As unwanted oil overwhelms storage capacity, many petro-states are posied for existential crises. EricLevitz writes
There will be blood. Photo: Hasan Jamali/AP/Shutterstock The past few years have vindicated many long-ignored prophecies of impending catastrophe . But “peak oil” isn’t one of them.
Which works fine, as long as there are enough people in the world who would like to buy actual oil from speculators at any given moment in time. If a global pandemic were to turn billions of humans into homebodies all at once, however, oil speculators could find themselves invested in what are, essentially, “storage headache futures.
International oil producers were already struggling to fend off overproduction before the COVID-19 crisis began. America’s shale revolution had dealt a blow to both the market share and pricing power of major oil producers. Saudi Arabia, which can produce oil fairly cheaply and has a $500 billion sovereign wealth fund to lean on, has some incentive to sell its crude at a massive discount, in order to ruin its more vulnerable competitors and inherit their market share.
For the citizens of many oil-producing states, these “near-term demand losses” mean cuts in social services and public employment in the midst of a pandemic-induced depression. For already embattled regimes in in Iraq, Iran, and Venezuela, the coming fiscal and economic crises pose an existential risk. As the Associated Press reports:
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