Voltaire Network

Who is being targeted by the 25% drop in oil prices?


Since the beginning of the Islamic State onslaught in June against Iraq, not only did the price of oil not climb, but it fell by nearly 25%, from $ 115 barrel of crude to 83.78 dollars.

Venezuelan Oil Minister Rafael Ramirez publicly denounced that a price manipulation is afoot, totally unrelated to the reality of the international market. Most experts accuse Saudi Arabia, while experts from the Kingdom itself speak openly about pulling the price down to $ 80 a barrel.

The governor of the Russian central bank, Elvira S. Nabiullina, said before the Duma to prepare for a prolonged decline in the price of crude to $ 60 a barrel.

While some exporting countries like Russia have sizeable currency reserves, others like Venezuela have to brace themselves for a serious economic crisis. Those directly affected are: Iraq (in the midst of war), Iran (still under sanctions), Nigeria (which is about to hold a presidential election), Nicaragua, Bolivia and Cuba (which are supplied at low prices by Venezuela).

In the end, it is the United States itself would suffer, the dollar being backed by the world oil market.

It is difficult at the moment to interpret the current decline, that defies all the predictions. Two factors must be taken into account:
- The intention of the BRICS to stop selling hydrocarbons in dollars, but in their national currencies;
- The war waged by the US Coalition against the Islamic State which, under the pretext of fighting against terrorism, is a means of destroying oil facilities in Iraq and Syria.

The decline in oil prices affects the profitability of many economic activities (eg, the exploitation of renewable energy sources becomes prohibitive, while most chemicals become very cheap).

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