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Plunging oil prices hammers the United States


In June 2014 the price of a barrel of oil was 110 dollars; now it has plummeted to just 20 dollars. [1]

This decline is firstly due to speculative capital shifting to other products, and secondly, due the desire on the part of the Saudis to wreck investments in alternative energy sources and to scupper attempts to cut consumption. There is no doubt that this was encouraged by Washington in the context of its economic war against Russia.

However two years later, the effects of this price-drop are also felt in the United States. The number of oil-producing platforms exploited in the United States has reduced from 78% (falling from 1,600 to 380). Another 100,000 jobs have been slashed in this sector. At the same time, oil consumption and SUV sales have rocketed.

If the plummeting price of oil has destroyed the oil extraction industry from shale oil and suspended investments for exploiting deposits in deep waters and in the Artic, it has no effect on extractions in the Gulf of Mexico.

Last week, the outgoing OPEC director, Abdallah El-Badri (see photo), patted himself on the back because he won the war against US oil.

This reversal in trend could challenge US disinterest in the Middle East and encourage the Pentagon to commit itself once again in this region. Hearings of the Foreign Committee of the House of Representatives to address this issue have been scheduled for June 9th, 2016.

Anoosha Boralessa

[1] The price of oil varies according where it is exploited. Here we are talking about Arabian light. This is Saudi Arabian oil, which has always been the easiest oil in the world to exploit. In Europe, we often take the price of Brent as the benchmark. Brent is oil from the North Sea. Or, in the US, the WTI which is the price of oil from Texas.

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