Petro Diplomacy: The Political Economy of Volatile Oil Prices

In June 2014, the price of oil, projected to continue increasing to at least $125 to $150 per barrel WTI, collapsed within six months to just under $50 per barrel.

Vinod K. Aggarwal Jun 30, 2015

Executive Summary

In June 2014, the price of oil, projected to continue increasing to at least $125 to $150 per barrel West Texas Intermediate (WTI), collapsed within six months to just under $50 per barrel. Oil prices continue to remain volatile. What were the causes of this dramatic fall? Was this a Saudi Arabian strategy to damage its competitors, particularly the U.S. fracking industry, which had rapidly been increasing output? Was this collusion between the United States and Saudi Arabia to pressure Russia, Iran, and Venezuela, as well as non-state actors with access to oil in the Middle East? Whatever the underlying motivations, what has been the effect of this decline in oil prices on U.S. shale oil producers, the domestic political economy of Gulf countries, and broader issues of foreign policy?

To analyze these critical issues, the Arab Gulf States Institute in Washington hosted the international conference “Petro Diplomacy: The Political Economy of Volatile Oil Prices” on April 27, 2015. Scholars, analysts, and CEOs from all over the world representing academic institutions, non-governmental organizations, multilateral organizations, and the private sector, including shale oil producers, attended the conference.

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Vinod K. Aggarwal

is a professor of political economy in the Political Science Department at the University of California, Berkeley, and the director of the Berkeley Asia Pacific Economic Cooperation Study Center (BASC).

The views represented herein are the author’s or speaker’s own and do not necessarily reflect the views of AGSIW, its staff, or its board of directors.

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