The Oil War

                                      The Oil War



Lost in the Coronavirus explosion is the oil war. A month ago, Brent crude was trading at $57.67 per barrel. It had dropped to $34.36 by Monday, March 9. Trump’s announcement that the government would buy oil for the Strategic Oil Reserve propped up the price to $35.44, but since then prices have collapsed further. Tuesday, Brent crude fell to $30.41, and on Wednesday it was trading near $26. And West Texas Intermediate (WTI) crude, which usually goes for less than Brent, is hovering around $20.

The Russians wouldn’t agree to limit oil production and prop up oil prices because they want to put American shale producers out of business, and the Saudis at the end of the day decided to join the Russians. These are guys we have supported countless times in their squabbles and support now and they are partnering with sworn enemies of this country. They might sound like they’re feuding, but both of them, as well as Kuwait Petroleum Corporation, the National Iranian Oil Company, Petrobras, and Abu Dhabi National Oil Company, ultimately want exactly the same thing, which is to get rid of as many American producers as possible. 

These will be challenging times, but clarifying. Both liberal and conservative philosophies will be compromised. Things will change. But, in the oil problem, an old adage may still apply: A competitor is an opponent who competes by the same rules, an opponent who competes with different rules is an enemy.