Oil closes under $30.00 bbl

Yesterday, that is.

The last time oil was that low was December, 2003.  And in real terms, it's lower now than it was then.

Indeed, the actual last time oil was as low as it currently is was in 1999.

Now, in the 1990s and the 2000s, when oil reached its current low mark, it didn't stay there.  In fact, it shortly thereafter rocketed skyward.  In the late 90s price crash the price went up to $40.00 bbl, which is more then than now, fairly quickly.  In the 2003 crash it soon recovered and over time went up to $151.00 bbl, a price that's unlikely to be the rebounding price here.

And there is likely to be a rebound.  Saudi Arabia, which is depressing the price, actually can't meet its expenditures if the price is lower than $80 bbl.  Nobody knows how low Russia can go, but the Saudis are betting that it can't stay this low long.  They may be right.

The Russians seem to be betting that they can, and there's additional speculation that they may be aiming to damage the American oil industry, which needs prices to be $50 bbl.  The US is the world's largest oil producer and is an energy exporter once again, but if we need $50, and the Russians can stay well below that, it'll result in a lot of American production being shut in and the Russians may gain the market.

Which leads to an additional theory, although one I'd discount, which is that the Russians hope to be low enough to hurt the Saudis and get part of their share while not so low as to hurt the American market, which would boost the OPEC share.

We'll see.

Anyway you look at it,a prolonged oil war between Russia and Saudi Arabia, an Oligarchy v a Monarchy, isn't good for American oil production and its really bad for the state.

Of course war, which this is only by analogy, is also bad for those who engage in them, and the outcomes are never predictable.  The US is never good at waging sustained war, as recent events once again have demonstrated, as people tire of them and in a democratic society they vote them out, basically.

Despotic countries are better at keeping wars running, but not necessarily winning them. Nazi Germany kept World War Two running well past the point of no return for the state.  Imperial Japan had lost the war prior to Iwo Jima.  Imperial Germany kept the war running right up to the point of internal revolution which in turn destroyed it.

The current head of Saudi Arabia is jailing family opposition to his rule and we know that Putin doesn't tolerate very much dissent.  But there are a lot of Sauds who depend on oil checks to evade working and there's plenty of Russians whose dachas depend on petrobucks.  At the current prices, they'll be hurting.  And nobody knows where that leads.