVENTS IN THE US OIL INDUSTRY
 HYPOTHESIS
• Economies of OPEC countries are highly
dependent on petro-dollars received from U.S; U.S
imports approx 42.5% of its requirement of oil from
OPEC.
• U.S has its own oil reserves in Alaska, Texas,
California, and Louisiana which it is conserving for
future use. In case of any oil embargo by OPEC,
U.S can rely on its own reserves.
• In the coming decades, a shift from cars powered
by petroleum fuels to ones powered by electricity
(whether plug-in hybrid electric vehicles or pure
electric vehicles) will have a significant impact on
the oil market. Electricity is cheap, clean, scalable,
and readily available.
 ROLE OF SAUDI ARABIA
• Saudi Arabia not only is the world’s largest exporter of
oil, but also has the biggest share of unused oil
production capacity
• Thus, the political stability and future of Saudi Arabia’s oil
industry remain paramount to forecasting trends in the oil
economy of the Middle East in the next 15 to 20 years.
 HISTORY AND KEY EVENTS IN THE US
OIL INDUSTRY
• The oil industry began in the United States in 1859, with the discovery
of oil in the hills of Pennsylvania
• By the 1870s and 1880s, the U.S. was exporting 50 percent of its oil to
Europe
• In 1912, the U.S. began importing more oil than it exported.
• In 1950, the oil-producing countries began to raise prices. Then, in
1960, Middle Eastern oil-producing countries formed the
Organization of Petroleum Exporting Countries, or OPEC.
• Then in 1973, the Yom Kippur War broke out, with Israel against Egypt
and Syria. When the United States sent massive military aid to Israel,
the Arab OPEC nations responded by cutting off all oil sales to the
United States
• When OPEC resumed selling its oil to the United States in 1974, the
price had quadrupled.
• Between 1965 and 2007, U.S. oil consumption rose by 80 percent
while oil production declined 35 percent
• In 1950, the U.S. produced 52 percent of the world‘s crude oil, In 2007
about 7 percent.
• In late 1979, the price jumped again as a result of an
Iranian revolution.
• 1979 was a turning point for OPEC. In that year, OPEC
countries received $280 billion in oil revenue
• Within five years, non-OPEC countries increased their
production of oil by 20 percent.
• Research into other forms of energy, such as solar
power, nuclear power, and gasohol, increased sharply.
U.S CONSUMPTION OF
FOREIGN OIL
 CONCLUSION

• Although as of now the US imports its major percentage of oil from

OPEC but still the economies of OPEC are highly dependent for the
revenue they receive from the US in the form of petrodollars. In the
long run US dependency of oil on OPEC will decrease due to the
availability of other sources of energy. U.S has its own oil reserves
in Alaska, Texas, California, and Louisiana which it is conserving for
future use. In case of any oil embargo by OPEC, U.S can rely on its
own reserves. Other sources of energy such as nuclear, wind and
solar will play an important role in future. Further electrification of
vehicles and use of flex fuel will have an impact on the oil demand.

• "Oil makes and breaks nations." That is common shorthand for

21st century history in the petroleum industry.