Just before the lockdown a small but powerful storm was brewing, a contest that implicated the fortunes of Saudi, Russia and the USA. Fracking created for the US a unique opportunity to be a leader in oil production as long as prices remained competitive. The fracking made importing oil less dire and put the USA in the running once again, even though it dashed the fortunes of non-refining oil states like Nigeria and Angola. Nigeria was at one point the 2nd largest exporter of oil to the US. In the shadows of America’s new found energy boom, Nigeria’s home grown industry took a dip, sending reverberations through its economy and pushing it into economic decline. The Buhari administration began to work feverishly to shore up its economy through increased oil trade to Europe and a decided pivot to agriculture. It was only until 2019 that it again, traded nearly 500 billion in crude with the U.S.
But while America’s oil fortunes may have meant the demise of Nigeria’s gains, another energy crises was percolating. China had began to adjust its own energy needs by focusing more on liquid nitrified gas (LNG), hoping to slowly wean its economy on total oil dependence. The Giant of the East also began pivoting from the dollar by negotiating currency swaps that helped it control energy costs and sever dependence on the oil-dollar. Divorcing oil trading from the dollar makes it possible for nations to increase trade partners, cut costs and increase profits. It also weans it from dependence on US currency, which would tie it an America that has grown increasingly aggressive and protectionist. Other nations too sought new alliances to wrest themselves from the claw of the oil-dollar and whimsy of currency manipulations.
In 2014, the US-backed insurgency in Crimea rattled the Balkans, when a far right group took power in the Ukraine. While many Jewish leaders urged their people to evacuate the region, a pivotal vote on Crimean succession would ensue. Many were clueless to the importance of that tiny scrap of land in the Baltic region. Crimea, as it would happen, was the linchpin for lucrative energy resources. Crimea’s allegiancewould lend access to its Nord Stream pipeline and oil resources. Despite the coup, Crimea allied with Russia and the Oil War battle lines began to align.
While the US waged a trade war against China, it was also clocking a growing energy war with Russia. As the world began to take its position, it became increasingly important for the US to work with Saudi to keep oil prices high through clever negotiations and Mideast diplomacy that kept Riyadh happy. A glut of oil on the market could drive down prices of —and with it, America’s new, fracking oil boom. Saudi has been a long time deal maker with the West, even introducing it to the African Slave trade (spurring a centuries long West African slave trade, second only to the East African Arab slave trade).
Even with these moves, maintaining pricing in the world market where new sources are being discovered and new international allegiances forged has made competition stiff. The importance of keeping oil traded in dollars meant the difference between profit and loss for the U.S. In the past the US and the West were able to wield greater control in the oil industry, but times have changed. The untimely death of Iranian general Soleimani, created a brief period of uncertainty in the region creating fears of shortages. This allowed oil prices to climb on suspicions of conflict and inaccessibility in the region. But even with that level of uncertainty, Russia still remained a viable option to the world, unwilling to bow the knee to the Western throne, and ripe to strengthen itself on the world stage– it was a sleeping bear that could drastically turn the fortunes of Americas new oil regency.
When the 2008 economic crises hit, the financial system needed financial martyrs to keep the world currency system and financial markets afloat. Regardless of the scope of its contributions to the crash, France and Italy were among the European Union’s southern states who faced the brunt of austerity measures across Europe. Consequences that also adversely affected African CFA Franc nations whose reserves were held hostage in France.
Once again the order of the current archaic financial/monetary systems is threatened. Crude oil dropped below zero in mid-April, sending panic throughout the world. Even as prices normalized since April, it once again highlights a brewing contest in an ailing world-system, whose losers could once again be southern European states. Northern European nations like Germany and Sweden were among the authoritarian nations to mete out prescriptions under which southern European populations suffered mightily. Now in the shadow of Covid-19, a renewed Trade War on Tariffs with China, and a mounting Oil War with Russia; southern states could once again face the brunt of the crunch. Even as these states have seen devastating infection numbers; it remains to be seen who the martyrs of the EU will be this time around. Even in the wake of the growing energy war with Russia, we are left to wonder which European nations will be sacrificed. While many nations like India, China have begun to chafe under the constraints and seek remedy, it will be curious to see whether the southern European states will continue to suffer in silence.
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