Recently, the international price of oil has reached a record high: approximately $100 USD per barrel.
The price of oil is increasing by leaps and bounds as a result of recent political and economic changes. The Middle East, with 65% of the world's oil reserves, is the most crucial global oil production base. However, a long-term US garrison in Iraq, as well as the growing US military threat in Iran, has increased the international oil market's instability. The continuous devaluation of the US dollar directly contributes to the increase of oil prices based on USD evaluation. Some giant western international financial institutions – including hedge funds, pensions, and other investment funds – heavily engage in speculation and profiteering in the oil market and purchase crude oil futures contracts by exploiting precarious international situations. As a result, new demands emerge. International financial speculators, with huge sums of funds at their disposal, control oil pricing rights to a great extent.
The ballooning international price of oil is a new bulky fortune maneuver. Oil importers are bound to pay more to exporters and intermediaries to meet oil demands induced by economic growth. Although the global economy has been growing steadily in recent years – the economies in Asia, Africa, Latin America, and Central and Eastern Europe have a sound development vista – the increasing oil price comes as a harsh blow to most countries.
Regions such as the Middle East and Central Asia are critical oil production bases; and therefore, it is in the interest of the world as a whole to keep the region secure and stable. Statistics show that Asia, South and East Asia are becoming the highest energy consumers in the world: China, India, Japan and Korea are presently the dominant global oil importers. According to a report in World Oil Vista released by the World Energy Bureau, in the next 23 years, oil demands from developing Asian countries will increase considerably. Under such circumstances, any confrontation and conflict taking place in the Middle East and Central Asia will dramatically limit Asia's development, and bring a far-reaching and profound impact on the world's prosperity and stability. Facts indicate that wars have aggravated the existing precariousness in Middle Eastern and Central Asian regions; and the international community, consequently, is obliged to discuss security and energy cooperation.
Likewise, the US is the world's largest oil importer, and China holds the record as the fastest growing oil importer. The high oil price and instability of the oil supply will damage both countries. On top of that, in the age of inflating oil prices, China and the US share common interests and cooperation ground. China enjoys abundant coal reserves, but faces pressure from environmental protection. The US can support China with ushering in clean energy technology. Cooperation in these fields will guarantee a win-win deal between China and the US. Meanwhile, to ensure smooth transportation routes on the sea; the US should strengthen its cooperation with China and other Asian countries.
The US and Europe need to intensify supervision over the financial industry. In the past few years, the US government and the governments of Western European countries have eased their control over finances – a moved which has caused much speculation. This has not only damaged the position of the US dollar among international currencies and stimulated the inflation of the oil price; but has also endangered the entire international financial system. Both Europe and the US need to collaborate in seeking benefits and avoiding drawbacks.
Presently, the international community has devised ways to tackle the challenge in concert. In the long term, Western private capital will have a monopoly over the oil industry, and will pose a large threat to the global economy. In the recent years, however, massive state-owned oil companies in countries such as India and Russia have taken over crude oil reserves. This acts as a solid foundation for governments' joint regulation and control of the international oil market.
By People's Daily Online
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