Oil trade is one of the most important forms of trade worldwide.It takes place both internationally and intra-nationally. Where do countries get their oil? Should they care? According to economists, it doesn’t matter where the oil comes from as long as it’s cheap and less pollutant to the environment whereas security strategists say yes because they feel that countries should strengthen their position in the word by wisely choosing their oil trade patterns. What are the advantages and disadvantages of oil trade? The major issue that arises because of oil trade is its effects on international political relationships (Levi, 2012-2013).
Oil trade has its effects. Relationships between countries involve investments and international politics. Cross-border trade and internal trade are examples of major national and international politics. This type of trade has made the global market more robust and integrated. Some of the adverse effects of this oil trade are usually not concentrated on since pollution is already part of the world’s industrialization and cold wars are the bread and butter of our current society. Using the United States, Russia and China, researchers have been finding fascinating facts about oil trade and the consequences that come with it (Levi, 2012-2013).
Cross-border oil trade is politically charged. In Latin America for example, oil is a country’s patrimony and exporting it to outsiders always triggers a profound emotional reaction. This is not the same all round. Some countries like Kuwait, Saudi Arabia and Iraq, selection of foreign firms are by contract terms and technological potential. China, however, does this by general assessment in commercial attractiveness. Imports or Exports can make some countries have advantages over others, and this can be used as leverage. Landlocked countries like Belarus, for example, have no option but to bend to whatever Russian exporters have to say. Russia can price up the oil as it desires to exert leverage (Levi, 2012-2013).
Power play comes into oil trade in a way that one single supplier may want to be the only one in the “game”. Saudi Arabia’s Riyadh, for example, wanted to remain the number one oil supplier to the United States. He offered crude oil at a slight discount compared to that he quoted for Asian buyers.By doing this, he secured better relations with the US. It’s not that Politics is everywhere in the international oil market. Some do this through the proper channels. China for example in the Russia-china crude oil pipeline that was compelling purely on economic terms.it was somehow cheaper and practical. This provided China with an advantage of having a land-based source of crude oil that was impervious to maritime blockade (Levi, 2012-2013).
The Saudi Arabia insight implies that international politics can influence oil-trade patterns without any active interference from any of the participants. In many cases, this kind of trade brings about allies thus in times of turmoil, Saudi Arabia as an example, gets special care treatment from the United States (Levi, 2012-2013).
In summary, we’ve seen that Oil trade is an important form of trade that connects the world. The introduction of this kind of trade made the global market more robust and integrated.There are many suppliers, and the choice of who to go to is with the consumer country depending on the country’s goals. Countries operate differently from one another. Some see oil trade as a political opportunity, some see it as genuine technological advancement platform, others see it as a part of their country’s patrimony thus they only trade internally, etc. The effects of this trade are leaning towards politics. They include countries making allies for special treatments and others exploiting the leverage they have over other countries.
Levi, B. C. (2012-2013). The Surprising Sources of oil’s influence. In B. c. Levi, Survival (p. 122).