Oil market crash 2020 and possible factors
While the world is going through the coronavirus crisis. We also observed the oil market crash 2020 unilaterally imposed by Saudi Arabia. By increasing oil production and of course the coronavirus pandemic. When even suggested by OPEC to cut its oil production.On Monday crude oil price did something which left everyone to shook their heads. Oil had a negative market price that means the one who sells oil has to give money with the oil to the buyer. Why would someone do that? No one either he is 18 or 150 years old had seen the price of oil at such lowest. That’s because of the oversupply of the oil in the Global markets.
Crude Oil Price – Cheaper than fries?
$1.68, That’s how low the price of the main US oil benchmark went at one point on April 21. As it recovered from -$40.32 a barrel and it’s cheap than medium MacDonald’s fries which cost around $1.79.
That reminds us of the winters of 1973/1974 when Saudi Arabia did the opposite. They unilaterally raised the crude oil price by seven-time to punish the United States for supporting Israel in the Middle East war. US treasury department contacted John Perkins and other Economic hitman’s and they were sent to Saudi Arabia. Where they made a deal with House of Saud’s to make sure that this won’t happen again. House of Saud’s agreed on terms that the oil prices won’t fluctuate in any way.That has not been agreed by the US or its oil companies and the oil will be traded internationally in US dollars.
This supported the fragile dollar because the US dollar was not the gold standard in 1971. In return United States guaranteed that the House of Saud’s will stay in power. United States did cover activities through CIA and other activities that were necessary by the Pentagon to defend Saudi Arabia, Even the first war in the middle east under US president Bush was a part of it.
US Oil Market Crash- Will the United States do something now?
What happened now? Has Saudi Arabia broken the agreement? Are they deifying the United States? Will the United States do something now to remove the House of Saud’s from power? What’s Going on?
Another possibility that is even more realistic is that the United States may be collaborating or even came up with the idea that Saudi Arabia should do this because who gets hurt the most? Well, Saudi Arabia is the largest exporter of oil but they are a very rich country.The second-largest exporter of oil is Russia. They are not as prosperous country. They are much more venerable. Of course, also Venezuela and Iran which both are allies of Russia.
Lowering crude oil prices in the oil market will of course also hurt US oil companies. This will have an impact on the US economy but maybe they are thinking that they can move beyond this because their economy and oil companies are already affected by a coronavirus. Moreover, the administration is thinking of supporting oil companies more than it already is doing because oil companies of the US are heavily subsidized in many different ways.
So, we will have to see what happens next. Will the US retaliate against Saudi Arabia or Saudi Arabia is really behaving as a partner, an ally in this process? How does this affect the upcoming Presidential elections in the US?
Comment us will possible ways …
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