by evilgenius » Thu 31 Dec 2020, 10:09:57
This subject is interesting to me because it points out what is transpiring under globalization. Under globalization the oil markets have been brought round to understand the importance of the spot price. It isn't the most important thing because certain actors of some size will always hedge, but it is very important.
I believe all of the US intervention in the Middle East is pointed, eventually, at Russia. The tangle with Iran is a tangle with Russia in the sense that Iran is Russia's proxy in the region. There are tensions between the two most important factions in Islam, but there is also this. Russia's oil producing regions, and those of its southern neighbors, are being coaxed to respect the markets, and the necessity of respecting the spot price. It is a strategy designed to put pressure on Russia, possibly avoiding war. It uses the threat of war to avoid war. Go figure. Otherwise, Russia will continue to use its strategic oil position to get what it wants, purely by leveraging supply out of political machination and not by observing what the markets are telling them.
As oil begins to become less important for various reasons, the world may actually enter a period where it's become harder to use substitutes. Renewables need more time, nuclear takes a long time to build and we can't count on reduced demand to relieve our energy deficits over the long term. Smart people have known this for some time. The thing is, renewables look better now than they once did, even though they still look less than perfect. Nuclear does look like it has technological advances it could make to operate more safely. And the world can live with reduced demand, the pandemic has proven that. We'd just bump along.
If oil is still important, but not so much that it stands to crowd out whatever else is going on, why bother? Will the US, even though globalization looks re-established under Biden, seek to continue pushing into those parts of the Middle East most important to Russia, as well as threaten Russia itself? What sort of toned down version of this would be effective at this time, assuming that was the case? I don't think that Trump's attempts at a complete reversal of this are what is coming. I suppose, they could be.