Oil crisis: Did those who dig graves for each other fall into it?

Confucius said to dig 2 graves before goinag on the path of revenge. This statement of the great Chinese thinker resonated in the mind during the recent oil price war and looked at the consequences of this war. Perhaps the rhythm of this statement of Confucius with the war of oil prices is not immediately understood, so a story has to be told.

The proposal to reduce oil production was discussed at the OPEC Plus meeting on March 6 due to a significant drop in global demand. The OPEC Plus countries failed to reach any agreement at the meeting, as Saudi Crown Prince Mohammed bin Salman and Russian President Vladimir Putin had a telephone conversation shortly before the meeting, and the most important thing was that the talks There was a departure from the traditional diplomatic etiquette between the two heads of government.

According to the Arab website Middle SI, the two leaders looked very angry at each other in this phone call. The Saudi Crown Prince was in a very aggressive mood during the phone call, and Muhammad bin Salman threatened the Russian president with a price war if there was no agreement to reduce production. The Russian president did not succumb to the pressure, and the phone call ended in a very bad mood.

The report also said that the Saudi Crown Prince had consulted with his friend and President Trump's son-in-law Jared Kishner at the White House before contacting Putin by phone. Jared Kishner assured the Saudi Crown Prince of his full support for President Trump.

President Trump said that with this cheap oil he would fill the reserves of the United States, thus not only benefiting the American people by billions of dollars, but also helping the national oil industry. He added that the United States was no longer in need of energy and had achieved a great goal that no one had ever thought of achieving.

U.S. oil companies investing in expensive shale oil projects have strongly protested President Trump's remarks because the war on oil prices and the consequent cheap oil have jeopardized investment in those projects. ۔ The White House had to change its stance on the protests of the American oil companies.

A series of phone calls began between Washington, Riyadh and Moscow, and on April 10, Moscow said that President Putin had spoken to the Saudi Crown Prince on the phone and the two had agreed to continue Moscow-Riyadh contacts.

On April 12, President Trump, Saudi King Salman, and the Russian president were contacted by phone, and on April 13, President Trump announced on Twitter that a major agreement had been reached in the OPEC Plus countries, saving thousands of jobs in the US oil sector. Will go

The White House and Saudi Crown Prince's joint plan to teach Russia a lesson backfired on the United States, and on the first day of the business week, US crude traded negative for the first time in history and traded at فی 37.63 per barrel on Monday. Closed on the barrel.

This was due to oversupply in the market, which was the result of increasing Saudi oil production. As a result, there was less space to store oil and companies were forced to pay buyers to pick up oil from their storage.

US oil prices returned to ڈالر 20 on Wednesday, but global benchmark Brent Crude, which accounts for 60% of the international market, also fell to its lowest level since 1999. Brent crude traded at 15 15.98 a barrel on Wednesday, and the US president sought to support oil prices by ordering to hit Iranian ships, with Brent crude returning to 21 21.50 a barrel on Wednesday.

This war of oil prices has also cost oil exporting countries dearly. The economies of Saudi Arabia, the United Arab Emirates and Kuwait depend on oil exports. Iraq and Venezuela could be in turmoil as a result of this oil price war. Nigeria's economy in Africa has already slowed down due to the corona virus. The United States and Canada are in a position to endure this crisis, but the process of overcoming this crisis will be painful.

The Corona virus epidemic and the resulting economic shutdown are deepening the crisis in the oil industry. The United States, Europe, India, and China began sending back oil shipments when they ran out of storage space. China returned 10 April and May deals to Saudi Arabia.

The International Energy Agency says oil demand is likely to remain negative by the end of 2022. The International Atomic Energy Agency (IAEA) failed to anticipate negative oil trading, but warned that it was not possible to accurately assess the effects of the corona virus on millions of employees in the oil industry worldwide.

The economies of oil-exporting countries are at great risk. According to the US Credit Rating Agency, Saudi Arabia needs to keep the minimum oil price at 91 91 a barrel to avoid a budget deficit. Similarly, Oman needs ڈالر 82, Abu Dhabi 65 65, Qatar 55 55, Bahrain 96 96, Iraq 60 60 and Iran 195 195.

In Africa, Algeria needs oil at بیر 109 a barrel, Libya at 100 100, Nigeria at 14 144 and Angola at 15 155 a barrel to meet its budget needs.

For this year's budget needs, Russia needs to keep oil at 49 42, Mexico at 49 49 and Kazakhstan at 58 58 a barrel.

The United States is expected to save 48 48, Canada 60 60 and Norway ڈالر 27 a barrel.

It remains to be seen how many of the 10 million jobs in the US oil industry will be affected.

The oil war between Russia and Saudi Arabia has also hit the energy market hard, which was already under pressure due to the Corona epidemic. Oil companies contribute 8% to US GDP, while oil companies account for 2.6% of the S&P Five Hundred Index. The impact of the oil crisis on the US economy is likely to continue beyond 2020.

The biggest buyers of Russian oil are China and the European Union, and the Corona virus epidemic has hit the market, but oil prices have deepened that effect. Half of Russia's total exports depend on oil. Russia could face a سے 40-50 billion budget deficit in this situation. The oil sector accounts for 30% of Russia's GDP and 1 million jobs are at risk.

Oil accounts for 70 percent of Saudi Arabia's exports, and Saudi Arabia's 500 500 billion wealth fund could temporarily help it cope with the oil price crisis.

Saudi Arabia has announced it will pay 60 percent of employees' salaries during the Corona virus epidemic to help it recover from the economic crisis, but the bailout package may not be fully operational as reports say Saudi Arabia's largest telecom The company's employees are receiving only 10% of their salaries. The hotel industry has been turned into hospitals but no bailout package has been given to the industry and no expenses are being paid. The salaries of Egyptian doctors working in the country are being cut and those who are on annual leave are not being paid at all.

Saudi Arabia had expected oil prices to reach 40 40 a barrel after a reduction in production with Russia, and if oil prices remained at current levels, Saudi Arabia would face a ارب 40 billion revenue cut. ۔

Prior to the agreement with Russia, Saudi Arabia had instructed its agencies to cut spending by 30 percent. The Saudi government will have to stop its big plans and the Crown Prince's vision for 2030 will also stop.

The Saudi oil sector employs more than one million people. Saudi Arabia will have to spend from wealth funds and citizens will have to help.

If the economic crisis deepens, there could be a risk of unrest in Saudi Arabia. Saudi Arabia's economic crisis could affect the entire region. The effects of the Saudi economic crisis will be felt immediately in Egypt, Sudan, Lebanon, Syria and Tunisia, as millions of people in those countries are employed in Saudi Arabia.

Market watchdogs and experts say both Russia and Saudi Arabia are quick to emerge victorious in the oil price war, as both have long been plagued by US shale oil. These experts say that the happiness of Russia and Saudi Arabia is temporary because the Brent crude market will not survive and in the next few weeks (end of May or early June) the world will run out of oil storage capacity. ۔

Saudi Arabia has been so cautious that in the absence of an agreement with Russia, it has increased production, sold its oil wherever there was a demand for oil around the world, and reduced its oil production after the agreement with Russia. Now the only way for oil-producing countries to agree on another major cut in production is to achieve that goal, the next OPEC Plus meeting is scheduled for June 10.

If US President Donald Trump pushes Saudi Arabia into an oil price war to teach Russia a lesson, he will dig a grave for his oil industry. If the Saudi crown prince has tried to humiliate the Russian president, he has suffered. Thus Confucius's statement to dig 2 graves before walking on the path of revenge came true.