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Coronavirus and Oil: geopolitical consequences.- José Pardo de Santayana.

The coronavirus crisis has hit the oil industry hard at a time when it was already strained by overproduction. Never before have two simultaneous shocks of demand and production of such magnitude coincided. The situation is hitting the US, Russia, the countries of the Middle East and other major producers very hard. Some of these countries were already the victims of situations of conflict or instability that may be aggravated by the lack of economic means to meet the needs of the population. Black gold will not lose, at least for a couple of decades, its preeminence in global energy matrix, but the panoply of production will be altered, and its geopolitical value will increase. The North American unconventional sector (fracking) will lose some of its strength and production will tend to concentrate among countries with lower production costs. Russia, Saudi Arabia, and the other countries of the Middle East can benefit in the medium term. The demand crisis in a context of overproduction may also give some power to countries that are large markets of this raw material, such as China. Moreover, in the most fragile countries there is a great danger of a spiral of violence and conflict with contagious effects.

Document written by José Pardo de Santayana. Artillery Colonel DEM. Research coordinator of IEEE.

Note: The full document is only available in Spanish.

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Coronavirus and Oil: geopolitical consequences.
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