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The Country That Won The Oil War


China is now holding most of the cards in the oil price game as far as Riyadh and Moscow are concerned--and Beijing is right where it wants to be. The other two have overplayed their hands. And the U.S. has--once again--been caught napping. There’s a ton of geopolitical leverage to be had for China. The king of ‘soft power’, can simply turn the import taps off to make things extremely uncomfortable for Saudi Arabia and Russia, both vying for China oil sales and both with budgets that depend upon this far too heavily.

This is the bigger game that is unfolding at a time when most are worried about whether U.S. shale will be able to find its new normal. For the U.S., shale isn’t the gravest concern--it’s the loss of geopolitical leverage, and it has nothing to do with OPEC.

Another perceived looming threat to oil prices is the prospect of an end to the Libyan conflict that would see the country return to a minimum of ~1.2 million bpd (pre-conflict levels). With demand predicted by some to never again reach its peak 2019 levels, bringing all this Libyan supply back online would not be helpful. But those external powers (UAE, Saudi Arabia, Russia, Egypt) supporting General Haftar’s bid to control Libya and its oil have now been backed into a corner. They have to act on his behalf, or he will lose Libyan oil to the GNA, Turkey and Qatar. As we noted last week, the Turks may be spinning recent developments as a victory over Haftar,…


Published on June 27th, 2020

Source:-oilprice