| The relationship between economics, finance, and geopolitics in the oil market is examined. Furthermore, the structural changes that have occurred in the petroleum industry are analyzed.; Recent developments have greatly influenced oil prices, and the supply of and demand for oil. The research clearly points to an increasing U.S. reliance on the Middle East oil in the future. Large U.S. oil companies are emphasizing overseas oil exploration and development.; The volatility and competitiveness in the market have led to new oil pricing mechanisms in international oil trade. Netback pricing, the growth of the crude oil futures market, and an increase in barter agreements are important developments.; Several factors, including the decline in oil prices, and the lack of investor interest in oil investments have reduced the capital available to the industry. This has created the need for new financing techniques. Companies are devising strategies to protect their financial strength.; The high level of acquisitions and mergers activity has increased the debt burden of the industry. The companies are stressing reduction of debt, and are implementing cost-control measures. They have also taken steps to defend against hostile takeover attempts.; Oil plays an important role in the world political economy. It influences the foreign policies of nations. Future competition for foreign oil supplies could lead to tensions within the Western Alliance.; The diversity and conflicts within OPEC have raised questions about its future. The Middle East is a strategically important area, hence the Soviets will continue to seek greater influence there. The outcome of the Iran-Iraq war will have major implications for oil supplies from this region.; A survey of the restructuring of the petroleum industry was conducted. The survey examined the problems of the petroleum industry, strategies of the oil companies, and the future role of OPEC. The consensus amongst the respondents was that misjudgement regarding future oil prices was the leading cause of the industry's problems, and that the U.S. will be more vulnerable to oil supply disruptions in the future. |
