Organization of the petroleum exporting countries (OPEC) is an international body that has 12 members worldwide. The body regulates the production and the market of oil in order to ensure that the oil market is stable in the whole world. Oil is one of the most important products in the world and many countries economy depends on oil and mostly the members of OPEC who are the leading producer of oil in the world plus other large countries like Russia. Other countries like China and United States depends largely on importation of oil for their industry. This indicates the seriousness and the importance of oil in the world market.
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Countries have taken advantage of oil and they have made oil as a tool of foreign policy. This means that countries are being manipulated through oil policies like sanctions which have affected many countries mostly economically. The Wall Street Journal draws a clear picture of how oil has been made and used as a tool of foreign policy in reflection of countries like Russia. The objective of the paper is to discuss how countries have used oil to advance their foreign policy goals in reference to the Wall Street Journal.
Application of oil as a tool for foreign policy
The wall street journal mostly talks about the new China-Russian on matters of oil imports and production. However, it is good first to understand what led to the sign of the deal and how it relates to oil manipulated as a tool of foreign policy. China and Russia are not members of OPEC; however, they have a big influence on the oil market. This is because China is one of the main importers of oil in the world and Russia is one of the biggest producers of oil in the world which means that it has an influence on the world oil market. There are certain things that have happened that have affected Russia and thus affecting the oil market.
In 2014, Russia engaged in a war with Ukraine and the war was highly condemned by the whole world but Russia did not end the war. United States got involved in that war where the war turned to be like United States and Russia. This led to oil sanction to Russia by the western countries. This means that the market of Russian oil was affected and having in mind that oil takes 70% of the Russian economy, it was a big blow to the country. The author of the article projects that sanction meant the collapse of Russian economy. In this case, United States and western countries used oil as a tool of foreign policy to Russia (Spegele, 21).
The oil sanction meant that Russia would not export its oil in United States though it had a small portion in United States oil imports. It also means that it would not export oil on all the western countries and some countries from continents which are related to western countries. This was a total blow to the economy of Russia. The oil sanction was used to punish Russia because of its attack on Ukraine and thus oil was used by western countries as a foreign policy. However, the article presents the effect of this oil sanction to the Russian countries and to all the OPEC countries.
Oil as discussed above is an important product in many countries where many countries depends on it for the stability of their economy. The OPEC members like the Venezuela and Saudi Arabia depends purely on exports of oil to countries like United States and China. However, their oil market in United States had declined because of several reasons. The oil-drill boom in United States was the major reason. United States started producing its oil in the oil-drill project and thus it decreased its oil imports at a very high rate.
The countries that suffered were the OPEC countries because they hugely depended on the United States for their exports. Their only option was China which imported huge barrels of oil from those countries. However, the Russian oil sanction was a big blow to those countries. This is because in order for Russia to secure its economy from collapsing, it diverted its whole attention to China as presented in the article. This meant that the all its oil exports were diverted to China where they signed a deal with the president of China this year for a huge export of oil. This had a great impact to the OPEC countries because China increased oil imports from Russia and it decreased oil exports from other OPEC countries like Venezuela and Saudi Arabia.
Effects of oil as “weapon to the poor” countries
This section will offer a clear understanding of how poor countries are affected by the manipulation of oil as a tool for foreign policy. By taking the example of Venezuela which is discussed in the article, one is able to understand the effect of manipulation of oil to become a foreign policy tool to poor countries. Venezuela is not economically stable because it depends only on the exports of oil. After the oil sanction of Russia and the decrease in oil import in United States, its supply of oil decreased because of the following reasons.
The first reason is that its oil market reduced in United States which made it to make huge losses. Venezuela was one of the major importers of oil in United States, this means that it highly depended on United States for the sale of its oil. On the other hand, the oil sanction of Russian made Russia to divert its market on China. In order for it to convince China to accept the huge deal, it lowered the price of oil which lowered the total price of oil in the market.
Russian decision had an impact on two ways to Venezuela; the first impact is that Venezuela was forced to sell its oil at a lower price in the market; second, Venezuela oil imports to China decreased dramatically (Falola, 67). Generally, two main oil markets of Venezuela were affected and this made the country to make huge losses where currently, the country’s economy is about to collapse if there would be no immediate change in the oil market because oil is the only future of Venezuela.
Through critical review of the article, one can understand that the overall problem that Venezuela and other poor countries especially the members of OPEC are facing is because of the oil sanction on Russia. This is because Russia is great in the market and its oil production cannot be ignored because of its huge oil production. It has the power to control the price of oil in the world. The author of the article states that Russia is using oil as a tool of foreign policy in order to ravage for its oil sanction by the western countries.
This means that its decision to lower the price of its oil is not just a way to convince China to accepts the new deal but it is also a plan to destroy the oil price in the market because it has already identified its market which is China. This is a big blow to all OPEC countries and that is why the issue of poverty gets involved. Non-producer of oil countries will enjoy the low price of oil but the effect will be on the oil producer countries that depend hugely on oil. Venezuela is the best example because it has already felt the Russian impact and it is about to collapse.
Destruction of the Russian economy
Despite the Russian-China new oil deal, the author of the article explains that the economy of Russia is not on the safe side. This is because according to the nature of Russian economy, oil should not be at risk of anything. Oil means the economy of Russia because it makes up 70 percent of the Russian economy. The application of oil as a tool for foreign policy in Russia by the western countries, it means that the economy of Russia was put at a risk. This is because all its exports in western countries were closed.
The author explains that the new deal with China cannot offer a lasting solution to Russia because of some reasons. The first and the most destructive reason is that China might also be manipulated by western countries in order for them to reject the Russian deal. This means that Russia would be left without oil market and that would mark the collapse of Russian economy.
OPEC countries might also offer new deals to China at a lower price other than the one presented by Russia in order to win back China market. This means that China would either decrease the China supply or it might also cancel the Russian deal which means the end of the Russian economy.
Finally, the oil-drill of United States might boom to a level where it would start exporting its oil. United States is one of the countries that were first to request for Russian oil sanction, this means it can manipulate oil market any way in order to destroy the market of Russia. This is because it is economically stable and thus lowering the price of its oil cannot be a big deal. Generally, the article argues that economy of Russia is at risk of collapsing because of the oil sanction from the western countries.