The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss the collapse of global markets as Saudi Prince MbS enters into an oil price war with Putin and Russia, while coronavirus spread causes mass panic across financial markets.
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American shale drillers are poised to be among the biggest losers in the Riyadh-launched oil price war, experts told RT. They say the kingdom’s dramatic move will be ‘painful’ for the US fracking industry.
Saudi Arabia’s Crown Prince Mohammed bin Salman is trying to give OPEC control over the price of oil, according to political expert Jack Rasmus.
“What’s really happening long-term… the problem is the US oil fracking,” he said, explaining that the US is pumping 12 million barrels a day, driving up the glut in global oil at a time when the global economy is slowing down.
“Bin Salman is rolling the dice, dropping the price of oil even further,” said Rasmus, professor of political economy at Saint Mary’s College of California. He added that “the idea is to get Russia back to the negotiating table in the short run, but in the long run, I think it’s about driving these American fracking companies out of business, you see, causing them to go bankrupt.”
Rasmus explained that the smaller fracking companies are caught in a competitive situation where they, unlike Russia and the Saudis, have no interest and can’t afford to agree to cut output.
His views were echoed by Oil Associates LLC President Andrew Lipow, who told RT that the US shale producers are undoubtedly “going to feel pain.”
“We’ve already seen a number of announcements of laying off people and cutting rigs,” Lipow said.
Most of the 57 members of the S&P Oil & Gas Exploration & Production Select Industry Index fell on Monday, following the global stock market rout. US shale producers Oasis Petroleum, California Resources and Occidental Petroleum plummeted more than 40 percent. On Monday, shale producers Diamondback Energy and Parsley Energy said they were cutting the number of drill rigs in response to the oil price crash.
After failing to agree with Russia on production cuts, Saudi Arabia pledged on Sunday to supply a record 12.3 million barrels per day (bpd) next month, a massive production hike from the current nine million bpd to flood the market. As a result, global crude prices dropped 30 percent on Monday.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of The Duran.