The price of oil has been plummeting for months, leaving oil-producing nations around the world aghast at their sinking revenues. Poor global economic growth has cut demand, while the U.S. is producing oil faster than ever recorded.
Prices fell further last month after Saudi Arabia and its Gulf allies blocked an effort at the Organization of Petroleum Exporting Countries to reduce production levels in order to boost the price of oil.
The OPEC episode shows that it's not only economists and oil barons who are concerned about the price crash. Many major oil producers are embroiled in domestic and international political crises, and political analysts are watching closely to see how these countries react as revenues continue to decline. Iran, struggling to balance its budget amid falling prices and international sanctions, this week blamed longtime rival Saudi Arabia for a “conspiracy against the interests of the region.” Russia recently warned that it will fall into recession in 2015.
“Optimists think economic pain may make these countries more amenable to international pressure,” The Economist explains. “Pessimists fear that when cornered, they may lash out in desperation.”
The WorldPost spoke to Jason Bordoff, director of Columbia University’s Center on Global Energy Policy, about the political fallout of declining oil revenues around the world.