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Oil and the Perfect Storm

Oil and the Perfect Storm

Remember when the world was “running out of oil?” Seems like a long time ago. New technologies changed the game by helping companies find oil they couldn’t have found 10 years ago and draw it from places once thought inaccessible. Today, oil sells for about half the price it earned ten years ago. That’s been bad news for countries like Saudi Arabia, Russia, Venezuela and others that sell lots of oil, and good news for importers that want oil at affordable prices. It also helps keep gasoline prices lower.


But… the oil price has risen 60% in the past 11 months, and we might be on the verge of another surge over the coming 12–18 months, perhaps to heights we haven’t hit in a decade. Call it a possible perfect storm:

  • Lower prices have discouraged investment in new oil production, and countries and companies now hold less oil in reserve.
  • President Trump’s decision to reimpose sanctions on Iran may pull hundreds of thousands of barrels per day of Iranian crude off the market later this year.
  • Crisis-stricken Venezuela, home to the deepest oil reserves in the world, can’t invest in fixes to dilapidated state oil company PDVSA, which now produces 700,000 barrels per day less than it did a year ago. That death spiral will continue.
  • US production is still rising, but lack of investment in infrastructure, especially pipelines, will delay the arrival of new US supplies.
  • The Saudis could help by pumping more oil, but the Saudi government is prepping to sell shares in state-owned Saudi Aramco and will raise more cash with a higher oil price.
  • The Russians could also pump more, but a higher price helps President Putin avoid tough choices on state budget cuts in sensitive areas and makes trouble for oil importers in Europe. (China wouldn’t much like $150 per barrel either, particularly at a time when its economy is already slowing.)

A possible unintended political consequence: What if Trump’s move to sanction Iran forces US gasoline prices higher… just in time for the November midterm elections?

The Hindu Kush Himalayan region, stretching for more than 2,000 miles, is home to the world's highest mountains. The mountain range is also home to the world's third-largest concentration of snow and ice, earning it the moniker the third pole; only the North and South Poles contain more. The glaciers of the Hindu Kush Himalayas are the main source of fresh water for around two billion people living in the region. However, by the end of this century, two-thirds of that snow and ice could be lost because of climate change. A network of data scientists and environmentalists around the world, and on the ground in the Hindu Kush Himalayas, are working to understand the extent of glacial melting in the Hindu Kush Himalayan region, its effects and what can be done to minimize its impact. To read more visit Microsoft on the Issues.

When Italy's Prime Minister Giuseppe Conte resigned Tuesday — plunging the country into chaos as it faces once-in-a-generation public health and economic crises — he became the fourteenth Italian to vacate the prime ministership in three decades. (For contrast, Germany has only had three chancellors since 1982, and France has had five presidents.)

But Conte, who had no previous political experience until he was tapped for the top job in 2018, is not so much throwing in the towel as he is taking a massive gamble that President Sergio Mattarella will again appoint him to head Conte's third coalition government in less than three years.

The recent dysfunction is unique even within the context of instability-prone Italian politics. How did Italy get here, and what might come next?

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Ian Bremmer shares his perspective on global politics on this week's World In (More Than) 60 Seconds:

What did you think of Xi Jinping's speech at the virtual World Economic Forum?

Well, his last speech at the real World Economic Forum in Davos, I remember being there four years ago, and given that Trump had just been elected, Xi Jinping gives this big, "We want to stand up and be leaders while the Americans are doing America first." And generally speaking, was probably the most important speech of the week. People liked it. This is a pretty different environment, not so much because Trump has gone, but rather because support and belief in Xi Jinping is pretty low. I will say one thing that was generally well responded to was the call not to enter into a new Cold War. Anybody in the business community generally supports that. There's so much integration and interdependence between the US and the Chinese economies that when Xi Jinping says, "We need to find ways to continue to work together," I mean, this is the pro-globalization audience he's speaking to. They generally agree. But otherwise, the message fell pretty flat. So, the idea that China is going to be globally useful on issues of leadership, especially when it comes to anything that might threaten Beijing's sovereignty, they check global norms at the door. And a few examples of that, when Xi called for support for the rules-based international order, that's in obvious contrast with China's violation of the one country, two systems framework in Hong Kong. And they said, "Well, that's a domestic issue." Well, actually that's not what your agreement was with the British handover. And just because you're more powerful doesn't mean that norm doesn't matter anymore.

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Over the weekend, some 40,000 people in Moscow and thousands more across Russia braved subzero temperatures to turn out in the streets in support of imprisoned Kremlin critic Alexei Navalny. More than 3,000 protesters were arrested, and Navalny called on his followers to prepare for more action in the coming weeks.

But just who is Alexei Navalny, and how significant is the threat that he may pose to Vladimir Putin's stranglehold on power in Russia?

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Angry farmers take Indian fort: In a major and violent escalation of ongoing protests over new agriculture laws, thousands of Indian farmers broke through police barricades and stormed the historic Red Fort in New Delhi on Tuesday. At least one protester died in the chaos, while the government shut down internet service in parts of the capital. Farmers and the government are still deadlocked over the new laws, which liberalize agriculture markets in ways that farmers fear will undercut their livelihoods. The government has offered to suspend implementation for 18 months, but the farmers unions are pushing for a complete repeal. Given that some 60 percent of India's population works in agriculture, the standoff has become a major political test for the government of Prime Minister Narendra Modi's ruling BJP party.

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The GZERO World Podcast with Ian Bremmer. Listen now.

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