Russia and Saudi Arabia are Playing a High-Stakes Game of Chicken Over Oil Prices, at the Expense of U.S. Oil Producers

The coronavirus continues to disrupt the global oil market as demand falls sharply and investors begin to worry. The Organization of the Petroleum Exporting Countries (OPEC) met in Vienna last week to debate who ought to slash oil production in response to the market crisis.

Saudi Arabia and Russia, the two largest oil producers after the United States, are both reluctant to cut oil output, according to ForeignPolicy.

Saudi Arabia shocked the oil community by pushing for steep and long-lasting production cuts. After Russia refused to agree to the cuts, Saudi Arabia responded by slashing its crude oil prices and ramping oil output, causing prices to plummet and starting a dangerous game of chicken between the two countries, reports ForeignPolicy.

The United States stands to lose in this situation, as a sharp decline in oil prices promises to shake the U.S. market in various ways. Oil prices continue to drop while Russia and Saudi Arabia wait to see which nation will break first, meaning that U.S. oil producers are suffering from an unprecedented economic situation.

According to ForeignPolicy, if the situation continues as it is, the United States could see widespread bankruptcies, a dramatic drop in rig count, and a drop in U.S. oil output by more than 1 million barrels per day.

Read More Here