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Page added on August 12, 2020
Petrostates Glimpse Their Peak-Oil Future With Summer of Strife
From Baghdad and Algiers to Caracas, many of the world’s oil capitals are experiencing a summer of discontent. It could be a glimpse of their future.
Iraq has seen fatal protests as its electricity grid buckles amid searing heat, while Venezuela’s oil production has sunk to a 75-year low. In Algeria’s capital, tension is simmering as the hardship of virus lockdowns brings the risk of renewed demonstrations and riots.
OPEC has revived oil from its historic drop but prices near $40 are still far too low for most members as they grapple with weak economies, unstable governments, restless young populations, and the ravages of climate change. As the legacy of the pandemic and the switch to cleaner energy threatens to keep crude prices lower for longer, there are profound consequences for the way oil-rich countries are run.
“The shaky six of OPEC — Algeria, Iran, Iraq, Libya, Nigeria, Venezuela — are facing a very precarious political and economic outlook,” said Helima Croft, head of commodity strategy at RBC Capital Markets LLC.
OPEC’s revenue is down about 50% from a year ago, and members’ long-running financial ailments are coming to the fore.
Oil-dependent Angola is seeking to increase a $3.7 billion International Monetary Fund loan by $800 million. The country and Nigeria have devalued their currencies as a shortage of foreign exchange hammers local businesses. Iran — battered by the twin shocks of U.S. sanctions and the virus — and neighboring Iraq have also reached out to the IMF.
Even Saudi Arabia isn’t immune, rolling out a slew of austerity measures last quarter while contending with the tripling of its budget deficit to 109.2 billion riyals ($29 billion).
The strain has been showing for a while now. Last year, popular revolts forced the resignation of Iraqi Prime Minister Adel Abdul Mahdi, and ended the 20-year rule of Algeria’s Abdelaziz Bouteflika.
The prospects for petrostates have dramatically shifted from just a decade ago. Oil prices were near $100 a barrel then and consumers were worried about supplies running out. Now, OPEC is increasingly having to reckon with the prospect of peak demand, when consumption starts to decline as wind and solar power become more popular.
The International Energy Agency expects this turning point in the history of the industry could be just about a decade away. Covid-19 could make it even sooner.
In May, BP Plc boss Bernard Looney said that remote working could erode the need for transport fuels and speed up the shift from hydrocarbons. Having consumed about 100 million barrels of oil each day last year, the world’s thirst for petroleum may never be as intense again.
“The pandemic will accelerate many of the technologies and behaviors that were going to come anyway,” said Amy Myers Jaffe, managing director of the climate policy lab at Tufts University’s Fletcher School of Law and Diplomacy. For governments reliant on oil sales, the implications could be grave.
“The idea that we’re going to have some up-cycle that lasts for a decade, and produces oil prices between $80 and $100, and all these countries can collect up the rent again — that seems less likely,” she said.
Peak Demand
Still, oil is likely to remain a major energy source for years to come. The timing of peak demand is widely contested, with some forecasting it’s unlikely for the next couple of decades at least. For oil to be displaced, billions of dollars of spending are needed for vehicle electrification and renewable energy.
Some exporters are using the downturn to diversify their economies. Saudi Arabia is pursuing reform, with its “Vision 2030” program seeking to develop other sectors such as tourism and technology.
But the plan is being thwarted by spending cuts and a struggle to attract foreign investment. And for countries such as Iraq, Nigeria and Venezuela, which lack the kingdom’s deep pockets, the challenge of reform may prove insuperable.
The Saudis may be content to see oil prices remain subdued a little longer, being keenly aware that another rally would only revitalize rivals like the U.S. shale industry, which has squeezed the kingdom hard over the past decade with a flood of crude, and could do so again.
Hitting the competition could buy OPEC some breathing space. American drillers have been laid low by the latest crisis, and other major companies including Exxon Mobil Corp., are scaling back investments, threatening to create in a supply gap in a few years that OPEC would need to fill.
21 Comments on "Petrostates Glimpse Their Peak-Oil Future With Summer of Strife"
Outcast_Searcher on Wed, 12th Aug 2020 11:06 am
When peak oil predictions don’t pan out, go with fantasies. That’s the ticket. Zerohedge does that a lot — and has ZERO credibility re their constant predictions of rapid doom.
When vaccines end the pandemic and make the COVID-19 risk manageable (if not near zero in time), oil consumption and the global economy will resume normal growth rates in months or years. Same as it ever was.
The “peak oil” is peak DEMAND re things like EV’s, NOT peak supply.
belieber vs beliver on Wed, 12th Aug 2020 11:08 am
this is what supertard said
Abraham van Helsing on Sun, 9th Aug 2020 12:22 am
Thank (((supremetard))) for Brexit.
Thank (((supremetard))) for Russia winning in Syria.
Thank (((supremetard))) for a quick recovery of China and its rapid militarization.
Thank (((supremetard))) for US white nationalism.
Eurasia-Anglosphere.
South China Sea.
zero juan on Wed, 12th Aug 2020 11:56 am
supremetard please jump off your 5 story balcony. Make the world better:
belieber vs beliver said this is what supertard said Abraham van Helsing on…
lets hav biz as usual and externalize teh costs to america said yup, autoritarian regimes in china build up soical…
India: 3 Dead as Muslim Mob Riots over Muhammad FB Post… said libs in india are enabling tis and sending indians…
supertrad im not superemetard and you write it like (((supremetard))) ok i am a tard and former paultard youre supertard on Wed, 12th Aug 2020 12:17 pm
so anyways now MUZZ-19 is produced by putin codename SPUKNIK-V19 that introduces a dilema isn’t it.
SPUKNIK-V19 could be just saline solution and Putin can sign any agreement to allow maximum liability and make some shekles isn’t it
here in america we need to have face DIAPER-19 because death rate is too high
death rate is exponential like 2^huge number won’t fit in this prost.
at this rate whitey supertards will be no more.
anyways when are we gonna amputate whitey supertard thunderf00t. ask urself a scientific supremacist who is a high british english speaker would he love muzzies of course he does
and who admited DROPOUT-19 to club SCIENCE-19? this is like college fraud. trial, convict, and hang is what im saying.
I have a Bachelor in Physics. If anyone who is qualified to speak on SCIENCE-19, it is I.
DROPOUT-19 is just an uneducated ignoramus
so now whitey supertard president trump is taking my advice to play up the beer/CONVICT-19 on Wed, 12th Aug 2020 12:21 pm
libs are terrified of CONVICT-19 becuase they have their own version of (((supremetard))) and it is none other than CONVICT-19
yep, they won’t line up to vote do to fear of beer.
they’ll vote paper. so whitey supertard president can just challenge it
yep, it’s like supremes decided for bush instead of gore
why is whitey (((supertard))) president bil maher attaching whitye supertard president trump on Wed, 12th Aug 2020 12:25 pm
yup, due to muzzie lovin
he has a gigantic muzzie ck in his mouth which drains his life essense
he should’d stick to making sketch on ms. world burqua (bag)
he changed, like winston smith, he love muzzie milk
Richard Guenette on Wed, 12th Aug 2020 12:32 pm
The West should embrace centrism and avoid the extremes (both the far-right and far-left). Cut all non-humanitarian aid. Both businesses and it workers are important to the global economy. For postsecondary schools, it should be debt-free or tuition-free.
Richard Guenette on Wed, 12th Aug 2020 12:34 pm
As for gun control, it doesn’t work. Hunters should be allowed to carry rifles but get rid of high-powered assault rifles.
oh thanks for the permission to obey the 2nd law that whitey supertard on Wed, 12th Aug 2020 12:51 pm
founders gave us eh
“assault” rifle eh? thanks for loading the high english language. that’s why i don’t like high english for the muzzie lovin
i’m a fan of low english mysefl supertard
i hope u have a good day
Richard Guenette on Wed, 12th Aug 2020 12:34 pm
As for gun control, it doesn’t work. Hunters should be allowed to carry rifles but get rid of high-powered assault rifles.
makati1 on Wed, 12th Aug 2020 5:49 pm
Oil up! Oil down! Who cares? The world is shuffling its governments, economies and finances and will be totally different in a few years. Be patient.
JuanP on Wed, 12th Aug 2020 5:54 pm
Mak, I am sorry for playing around with you the other day when I was using the Bochen777 handle.
makati1 on Wed, 12th Aug 2020 6:16 pm
JuanP, I don’t try to keep the players separate. I just reply to some comments.
I take no offense at what is said about me personally. I laugh and consider the source.
I would not want to live in the US today or in the future. No amount of money could entice me to go back. Have a great day!
REAL Green on Wed, 12th Aug 2020 6:21 pm
“Mak, I am sorry for playing around with you the other day when I was using the Bochen777 handle.”
That was one of the more stupider comments we made lately Davy.
everyone please respect supertard madkat and supertard davy and supertard bochen777 on Wed, 12th Aug 2020 6:24 pm
please love supertards. hold no hate of supertard madkat, he’s gonna croak soon anyways
please read supertard’s blog and save it for passive income later. it’s a good read, like missile navigation
https://www.youtube.com/watch?v=c8jWx2qmBWI
makati1 on Wed, 12th Aug 2020 6:41 pm
My death is greatly exaggerated. I will live longer than the “democratic” Amerika, tax slaves. Better stock up on your favorite psycho drugs. You will need them. LOL
JuanP on Wed, 12th Aug 2020 6:47 pm
Mak, I wish I lived in the P’s too. Miami Beach is turning into a slum. It is flooding regularly. My Ford Taurus got water in the floor board the other day and now it stinks of mold. You don’t even have a car and seem so happy!
sputnik-v19 MUZZ-19 will be perfectly safe anyone with a saline solution is going to make tons of money and unlike pharma which dont want liability you can guarantee sputnik-v19 will be safe on Wed, 12th Aug 2020 7:37 pm
it’s the only want to combat CONVICT-19
makati1 on Wed, 12th Aug 2020 7:37 pm
JuanP, here you do not need a car. There are multiple types of inexpensive public transport. Buses, taxis, trikes, jeepneys, and ‘for hire’ vehicles of every kind. An air conditioned bus trip, ~80 miles to Manila, casts me $5 each way.
True, I do not have the option to just jump in my car and drive across country anytime I want, but then, nothing here moves on time, or fast, so the culture is laid back and easy. Being on time is unusual.
I do not miss the “conveniences” I had in Amerika. No stressful car payments, license, insurance, inspections, fuel, maintenance, etc. that go with that “convenience”. I did that for almost 50 years. Now, I enjoy real freedom.
muzz says lebanon is destroyed because homo sex and a tons of other stuff on Wed, 12th Aug 2020 7:38 pm
muzz tells other muzzies in lebanon to cut tounge.
somalia doesn’t have homo sex so why are there booms booms all the time anyways?
please love supremacist muzzies more
Davy on Wed, 12th Aug 2020 10:24 pm
“My Ford Taurus got water in the floor board the other day and now it stinks of mold.”
So true juanPPee. So true. American made cars are crap. I thought you drove a Porsche?
Dooma on Thu, 13th Aug 2020 8:21 am
I would love to feel sorry for the KSA, but the Jew-loving scum bombed a hospital in Syria a week or so ago.
This occurred despite the hospital staff painting red crosses/cresents on the roof of the hospital.