The sharks and the small fish in the oil game!

The Kurdish Globe - - NEWS - By Swara Kadir

Who are the big­gest win­ners and losers in the cur­rent oil game? Is there a de­lib­er­ate play on the oil prices that will be for the ben­e­fit of some and loss of oth­ers who ‘hap­pen’ to be the ad­ver­saries of the United States and its al­lies?

We are prob­a­bly wit­ness­ing the big­gest shift in the global en­ergy sec­tor for the last decade or more! The changes have far reach­ing con­se­quences beyond eco­nomics. The huge drop in the crude oil prices from $110 dol­lars per bar­rel to (at the time of writ­ing this ar­ti­cle) around $45 dol­lars is af­fect­ing the geopol­i­tics of the world.

The big­gest win­ners of this oil game seem to be the United States and Saudi Ara­bia. The United States is us­ing the new oil pro­duc­tion tech­nol­ogy called ‘frack­ing’ short for hy­draulic frac­tur­ing of shale oil that is ex­tracted from shale rock for­ma­tions. There­fore it is now one of the big­gest oil pro­duc­ers in the world at a rate of around 9 mil­lion bar­rels per day which has driven crude oil price down and boost­ing its econ­omy. What is Saudi Ara­bia get­ting out of this? Isn’t it los­ing money from the fall in prices?

Saudi Ara­bia has re­fused to bow to the in­ter­na­tional pres­sure, mainly from the Or­ga­ni­za­tion of the Pe­tro­leum Ex­port­ing Coun­tries (OPEC), to lower oil pro­duc­tion rates for good rea­sons of its own. It is pur­su­ing a stub­born oil pol­icy that has long term con­se­quences, by driv­ing its com­peti­tors and po­lit­i­cal ad­ver­saries namely Rus­sia and Iran to the brinks. Saudi Ara­bia is bit­ing the bul­let for the short term and draw­ing from its large for­eign cur­rency re­serves for now to gain big­ger gains in the fu­ture.

Po­lit­i­cally, both Saudi Ara­bia and the United States seem to have teamed up to ex­ert eco- nomic pres­sure on Rus­sia and Iran to bow down and make con­ces­sions if not more. This tac­tic, in my opin­ion, is wiser than mil­i­tary ac­tion and di­rect force and may even­tu­ally drive Vladimir Putin out of of­fice.

Eco­nom­i­cally, Saudi Ara­bia and the United States are the sharks which are go­ing to even­tu­ally de­vour the smaller fish, that are the smaller oil pro­duc­ing coun­tries and com­pa­nies, which won’t be able to sus­tain a pro­longed drop in crude oil prices.

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