2020: Oil Price Wars, Covid-19 Havoc and...
Security in East Asia - China - USA - Japan - Korea - Taiwan
Source: The Asia-Pacific Journal | Japan Focus Volume 18 | Issue 11 | Number 1 | Article ID 5400 | May 25, 2020
Mit freundlicher Erlaubnis von Japan Focus
Oil Price Wars, Covid-19 Havoc and the Evolving US-China Trade War
John A. Mathews
"The US-China relationship continues to sour under the impact of Covid-19, with the Trump administration threatening to cut all ties with China in a move that would divide the world into two competing trade entities.1 It’s been a bad year for China, with accusations over the origins of the pandemic coming on top of China’s difficulties in managing the prodemocracy protests in Hong Kong.2 Under these circumstances, the energy erspective provides a fascinating set of insights into the evolving US-China relationship. The economic havoc unleashed by the Covid-19 pandemic has been bad enough, with reports of looming industry collapse by the International Energy Agency and others.3 But its economic impact has been exacerbated by an ugly price war in the oil industry, seeing prices tumble alongside a collapse in demand. At one point in April, the oil price reached a widely publicised negative level – an unprecedented phenomenon. Now the price is low but at present relatively stable, following a tripartite agreement between the world’s three largest oil suppliers – the US, Saudi Arabia and Russia. In the last few days, the oil price has recovered to nearly $30 per barrel, providing some modest relief.4 But the impact on the US has been severe, with the high-cost and highly debt-leveraged shale oil industry, which propelled the US to become the world’s largest oil producer, facing near collapse. It has long been the goal of both the Saudi and Russian oil industries to damage the upstart US shale industry, which was protected by relatively high oil prices. Now with this protection withdrawn, combined with collapsing demand, the US industry faces severe problems. ..."