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Copyright © 2007 riceNpeas
Oil. Black gold. Texas tea. The power and wealth it holds seemingly know no bounds. It powers our country, our homes, and our lives. Without it, modern civilization would find itself moving to a grinding halt. With it, the dangers of a second worldwide cold war anxiously loom on the horizon.

As the world’s oil runs out, the race is on amongst the world’s larger economies to secure the remaining oil. China and India are pursuing a more aggressive search for oil to supply the demand being produced by their growing economies. The emergence of these super powers in oil-producing countries across Africa, the Middle East, and South America poses a threat to the long term dominance of Western nations in these regions. The competition for oil has the potential to lead to an international conflict in a way not seen since the Cold War.

It is estimated that 85 million barrels of oil are consumed everyday worldwide. With a lack of renewable energy sources available, attention has turned to which nations are consuming the most oil. Unsurprisingly, the United States remains the world’s largest consumer of oil; however it seems to be the ever-increasing consumption of oil by China and India that disturbs many in the international community. The growth in the Chinese economy (the world’s most populous country) has seen a rise in the number of car users, consequently increasing the demand for oil coming from that country. China is now one of the world’s largest consumers of oil, passing Japan into second place, and was responsible for 40 % of the rise in the global oil demand between 2000 and 2004. Similarly, India’s need for oil is expected to grow by four to seven per cent a year according to the International Energy Agency. As the world’s fastest growing energy markets, China and India will not only compete with one another for energy but with other powerful economies in the world’s oil markets.

More than half of the world’s oil can be found in the Middle East. The importance of oil-producing countries in regions such as Kuwait, Saudi Arabia, Iran and Iraq cannot be underestimated. As such, the region is likely to be the focal point of the world’s oil market. Since the development of oil extraction in the 1930’s, Western nations have had a strategic interest in the region. The US and Britain sought to consolidate their interests in the Middle East through the Gulf War in 1991 and the recent invasion in Iraq in 2002. The Western super powers, particularly the US, will not take too kindly to China’s interest in the Middle East and its dealings with Iran. China’s willingness to do business with Iran (with whom the Chinese signed an agreement to buy oil and gas from in 2004) is likely to bring it into conflict with US government policies. The development of strategic alliances such as that between China and Iran is a throwback to the global power dynamics that characterised the Cold War.

The Cold War could be described as an ideological battle between East and West, or capitalism and communism. The world’s superpower's attempts to win over smaller nations by providing them with military and financial assistance were in a bid to protect national security, while this new cold war may be described as an attempt to protect energy security for the next generation. The current cold war dynamics may be seen as the superpowers’ endeavours to secure control over sources of oil in weaker nations. The methods being used to secure these goals are fairly similar to those used during the Cold War. Sudan can be seen as an example of the battle ground to secure its oil. Both China and India have immersed themselves in the country by investing in the Greater Nile Petroleum Operating Company, which controls Sudan’s oil fields. China has been able to win favour with the current Sudanese government by supplying it with arms. Chinese and Indian dealings with an allegedly oppressive regime are unlikely to go down well in Washington. In 2004, the House of Representatives adopted a resolution that genocide was being committed in Darfur. However, many African and Asian countries remain sceptical about the use of this term, and fear that military intervention in Sudan will not be based on humanitarian principles, but strategic interests related to oil. The US does not have a stranglehold on Sudan, an important component in the world’s oil market. China has been more successful in its attempts to woo the Sudanese government through its cooperation with Sudan, while the coercive methods of economic sanctions coming out of Washington have been less successful.  

China’s decision to forge new alliances with countries such as Iran, Venezuela and Sudan has brought it in to conflict with the US. The US has seen it as its divine right to question the legitimacy of regimes supported by the Chinese government. They believe China’s endeavours may undermine the attempts of Western nations to supposedly improve democracy, governance and corruption worldwide. As one of the five members in the United Nations Security Council, China plays a pivotal role in the affairs of the international community. The support of China is crucial in the Western nations’ attempts to carry out their policies around the world. In 2006, the US sought to restrict Iran’s nuclear programme with the support of members of the UN Security Council. However, China and Iran share an alliance over oil which is largely dependant on China’s support of Iran in the Security Council. China’s reluctance to impose sanctions on Iran was largely due to fear of the consequences that such a decision may have on the prices of oil it receives from Iran. Comparatively, India has cooperated with the US in a bid to prevent the spread of nuclear technology as part of their Next Steps in Strategic Partnership. However, India will find it difficult to maintain this relationship in the long term with the US having signed a $40 billion deal with Iran in January 2005.

The struggle over oil has taken precedence over so-called established international norms and diplomacy. India and China’s support of a Sudanese government which has allegedly committed human rights abuses points in this direction. The battle amongst the world’s superpowers to gain favour with smaller oil-producing countries may be to the advantage of small nations. During the Cold War, smaller nations were able to play the super powers (that were so desperate to secure strategic alliances) off against one another, allowing them to gain substantial financial and military resources in the process. Venezuela is a prime example of this point; President Chavez has understood the global power dynamics surrounding oil. Venezuela’s decision to diversify its oil supplies by forming agreements with China and India and hence, removing its dependence on the US, is a case in point. By signing up to 19 trade agreements including deals for oil with China in 2005, Venezuela altered its policy on oil removing its dependence from the US, to whom 60 percent of Venezuela’s daily exports of oil goes.

The competition for oil amongst the world’s larger nations is likely to result in a long-lasting power struggle. China, India and other emerging nations are likely to see their attempts to gain control over the world’s oil reserves being thwarted by western nations. In the post-Cold War era we have seen this carried out through economic sanctions, humanitarian intervention and international pressure being placed on oil-producing countries, coming from Western states and the UN. However, smaller nations no longer have to be so accepting of conditions imposed upon them by Western states as the politics of oil have produced a new power dynamic in world affairs in a way not seen since the Cold War. China’s oil diplomacy in Africa, which poses a threat to Western nation’s dominance in the region, illustrates this power struggle. In the coming years, we are likely to see the world’s larger nations go head to head in the race for oil.

1st October 2007
How Long Will The Oil Last?
By Mahad Ali