By Mohamed Osman
Doha: Oil prices are related more to political decisions rather than supply and demand.
How could the price of such a strategic commodity come down five times within a short time despite increasing world population and growing demands? wonders Dr Talal Abu Ghazaleh, Chairman, Talal Abu-Ghazaleh Organisation (TAG-ORG).
Oil experts think that oil prices depend on supply and demand “but I do not agree with this viewpoint because oil is a strategic commodity which is not included in international conventions which are part of World Trade Organisation (WTO) treaties,” Abu-Ghazaleh argues.
He told a press conference here yesterday that oil was not part of any world trade negotiation but as a strategic matter left for countries to take a suitable decision according to political interests, and not based on demand or supply.
Oil prices can rise any time if it serves the political interests of a superpower concerned. The situation today is quite similar to the one witnessed in the mid-eighties (1985-86) when the then Soviet Union was engaged in a war in Afghanistan and oil prices dropped to $10 a barrel.
Today, Russia is involved in an ongoing war in Syria and oil prices will recover when the powers concerned agree to settle the dispute about Syria, said Abu Ghazaleh.
“I’m not pessimistic about the decline in the oil prices, because oil is a strategic commodity which can be produced at any time in the future and its industrial value is much higher than its use as fuel,” argued Abu Ghazaleh.
Although the drop in oil prices causes short-term harms and confusion in countries heavily dependent on oil revenues, such as the GCC states, the underground commodity will stay there and be used at any time in the long- or short-term and may rule at satisfactory price levels.
These countries must take decisions that treat oil as an addition material and not the sole basic source of income. The development process should continue without oil and it is an opportunity to reconsider the situation beyond the oil revenues, said Abu Ghazaleh.
Abu Ghazaleh was among 10 Arab personalities who were honoured in a special ceremony in Cairo recently, by Chinese President Xi Jinping during his visit to Egypt, for their role in enhancing Sino-Arab relations.
The Chinese initiative was considered the first of its kind. The TAG-ORG is the largest global group of professional service firms.
The Peninsula
