OPEC's oil price war with the US and Russia
- By Zhang Jingwei
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E-mail China.org.cn, December 10, 2014
Russia is also a big oil producer, but it is not a member of OPEC and hence has to compete with the organization. The Ukraine crisis has put Russia's economy into a difficult position. According to Morgan Stanley, every decline of US$10 in oil price will result in a decrease of US$19 billion in Russia's revenue. The Western world can't wage a real war against Russia, but manipulating oil prices through OPEC is an effective approach to constrain the country. Whether intentionally or unintentionally, OPEC' decision to maintain oil output will be unbearable for Russia.
Meanwhile, some believe that OPEC made the decision despite all its sufferings because it wants to put pressure on the United States. With the success of new shale oil extraction technology, the United States can become self-sufficient, and Sunni Arabs' interests will be greatly harmed. Furthermore, with the Iran nuclear crisis hanging in the wind, with Iraq and Syria issues unsettled and with the Islamic State organization making trouble throughout the Middle East, Saudi Arabia and its allies will certainly not want to see the United States shifting its focus away from the Middle East.
The decline in global oil price is a result of the deteriorating world economy, but due to geopolitical tensions, oil price and output are no longer a mere market issue, but have also become political and diplomatic weapons.
The oil price war has made complicated impacts on the world economy. Low oil prices will make the deflation in Europe and Japan even worse and will also affect China and the United States, the world's two major energy consumers.
We should wait to see how the global oil price war will end.
The writer is a researcher with the Chahar Institute.
The article was translated by Chen Xia. Its original version was published in Chinese.
Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.
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