Global upheaval is likely to result from the oil price crash, upending the current fragile balance of power because key oil-producing countries, including Iraq and Nigeria, can’t buy their way out of this crisis with near-zero-interest loans like the Saudis and Americans can.
Even with Brent at $25 (indeed, even when it fell below $20), the Saudis were throwing around cash at all kinds of investments, including COVID-sinking cruise lines. The American shale patch can bail itself out if it wishes to, even amid desperate talk of looming bankruptcies. But in Nigeria, where oil comprises about 9% of GDP and 90% of exports, and with a break-even price of around $57 a barrel (with a fiscal breakeven of around $100), the economy is in serious trouble. If the economy is in trouble, the government is in even bigger trouble. Roughly 20 million people are unemployed, and that is now expected to climb another 25%. It’s enough to bring down a government, with the only lifeline now a $3.4-billion IMF emergency loan just approved. But making matters worse is the fact that no one even wants to touch Nigerian oil right now because there isn’t enough demand for it--even at $10 a barrel. And it’s competing with overproduced U.S. crude (light and low in sulfur).
In Iraq, the fragility will translate into a boon for the Islamic State first and foremost, while Iran and the United States grapple for control in this proxy war setting. Massive political and social…
