Oil Nations Engage in Price War

#. Oil Nations Engage in Price War

 

In late March, oil prices fell to their lowest point in nearly 30 years.

The precipitous drop came as Saudi Arabia and Russia failed to agree on proposed cuts to oil production.

The feud began when OPEC, the Saudi-led group of oil-producing nations, asked Russia to join it in reducing its oil output.

The goal was to restrict the supply of oil available on the market in order to keep prices stable.

This, in turn, would help lessen the economic impact of the COVID-19 pandemic.

Surprisingly, Russia declined the request to adjust its oil production, and in retaliation, Saudi Arabia declared a full-blown price war.

But instead of reducing production, the Saudi government has flooded the market with cheap oil.

In a matter of weeks, the price of "black gold" plummeted to 31 dollars a barrel, down from 65 dollars a barrel in December.

Critics have questioned Saudi Arabia's motives for starting a price war.

The country's economy is deeply reliant on oil, with about 50 percent of its GDP coming from the oil and gas sector.

Moreover, the cost of producing a barrel of oil in Saudi Arabia is relatively high, at about 80 dollars a barrel.

In Russia, the cost is just half of that.

So why would Saudi Arabia pursue such a seemingly self-destructive policy?

From a Saudi perspective, the short-term pain is worth the long-term reward.

The country holds one of the world's largest oil reserves.

Thus, its leaders believe that by lowering prices, they can eventually force Russia out of the market and take over their market share.

Whether Saudi Arabia succeeds in its plan remains to be seen.

For the moment, the gamble has not had its intended effect.

Companies and individual consumers had been unable to take advantage of the cheap oil due to the ongoing COVID-19 pandemic.

Consequently, demand remains low.

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engage ɪnˈɡeɪdʒ 1.(주의·관심을) 사로잡다   2.(~으로) 고용하다   3.(이해심을 갖고) 관계를 맺다

engagement ɪnˈɡeɪdʒmənt 1.약혼; 약혼 (기간   2.(특히 업무상·공적인) 약속; (약속 시간을 정해서 하는) 업무   3.교전

precipitous prɪˈsɪpɪtəs 1.가파른, 깎아지른 듯한   2.급작스러운   3.황망한, 황급한

feud fjuːd 1.(오랜 동안의) 불화   2.불화를 빚다, 반목 속에 지내다

in turn 결국 , 차례로, 교대로, 순번대로

lessen ˈlesn (크기·강도·중요도 등이[을]) 줄다[줄이다]

less les 1.(불가산 명사와 함께 쓰여) 더 적은; 더 적은 것   2.더 적게, 덜하게   3.…을 빼고

retaliation rɪˌtæliˈeɪʃn 보복, 앙갚음

declare dɪˈkler 1.선언하다   2.언명하다, 분명히 말하다   3.(세금 당국에 소득을) 신고하다

full-blown …의 모든 특성을 갖춘, 완전히 발달한[진행된], 활짝 핀, 만개의

flood flʌd 1.홍수   2.쇄도, 폭주, 홍수   3.물에 잠기다, 침수되다

In a matter of weeks 몇 주 후에

plummet ˈplʌmɪt  곤두박질치다, 급락하다

reliant rɪˈlaɪənt 의존[의지]하는 (=dependent) (→self-reliant) reliance rɪˈlaɪəns 의존, 의지 (=dependence)

sector ˈsektə 1.(특히 국가 경제 활동) 부문   2.(특히 군대의 통치를 받고 있는) 지구   3.부채꼴(부분)

come from …의 출신이다, …에서 생겨나다(=originate).

relatively ˈrelətɪvli 비교적

relative ˈrelətɪv 1.(고려∙판단이) 비교상의, 상대적인   2.(…과) 관련지은, (…에) 따라서 본   3.친척

seemingly ˈsiːmɪŋli 1.외견상으로, 겉보기에는   2.보아하니

reserve rɪˈzɜːrv 1.예약하다   2.(자리 등을) 따로 잡아 두다; (판단 등을) 보류하다   3.비축(물)

it remains to be seen whether ~인지의 여부는 지켜봐야 한다

For the moment 1.(지금) 당장은, 우선은   2.그 당시