The Petrol-Geopolitical War. THE oil price has fallen by more than 40% since June, from $115 a barrel to a well below $60. This comes after nearly five years of stability. OPEC which controls nearly 40% of the world market, failed to reach agreement on production curbs, sending the price tumbling. The hardest hit oil-exporting countries like Russia (where the rouble has hit record lows), Nigeria, Iran and Venezuela are feeling the crunch also but are keeping quiet now. Saudi Arabia produces nearly 10m barrels a day a third of the OPEC total out put. So the Saudi’s can tolerate lowering oil prices quite easily. It has $900 billion in reserves. Its own oil cost very little (around $5-6 per barrel) to get out of the ground. So to tolerate the market down fall the Saudis and their Gulf allies have decided not to sacrifice their own market share to restore the price fall out publicly. War torn countries like Iraq and Libya who are also big game players in the oil production of export who pump out nearly 4m barrels a day combined ironically has not affected their output yet, even though Iraq is fighting a terrorist promoted coup détat Islamic war with ISIS now… But countries like Algeria who operates an extensive welfare state. Who has $200 billion foreign reserves, is heavily dependent on its oil revenue which provides 97 percent of its hard currency income, and 60 percent of the budget. The Algerian government subsidizes education and housing. The current falling of oil prices would freeze public hiring, 60 percent of the jobs in the country come from the government agencies alone. Now by the grace of god, America has become the world’s largest oil producer. Though it doesnt export crude oil, it now imports much less than we consume, creating a spare (glut) supply. Yes we are seeing a new type of covert economic trans-war, not fought in the jungles or deserts, or urban cities. But in quiet board rooms across main stream economic markets in large capitals, and we are the soldiers (Consumers) who decide when we want to fight or just dissipate into economic peace.
Posted on: Mon, 29 Dec 2014 08:39:12 +0000
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