GEAB 142
Oil/Libya: War or US shale collapse?
In Libya, General Haftar, mainly supported by the Americans, is not giving up. The reason is simple: he is acting under orders to block the oil wells of a country which is seeing its production collapsing, thus giving some support to the plunging prices of crude oil… and slowing down the implosion of the bubble of US shale at the same time.
Let’s recall how we understand the trap into which the Americans got themselves with their shale. The revival of their dried oil industry, linked to the development of this technology, was initially intended to provide the US economy with the cheap energy it needed when the threat of peak oil had led to the anticipation a price surge. Problem: they were not alone in anticipating this peak and diversification policies in the rest of the world delayed/cancelled the arrival of expensive oil. However, to repay the huge loans they had taken out, shale companies needed the global price to be high for their exports. US shale + world diversification à even lower prices – and the insolvency crisis in the US shale industry will soon hit the already overstretched financial system.[1]
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