From Iran to Nigeria, Cheap Oil Means Perilous Politics

Oil producing nations were long warned to diversify economies. The abrupt fall of oil prices from more than $110 to less than $30 per barrel in the space of a few years is influencing politics and foreign policy. Fareed Zakaria points out that Iran entered serious negotiations for an agreement on ending its nuclear program in summer of 2013. “Iranian officials were predicting that by 2015, Iran’s oil and gas revenue could reach $250 billion annually,” he writes for the Washington Post. “That’s what they were banking on when making their concessions.” Iran, accustomed to sanctions, is expected to handle low prices better than other nations, including Iraq, embroiled in war, or mismanaged Venezuela. Extremists, like Boko Haram in Nigeria, will try to take advantage of economic difficulties. Economists urge structural reforms, diversification into manufacturing and services, and long-term investments in education. Oil producers, desperate for revenue, add to supplies and price pressure, and Zakaria concludes that such trends over the long term will lead to “perilous politics.” – YaleGlobal