It wouldn’t be an overstatement to say that energy has played a predominant role in geopolitics over the past few decades. Some might even argue that geopolitical rivalry over oil has been a cause of most conflicts in the 20th century.

READ: The Oil Industry And Its Effect On Global Politics

So the question becomes, are prevailing geopolitics threatening to oilfields? Let’s find out! 

Prevailing geopolitics and oilfields

There’s no denying that geopolitics have a big influence on the gas and oil industry. Recently, oil prices saw a reduction of 1.6% due to easing tensions in the Middle East. 

Currently, global crude oil prices sit between US$55 and US$60, which benefits Canadian companies. Moreover, Canadian oil producers are likely to take advantage of reduced pressures from competition stateside.

Tensions between Iraq and the US

Last year, oil prices increased to $80 per barrel, chiefly due to the withdrawal of Washington from the Joint Comprehensive Plan of Action with Iran. Moreover, the recent assassination of Qasem Soleimani has plunged Iran and the United States into the brink of war.

READ: What’s next for oil as US-Iran tensions simmer?

While Iran’s muted initial reaction means that shipping lanes will be unaffected for now, the future remains heavily uncertain and most oilfield experts are refraining from providing any conclusive statements.

Transition to renewable energy

Prevailing geopolitics are also heavily influenced by the transition from fossil fuels to renewable and low-carbon energy sources. Surprisingly, top industry experts are undermining the pace and profundity of this transition.

Investors with vested interests in fossil fuels are under scrutiny from environmentalist lobbies that are pressurizing them to switch to more eco-friendly energy sources. However, there’s still a long way for clean energy to go before pushing fossil fuel out of the equation.

Granted, the expansion of electric vehicles is predicted to accelerate significantly in the 2020s, but it’s unlikely to eliminate global oil demands anytime soon. While prevailing geopolitics will create economic uncertainty, the foreseeable future of the oilfield industry seems promising.

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