East African Business Week: Oil and Gas Production: Subsidiaries and sanctions

A Subsidy could be considered as a carrot for oil producers and a sanction as the proverbial stick which can be used to bombard and punish petroleum companies and certain countries for their misdemeanours.

But how are they used as a control mechanism and who are the controlling powers that wield them? Firstly let’s define a sanction. Where international law has been broken a court can apply a sanction to restrict trade in an attempt to control certain behaviour or reverse policies that have a negative effect on another group. The sanction will then be lifted once a balance has been restored to the point prior to where the unfavourable behaviour started.

For example Iraq invaded Kuwait to control the flow of oil. The first course of action is to impose economic sanctions by stopping the trade in oil. Iran builds a nuclear facility which some believe would cause a danger to others, again prompting oil sanctions.The same thing happened to Libya until the sanctions caused the desired change in behaviour.
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