Now the US has oil but didn’t know what to do about it.
LAHORE: When weaker countries recklessly get involved in the proxy wars of powerful nations, they end up inflicting pain on their own people. Sometimes these superpowers, blinded by egoistic pursuits to act like gods, become a victim of their own pitfalls; and this is exactly what the US under President Trump has got itself into.
The US, emboldened by the impact of oil and economic sanctions on Iran, made the cardinal mistake of initiating an oil war with Russia through Saudi Arabia. This forced a 65% quarterly fall in price of oil in March. The Trump administration did not seem to care about the impact of Covid-19, a crisis that the WHO had warned them about in January. Instead of pursuing a dialogue under the umbrella of OPEC over oil production levels, negotiations were disrupted and thereafter oil prices slumped by over 30%, which ultimately resulted in global stock-market crash.
A series of follies were committed because of the egoistical pursuits of a US President obsessed with hate and white supremacist notions, who forgot that the shale oil production in the US would be the first casualty of an oil-price war. As a result, the price fell below $50 per barrel. By the time President Trump intervened by pressurising Saudi Arabia to cut back on oil production, the Covid-19 pandemic had drastically reduced demands for oil. The problem was that the market had already been flooded with surplus oil, and storage capacity was running out. Now the US has oil but didn’t know what to do about it. At the moment shale oil companies are suffering a great loss with many experts claiming that some of them will not be able to hold through this historic downturn.
With Trump promising to provide financial lifelines to the oil industry, his administration will need to pull a rabbit out of the hat in order to overcome this unprecedented fall.
Malik Tariq Ali
Published in The Express Tribune, April 23rd, 2020.
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