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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?

Carbon has a bad rep, but did you know it's a building block of life? As atoms evolved, carbon trapped in CO2 was freed, giving way to the creation of complex molecules that use photosynthesis to convert carbon to food. Soon after, plants, herbivores, and carnivores began populating the earth and the cycle of life began.

Learn more about how carbon created life on Earth in the second episode of Eni's Story of CO2 series.

On September 23, GZERO Media — in partnership with Microsoft and Eurasia Group — gathered global experts to discuss global recovery from the coronavirus pandemic in a livestream panel. Our panel for the discussion Crisis Response & Recovery: Reimagining while Rebuilding, included:

  • Brad Smith, President, Microsoft
  • Ian Bremmer, President and Founder, Eurasia Group & GZERO Media
  • Jeh Johnson, Partner, Paul, Weiss, Rifkind, Wharton & Garrison, LLP and former Secretary of Homeland Security.
  • John Frank, Vice President, UN Affairs at Microsoft
  • Susan Glasser, staff writer and Washington columnist, The New Yorker (moderator)

Special appearances by UN Secretary-General António Guterres, European Central Bank chief Christine Lagarde, and comedian/host Trevor Noah.

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62: In a referendum over the weekend, nearly 62 percent of Swiss voters said they wanted to preserve freedom of movement between the European Union and Switzerland, which is not a member of the EU. The right-wing Swiss People's Party had proposed imposing migration quotas at the border, saying that the current frontier is basically a... (okay, they didn't actually say it's a "Swiss cheese" but still).

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Carl Bildt, former Prime Minister and Foreign Minister of Sweden, shares his perspective on the Navalny poisoning on Europe In 60 Seconds:

Can Europe get to the bottom of Russian opposition leader Navalny's poisoning? And if so, would it change anything?

One has got to the bottom of it, to certain extent. The evidence, there was a German laboratory confirming nerve agent, Novichok. They sent it to a French laboratory and the Swedish independent laboratory, they came to the exact same conclusions. I mean, it's dead certain. He was poisoned with an extremely poisonous nerve agent coming from the Russian state laboratories. Now, there is a discussion underway of what to do. I mean, the Russians are refusing any sort of serious discussions about it. Surprise, surprise. And we'll see what actions will be taken. There might be some sort of international investigation within the context of the OPCW, the international organization that is there, to safeguard the integrity of the international treaties to prevent chemical weapons. But we haven't seen the end of this story yet.

Watch as Nicholas Thompson, editor-in-chief of WIRED, explains what's going on in technology news:

Would Facebook actually leave Europe? What's the deal?

The deal is that Europe has told Facebook it can no longer transfer data back and forth between the United States and Europe, because it's not secure from US Intelligence agencies. Facebook has said, "If we can't transfer data back and forth, we can't operate in Europe." My instinct, this will get resolved. There's too much at stake for both sides and there are all kinds of possible compromises.

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Panel: How will the world recover from COVID-19?

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