It is difficult to estimate how great a role the price of crude oil plays in all aspects of our lives. If the cost of oil goes up, so too does our energy bills, the cost of goods in stores, and the price of the components that keep our infrastructure running. This often leaves us needing to juggle our finances and make difficult decisions. For instance, can I afford to cover both the cost of heating the house and a full tank of gas?
So what is it that makes oil quite probably the world’s most important resource? What is it that causes countries to fall out and occasionally go to war over it? Quite simply it is because it most directly influences the way that people are forced to live. Even the merest unexpected change will cause headlines not just in the financial news, but also on the front pages.
Oil may be widespread – in fact, it can be found on all of the continents on Earth – but those who have the largest reserves on their territory become major players on the international scene. Quite simply this is because they control the production and therefore supply for the commodity that fuels the global economy.
Saudi Arabia may be more widely known as being the spiritual home of the Islamic faith, but it also happens to be the most oil-rich nation on the planet. Sitting on top of an estimated 250bn barrels of crude oil – a figure that dwarfs even other oil blessed Middle Eastern nations – makes them extremely powerful.
POEC nations (the key players/producers on the global oil market) can simply raise the price of a barrel whenever they wish by producing less. Oil reserves are quite literally a tap to pour money at a time of their choosing.