The sharp decline in oil prices at the end of 2014 has once again brought to light the political implications of economic choices that affect commodities, as is the case with OPEC decisions.
Faced with the decision of the Saudi oil minister, Ali al-Naimi, within OPEC to not reduce oil production despite the drop in price, there are those who’ve suggested this is a direct form of support for the US to make the Russian sanctions more effective. Others see it aimed at the US fracking industry, which extracts oil and gas from shale rock. This form of extraction, depending on the kind of installation, is only profitable within a price range of $40 and $115 (€35 to € 100). Producing a barrel of oil in the Arab peninsula costs as little as $12 (€10).
The political effects of oil do not end with the choices made by the Saudi oil minister. After the tragic events at the Charlie Hebdo offices in Paris, it’s all the more obvious considering the wealth of the main terrorist organisations – the Islamic State (IS) is not just the world’s largest terrorist organisation, it is also the richest.
The Washington Institute for Near east Policy estimates that in 2013 and 2014 Is received more than $40 million dollars (€35m) in funding from Persian Gulf states and, in particular, saudi arabia, Qatar and Kuwait, who are among the largest oil producers in the world.
The sharp decline in oil prices at the end of 2014 has once again brought to light the political implications of economic choices that affect commodities, as is the case with OPEC decisions.
