Page 12 - FSUOGM Week 16

FSUOGM POLICY FSUOGM
US senator calls for sanctions against Russia, Saudi Arabia
US
Inhofe accuses the pair of flooding the market.
THE US Senator for Oklahoma, Jim Inhofe (R), sent a letter to the US Secretary of Commerce Wilbur Ross on April 20, calling for an investiga- tion and sanctions on Russia and Saudi Arabia and accusing them of “flooding the market” with oil in an effort to “manipulate prices” and “crush the US shale industry.”
“Russia and Saudi Arabia continue to flood the global oil market - what I view as an effort to crush American oil and gas producers. I sent a letter to Secretary Ross today requesting he con- tinue to investigate their anticompetitive prac- tices,” Jim Inhofe said in a tweet on April 20.
Oil prices have collapsed following Russia’s decision to renew the so-called OPEC+ produc- tion cut deal on March 6. Despite a new OPEC++ production cut deal that will reduce production of oil by 9.7mn barrels per day (bpd) agreed on April 13, oil price volatility has remained high and has led to the price of the US WTI blend fall- ing to below zero on April 20 for the first time in history due to the lack of storage space for May contracts.
The oil glut on world markets has been made a lot worse by the concurrent appearance of the coronavirus (COVID-19) pandemic, which has depressed demand for oil by 30mn barrels – equivalent to the combined daily output of Rus- sia, the US and Saudi Arabia.
US politicians have raced to blame external forces for the collapse of oil prices to around $25, a level at which almost the entire US oil industry ceases to be viable.
“China is the one that is out of control. We will not let you destroy this country,” FOX commen- tator Jeanine Pirro said on her show this week. “We fought too long to lose it to a Wuhan virus – that is what I said – that China knew about, openly lied about, said it couldn’t be transmitted from human to human and protected Chinese citizens from the virus, but allowed that virus to be released, putting the rest of the world at risk.”
The implication in Pirro’s comments that China somehow weaponised the COVID-19
virus and “protected” its own citizens, while “releasing” it on the rest of the world has been denied by both the Chinese authorities and sci- entists, who point out it is impossible to manip- ulate a pandemic in any sort of controlled way by definition.
Inhofe’s letter plays on the same conspirato- rial themes.
“I remain concerned by the continued flood- ing of oil by Russia and Saudi Arabia. Despite recently agreed production cuts by Russia, Saudi Arabia and members of the Organization of Petroleum Exporting Countries (OPEC), the global oil market is still well oversupplied, as the price of oil has failed to stabilise. It remains clear that the Saudis and Russians continues to flood the global oil market in what I view as an effort to crush American oil and gas producers and capture their market share.... I continue to believe the Trump administration must utilise all of its authorities, including tariffs on imported oil from Saudi Arabia and Russia, to punish this unacceptable behaviour.”
US President Donald Trump has placed him- self at the centre of the recent efforts to broker a new OPEC++ deal in an effort to save US jobs in the oil and gas sector ahead of the US presiden- tial elections. However, his efforts have blown up in his face following this week’s collapse of WTI prices on the futures market.
Low prices have already caused one promi- nent US shale producer to go bust and if oil prices remain at the current circa $25 many more will follow.
As NewsBase reported, Whiting Petroleum has filed for Chapter 11 bankruptcy protection on April 8, becoming the first US shale producer – and first publicly traded oil company – to fall victim to the crude price collapse last month. Whiting was quickly identified as one of the two shale producers most at risk as a result of the new downturn, so its bankruptcy filing came as no surprise. Most of the US shale producers are not viable at $25 oil. ™
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