The sparks start of the year between Saudi Arabia and Iran are not (only) the last chapter of the age-old clash between the two souls of Islam. But also the result of more recent tensions that affect the economic interests of the two powers: those related to the production and export of oil . The prices of which in recent days have reached the lowest level since 2004, after having lost about 70% since June 2014. A revolution, intertwined with the new technology in terms of extraction, he is putting on his knees many large manufacturers – from South America to Russia – and has also undermined the 2015 accounts of the Saudi monarchy. While Tehran, who for decades could not sell black gold abroad after the agreement on the Nuclear signed with the international community is preparing to restart the extraction on a large scale and to record significant additional revenues. It ‘s Isis ? The Islamic State has broadly diversified its sources of income, which was affected by relatively the collapse in oil prices.
The barrel could fall to share $ 15 – Eighteen months ago, Brent and WTI exceeded $ 100 a barrel. Today in the area totaled $ 35. And according to some analysts, including the head of commodity research at Goldman Sachs Jeffrey Currie , the excess supply will continue in 2016, with the possibility of seeing a barrel of oil at 20 dollars. A feeling confirmed by data from the New York Mercantile Exchange and the Depository Trust Us & amp; Clearing Corporation, which reported massive purchases by investors of Options sale in the range between 30 and $ 20 a barrel for next December. And even up to a level of $ 15. The mild weather this winter has helped reduce demand for crude oil, but the overproduction appears a real goal of producing countries and in particular of the ‘ OPEC , the organization that represents 35% of global supply.
OPEC split between hawks and doves no longer controls the production – After renouncing to have a price target, during the last summit in Vienna OPEC has abdicated production quotas of individual countries and also to a collective production ceiling: a decision that comes from the gap between the “ hawks “led by Saudi Arabia, who pushed for the increase of production, and the” doves “as Algeria and Venezuela that had instead called for a cut to match the reduced demand. The goal, not so hidden, you take out the production of shale oil of the United States, namely the extraction of non-conventional oil, more expensive (between 45 and 55 dollars a barrel) of the traditional one. A new feature that has prompted Washington, again in December, in a historic decision: the elimination of ban on exports , introduced 40 years ago to promote the ‘ energy independence of the country .
In the US, nine groups already bankrupt and others at risk under the weight of debts – The combined effects of this situation are being felt. The boom in shale oil and interest rates close to zero in the recent past have favored the accumulation of debt from the oil companies, which have also issued bonds High performance (technically “high-yield”, but also “ junk “, junk, as unsafe), covered by hedging contracts with fixed prices even at $ 90, to fund new drilling. Oil at a discount, coupled with the recent rise in interest rates by the Federal Reserve (the first since 2006), now threatens this system. Standard & amp; Poor’s it estimated in late November that over 50% of the junk bond energy are “distressed”, or at risk of default. Overall, in the United States about $ 180 billion of debt are at risk of default, the highest level since 2009, and most of its references to the Oil & amp; Gas. As reported by the Federal Reserve Bank of Dallas, are at least nine energy companies that in the fourth quarter of 2015 have gone to bankruptcy , for a total debt of over $ 2 billion, with a loss of 70 thousand seats working since October 2014. Jeffrey Gundlach , the founder of the investment company DoubleLine Capital and “King of the Bond” according to American magazine Barron’s , the downgrade of securities issued by energy companies are already accelerating and will continue with further default if oil prices do not come back above the 50 dollars.
Saudi Arabia and Oman for the first Once they come to terms with austerity – But the strategy of OPEC is not without consequences for either the same countries of what many analysts already consider a former sign, nor for others. Unpublished status of Saudi Arabia, who presented for 2015 deficit $ 98 billion (about 15% of GDP) compared to oil revenues in drop 23%, and we are preparing to launch a multi-pronged austerity which involves cutting of energy subsidies , the increase in the price of the gas of electricity bills and ‘ water , also considering the introduction of’ Iva and the increase in excise on drinks and tobacco . News like this comes also from ‘ Alaska and the’ Oman : the American state is considering reintroduction of income tax , after 35 years of exemption for residents, while the Sultanate has already announced spending cuts of 15.6 percent.
With the decline in revenues we are worsening the crisis in Venezuela and Brazil – Critical to the Venezuela , whose oil minister has called for the convening of a summit meeting between OPEC and non-OPEC countries in January to discuss again the action likely to boost the Crude oil prices, which is closely bound up with the fragile economy of Caracas. President Nicolas Maduro , who has just received the first electoral defeat of the ruling party for seventeen years now, he is grappling with inflation that in 2015 reached 150%, with estimates this year that point to 200 percent. Also in South America, the Brazil is going through one of the most difficult moments of its recent history. 2015 closed with a strong recession (-3.2%), with unemployment and inflation growing, the currency devalued by 35%, a Parliamentary request of impeachment for President Dilma Rousseff and the scandal corruption Petrobras which it has been dragging on for over a year. The collapse in oil prices hit surgically State of Rio de Janeiro worsening an already deep crisis, at the gates of the next Olympic Games . The Health has already suffered numerous cuts, the wages are not paid for months, and patients in the hospital are sent home. And since Rio is responsible for 67% of crude oil production (over 40% of gas), to recover approximately $ 500 million was launched a flat tax from $ 0.69 per barrel produced. Condition similar to the Nigeria : crude oil worth 75% of state revenues and almost 90% of the country’s exports. Here also they register without pay public employees and paradoxically, for most African exporter of oil, and one of the largest in the world, blackouts and lack of fuel for the population.
The axis Russia-Iran-Iraq war and the strategy of Tehran – But from a geopolitical point of view the spotlight on what is happening Russian , Iraq and Iran . Moscow, which in November saw its GDP shrink by 4% year on year, relies for almost half of its government revenues on oil and gas. Also affected by the penalties economic, the Federation, which has accused Saudi Arabia of destabilize the market, should have closed 2015 with a GDP contraction of 3.8% , with a budget that fixed the price of oil at 50 dollars. Are solid relations of President Vladimir Putin with Baghdad and Tehran, the two protagonists of the so-called Shiite Crescent. To finance the war at the Islamic State Iraq in 2015 has pushed the accelerator extraction of crude oil, but the expected surplus revenues was offset by lower prices. But now Iran strong tip on the production of black gold. The country that holds the fourth world’s oil reserves, after the agreement last July in 2016 should see past the penalties and is ready to produce in the space of one week up to 500 thousand barrels per day, get to the 1 million after a month. This strategy, together with the statements of Mehdi Assadli , Iranian OPEC delegate, who unveiled a production cost per barrel by Tehran less than $ 10 a barrel, could further increase the pressure on prices and lead to a confrontation with its bearish Ryad.
The Islamic State has already diversified – Less exposed than others, to the collapse of prices crude, would seem rather the Islamic State. In June, with the barrel to 60 dollars, it Is sold on the black market at 30 dollars a barrel. In today’s prices, hovering around $ 35, the Islamic State sells around $ 20, thus registering a drop less than proportionally to the official markets. And if until last October, the black gold trade was the only source of revenue, even after the attacks on the infrastructure of the Western powers and the difficulty of restoration and maintenance of the Is (or Daesh) has already to diversify their activities. The consulting company IHS reports a fact other big development: first the land confiscation and properties and extortion in the territories under control ( they collect about 50% of total revenue), in addition to the drug trafficking and finds archaeological , criminal activities such as robberies in the bank and redemptions as a result of kidnappings in person, small business related to transport , electricity and real estate activities and finally donations and grants. Not to mention the fact that in a document dating back to January 2015, announced by Reuters , the council of ulema who reports directly to the self-proclaimed caliph Abu Bakr al-Baghdadi gives the green light to the traffic organs of the prisoners. The total turnover of all these activities is estimated at around 80 million dollars a month, while oil would be worth today, in percentage, less than half of total revenue.
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