With the spread of coronavirus a global demand for fossil energy dropping. We’ve come a long way since the commodity boom that followed the attacks of 11 September, when the summer of 2008, the industry has reached historic highs. The financial crisis of that year combined with the growth in US production and the emergence of other countries as major energy players — all this has led to a glut of the market.
Covid is now a pandemic-19 and the recent price war between Russia and Saudi Arabia — now these factors have brought us to the day of reckoning for the global energy industry. In the US, these trends cause uncertainty in oil-producing States such as Texas. Meanwhile, the President of Trump in November to win the election in Texas if he wants to stay in power. Supporters of “green energy” are jubilant about the financial problems in the sector of fossil fuels, hoping that this will push people to use alternative (renewable) sources of energy. Strange hope: demand fell for all the energy, including one that uses renewable sources (wind, sun).
However, destabilization threatens not only the economy. The oil disaster has the potential to change geopolitics — and not in the direction of stabilization.
A neighbouring uninhabited spaces of Africa and the Middle East currently have to overcome problems such as the possibility of conflict between countries within their regions. Add to this the increase in unemployment in some countries and the increase in financial (debt) burden. And all these problems are compounded by low prices for fossil energy carriers. While Putin’s Russia is faced with serious domestic and geopolitical challenges that have the potential to trigger new conflicts on the periphery of Europe.
In sitting on the oil needle in her arm, fragile and vulnerable southern Sudan, growing domestic tensions due to low prices and the fear of pandemic covid-19. Nigeria, which suffers from tensions between the Muslim and Christian population in different regions, and also inspired the “Islamic state” (ISIL, a terrorist organization banned in Russia — approx. ed.) of the rebellion, this year also does not look good. It is expected the economy to shrink by 3.4%. Not much better situation in North Africa. Egypt, faced with such problems as staggering youth unemployment and huge public debt is likely to face the collapse of all hope for economic growth in 2020.
The same can be said about Tunisia, the only country that has achieved success in the “Arab spring”. It today face a grim financial Outlook due to the ongoing crisis in the field of hydrocarbon production, which are becoming increasingly important export for the North African country. Such developments are an ominous sign in a region where the economy is already unstable, ensuring a growing population depends on energy prices and which are often in conflict.
Saudi Arabia has announced that due to declining revenues from energy would apply austerity measures to limit spending on social needs. Increasingly, there are questions about the sustainability of the political economy of the Kingdom, given its rapidly growing population, which largely depends on government subsidies. Similar problems were experienced and longtime rival of the Saudis is Iran. Alas, the historically unprecedented low oil prices and threaten a country like Iraq: there may occur an economic collapse and to resume the activities of ISIS*.
*ISIS is a terrorist organization and banned in Russia.