Oil Drama? - The Saudi-Russia Feud Driving A 2020 Price War
Saudi Arabia, well known for its oil reserves and even more well known for how far it will go to protect those reserves, has been the lead participant in an ever-intensifying oil price war with Russia.
Oil prices came to a crash on March 9th when Riyadh and Moscow failed to reach a consensus on production policy, the OPEC deal. The deal would've asked to cut oil production by nearly 1 million bpd, that's barrels per day. Needless to say, it was turned down by the Saudis who had no interest in playing the loser for the sake of others Only days later, Saudi Arabia actually announced an increase in their oil production by about 3 bpd.
What I love about Business Insider is when they use gambling terms like 'doubling down' in their articles, which exactly what they used to described Russia threatening to increase their oil production, which basic macroeconomics tells us when the supply is too high and the demand is low or at equilibrium, the business suffers from production costs and cause a slump in the market.
This oil war also directs the global oil market, specifically the United States oil market. The market tanked 30% in one day, as reported by CNBC, and was the biggest 1-day drop in 3 decades that could cause several other foreign oil producers to tumble with it. Business Insider called it a 'reckless move'.
This event in tandem with a stock market crash - all at the same time as an election year which pours literal billions of dollars into non-asset funds - is shaping up to be a real "oh fuck" moment for the United States.
The U.S. in both the Trump and Obama eras has supported Saudi Arabia and funneled money to their economy as proof of alliance, and even supported their morally-questionable war with the Houthi regime in Yemen, so for the U.S. to be a target of a supposed 'punishment' through oil prices is a bit jarring to U.S. diplomats.
Russia's agenda is clear to drive U.S. producers out of business and expose them in front of Riyadh's government in the hopes of breaking their ties, which lead a massive hole in the web that threads the Middle East and Arab Leagues together.
It's been a few weeks and the price war hasn't ended. Canadian producer stocks like Vermilion, Baytex, and Whitecap are all suffering from it too, according to MSN.
It would be in Trump's best interest not to let this oil price war go on any longer.
Sources:
Business Insider
CNBC
MSN
Oil prices came to a crash on March 9th when Riyadh and Moscow failed to reach a consensus on production policy, the OPEC deal. The deal would've asked to cut oil production by nearly 1 million bpd, that's barrels per day. Needless to say, it was turned down by the Saudis who had no interest in playing the loser for the sake of others Only days later, Saudi Arabia actually announced an increase in their oil production by about 3 bpd.
'Marjan 2' oil rig workers in the Persian Gulf, March, 2003, photo via CNBC.
What I love about Business Insider is when they use gambling terms like 'doubling down' in their articles, which exactly what they used to described Russia threatening to increase their oil production, which basic macroeconomics tells us when the supply is too high and the demand is low or at equilibrium, the business suffers from production costs and cause a slump in the market.
This oil war also directs the global oil market, specifically the United States oil market. The market tanked 30% in one day, as reported by CNBC, and was the biggest 1-day drop in 3 decades that could cause several other foreign oil producers to tumble with it. Business Insider called it a 'reckless move'.
This event in tandem with a stock market crash - all at the same time as an election year which pours literal billions of dollars into non-asset funds - is shaping up to be a real "oh fuck" moment for the United States.
The U.S. in both the Trump and Obama eras has supported Saudi Arabia and funneled money to their economy as proof of alliance, and even supported their morally-questionable war with the Houthi regime in Yemen, so for the U.S. to be a target of a supposed 'punishment' through oil prices is a bit jarring to U.S. diplomats.
Russia's agenda is clear to drive U.S. producers out of business and expose them in front of Riyadh's government in the hopes of breaking their ties, which lead a massive hole in the web that threads the Middle East and Arab Leagues together.
It's been a few weeks and the price war hasn't ended. Canadian producer stocks like Vermilion, Baytex, and Whitecap are all suffering from it too, according to MSN.
It would be in Trump's best interest not to let this oil price war go on any longer.
Sources:
Business Insider
CNBC
MSN
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