While reductions will end price wars, major problems remain unresolved on the demand side. Consumption has fallen because of the coronavirus pandemic, and little short of a vaccine will help.

The U.S.-led petrodollar era has eclipsed. It is being surpassed by a multipolar oil age. The current transitional era is permeated by fundamental change, opportunism and speculation.

When achieving a stable global economy supercedes local and political interests, and a sustainable rebound in the global oil prices begins to emerge, this will soothe the chaos in the geopolitical sphere, the price wars among the oil-producing countries, the sluggish investment and consumption in the world economy, the capital market’s negative judgment about the future business growth and the “liquidity trap” in the monetary policy.

Falling oil prices present challenges for the competitiveness of China’s own oil and gas sectors, and while providing short-term benefits for production, poses additional deflationary risks. However, there are opportunities for Beijing to support oil companies in acquisitions, and further its own reserves.

The last months have witnessed oil prices at global markets dropping by more than 50%, the primary reasons being due to Saudi Arabia’s political protectionism over oil prices. Jin Liangxiang contends that beyond purely economic factors, Saudi Arabia actually intends to express its discontent and frustration, especially with Iran.

The steep drop in global oil prices has created ripple effects in the economies of Latin America, largely due to oil-for-loan schemes made with China. Fernando Menédez argues that even if China were to forgive their mounting debts, or more likely, when they default, these countries will still be in worse shape resulting from their failed economic policies.