crude oil
Explained: Whenever we fill our car's tank at the petrol pump, our focus is only on the price on the meter. But have you ever wondered why the black liquid (crude oil) from which petrol-diesel is derived is called the 'engine of the global economy' by economists around the world? In fact, just as without an engine no vehicle can move even an inch, in the same way without crude oil the wheel of today's global economy can come to a complete halt.
Crude oil is not just a commodity or fuel, but it is the axis around which world politics, business and your pocket revolve. Be it America, Russia or Gulf countries, everyone wants to keep a strong hold on this 'black gold'. Let us understand how this oil makes the world dance and why it is considered the backbone of modern development.
If we see crude oil only as petrol or diesel used in vehicles, then it is a big mistake. In terms of energy, even today the world receives the largest share of its total consumption from this source. Imagine the moment when the world's oil supply chain stops. This will not just mean that your car will be parked in the garage.
From huge planes flying in the air to cargo ships carrying goods crossing the sea, everything will come to a standstill. The entire structure of global trade rests on ships and trucks. If there is no 'jet fuel' and 'diesel', it will become impossible to transport goods from one country to another. Be it power generation, heavy mining work or big construction work, this energy is required to run machines everywhere. Therefore, it is absolutely right to say that when this main source of energy falters, the balance of the entire world economy gets disturbed.
Crude oil is the biggest 'factor' that determines inflation in any country. Its mathematics is very simple and cruel. When crude oil prices increase in the international market, freight transportation (logistics) becomes expensive.
As the truck fare increases, the vegetables coming from the farm to the market become expensive, the ration and clothes coming from the factory to the shop become expensive. That is, a small jump in the price of oil increases the cost of everything from your morning tea to your dinner. On the contrary, when oil is cheap, industries get relief and production costs decrease. This is why central banks and governments around the world keep an eye on the crude oil charts like a hawk, because it directly attacks the pockets of the general public.
The story of crude oil is not limited to just fuel. It is the backbone of modern industry. If you look around you, you will find that many of the things you are using exist because of crude oil. Plastic, from which half the things in the world are made today, is a product of crude oil.
Apart from this, various types of chemicals, fertilizers used in agriculture, synthetic clothes (like polyester), paint applied on walls, vehicle tires and even many life-saving medicines, all of these have crude oil present somewhere at their root. If the supply of oil stops like this, not only petrol pumps will dry up, but factories will also be locked.
A major reason for oil being called the 'engine of the global economy' is its political influence. In today's era, oil has become not just an economic product but a powerful political weapon. The entire economy and global power of the countries which have oil reserves depends on it.
The decisions of America, Russia, and OPEC (Organization of Oil Exporting Countries) change the direction of the world. If there is any tension in the Middle East or America changes its policies, its impact is immediately visible in the global markets. Oil exporting countries depend on it for their earnings and military strength, while importing countries like India keep an eye on oil prices to balance their currency and trade deficit. The fluctuations of dollar and rupee are also largely linked to oil prices. Investors see it as an 'economic thermometer', if the temperature of oil increases then the stock market is sure to get fever.
In short, crude oil drives production, accelerates trade, fills the coffers of governments and keeps global supply chains alive. Therefore, until the world completely shifts to some other energy alternative, crude oil will remain the real engine of the global economy.
The largest reserves of crude oil in the world, with 303.22 billion barrels, are in Venezuela, which has seen recent US military action. After this comes Saudi Arabia and Iran. Canada, Iraq, UAE, Kuwait, Russia, America and Libya are also included in this list. While Saudi and Canada are close to America, Russia and Iran are considered its opponents.
America also ranks first in terms of crude oil consumption, where 20.01 million barrels of oil is used daily. After this is China and at third place is India, whose consumption is 5.05 million barrels. Russia, Saudi Arabia, Japan, Brazil, South Korea, Canada and Germany are also included in the list of top 10 consumers.
