The ongoing slump in oil prices, which has seen crude fall so sharply from the 52-week high set in October that $1 trillion has been wiped off energy stocks, will cut deep into the pockets of major producers like Saudi Arabia, Russia, Nigeria and Angola. As the world heads into an “unprecedented time of uncertainty” in oil markets, however, it’s not only OPEC members who will suffer. Even countries who are less naturally exposed to fluctuations in oil rents, such as Malaysia and Canada, are more vulnerable than usual to the current oil price crash thanks to poor policymaking.
Record losses
As recently as early October, Brent crude was trading at almost $87 per barrel, amid predictions of $100 a barrel. Since then, the commodity has endured an unprecedented run of losses. Affected simultaneously by a glut in supply and a drop-off in demand, oil is now valued at almost half of what it was two months ago, after recording its biggest single-day drop in three years.
The projected decrease in supplies precipitated by American sanctions on Iranian oil has failed to materialize, thanks to the Trump administration unexpectedly issuing waivers for eight countries, including major importers China and India. More worryingly, this abundance in supply may only account for roughly 15 percent of the current slump in prices, with the rest caused by depressed demand linked to sluggish economies.
OPEC under pressure
As the industry holds its breath hoping that the December 6th meeting will stabilize crude prices, lethargic demand is far more concerning than outsized supply, as OPEC countries do not have direct control over it.
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