The future of oil is extremely uncertain right now. I don’t mean in general. Oil will continue to power the world for decades, but how much will it cost to do so?

There’s a great deal of uncertainty on that point. Simply look at a few recent headlines:

Reuters reported a rise to $58 a barrel after the Keystone Pipeline spill.

Meanwhile, Saudi Arabia may permanently cut back on oil thanks to its new de facto ruler, leaving prices high.

However, prices may also drop if Russia refuses to continue with OPEC’s temporary production cut from earlier in the year. Russia is the world’s top producer and exporter of oil.

What does all this mean? It means uncertainty, which is bad for business.

Oil is always a bit uncertain. With so many international players involved, it can be hard to project long term. With a vast global network of countries who produce oil, conflicts are bound to arise between competing interests.

For instance, Venezuela may want production cuts in order to turn a modest profit in a time when it really needs it, but Moscow is content with the amount coming in from greater production (especially since it has such a large network of clients in nearby Europe). Saudi Arabia, meanwhile, is looking to make a slow but steady transition away from oil, and America remains eager to avoid importing any oil from abroad and thus refuses to heed the calls of other countries one way or the other.

All of that makes oil fluctuate quite significantly even in the best of times, and the future may not be the best of times. Anyone who ever watches the news knows the world is growing more unstable and countries are growing more belligerent towards each other. As Saudi Arabia rattles a saber at Qatar and Iran, oil is the obvious business stuck in the middle. Russia’s disagreements with the West and desire to build stronger ties with China means its interests are no longer quite so broad and international, and so it is less likely to be able to be compelled to agree with other nations’ needs.

And when oil becomes that unstable, due to such belligerence, businesses will struggle to keep up. Consider the transportation industry, which relies heavily on oil prices remaining low. Should they fluctuate vastly and quickly, it’ll be hard for business to budget for fuel costs. As TBS Factoring points out, fuel is the number one cost for independent trucking agencies. Being unable to budget for the number one cost of business is sure to cause massive problems going forward.

Unfortunately, as OPEC loses standing and countries continually pursue their singular national interests, there’s little anyone can do to avoid this problem in the coming years.


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