• Fayaz Ahmed

Parallels between Game of Thrones and Oil Prices - Part 2

Updated: Nov 24, 2020




The uncertainty in the Game of Thrones which made fans go totally gaga over the show is the very same factor which makes oil price fluctuations very interesting.


May it be Ned Stark’s untimely execution in first season or Rob and Catelyn’s cold blooded murder during red wedding or John’s death prior to resurrection by Melisandre or last but not the least burning of great Sept of Baelor into ashes by Queen Cersei. I bet nobody saw those things coming while watching the show.


Same goes for oil prices; you never know which way oil price rollercoaster is going to move. Nobody would have thought in their wildest dreams in July 2008 when oil prices were record high $147.02/barrel that it could plunge below zero in stunning collapse in April 2020.


In this article I have tried to compare the key players in Oil and Gas Industry with the characters from Game of thrones and have discussed similarities between them.


Kingdom of Saudi Arabia (KSA), de facto leader of the Organization of the Petroleum Exporting Countries (OPEC) and most influential member reminds me a lot about Daenerys Targaryen of Game of Thrones because both of them don’t like the idea that someone else is sitting on their throne (global oil production crown) and willing to do whatever it takes to take it back. Kingdom of Saudi Arabia (KSA) might not have dragons of Daenerys to destroy her rivals to get the crown back but KSA does have something as lethal as dragons. Yes, I am talking about Kingdom of Saudi Arabia’s ability to single-handedly manage the supply of oil in an effort to set the price of oil on the world market.

Today, the United States remains the world's largest producer thanks to the Shale phenomenon which helped the United States to take the oil production crown from Kingdom of Saudi Arabia in 2013. Since then, Kingdom of Saudi Arabia has incessantly flooded the oil market with an attempt to drive down oil prices in order to undermine the U.S. shale industry, which has much higher costs than Saudi or Russia production in order to take back lost oil production crown. Now, If you could recall, when John Snow for the first time went for the night watch nobody knew what to expect from this quiet bastard of Ned, and when he marched beyond the wall and fought with ferocious wildings and white walkers, we all started speculating about how long will he be able to survive in that rough environment, didn’t we? Nevertheless, John Snow proved all the speculations wrong, and with his relentless struggle for survival and sheer resilience; not only he returned to castle black unscathed but also escaped death when betrayed by the brothers of Night Watch. Just like John Snow of Game of Thrones, U.S. shale industry turned out to be more resilient and determined than expected and survived in low prices intervals due to their resilience and cost effectiveness (i.e. reducing rig count to half without significant production decline).


Since, we already talked about Kingdom of Saudi Arabia (KSA) and U.S. shale industry and their parallel to Game of thrones, however, when talking about oil prices how one can forget to mention about Russia. After looking more closely to the actions and role of Russia in all of this game, I couldn’t find anyone more appropriate than Petyr Baelish, aka Little finger to fill in the shoes of Russia. The thing that strikes me most about Little finger is that he thrives on chaos. Similarly, Russia tend to consider chaos as a ladder, and creates a new paradigm for anyone who gets in her way or from whom she believes advance her agenda. Russia is interested in advancement, and in that sense chaos is the only thing that gives her the opportunity to do so. Who knows? What Russia truly wants to achieve in this chaos? Is it the end the expansion of US shale producers? Is it the end of OPEC monopoly? Or Just want to protect her market share, time will tell. It is important to remember that Little finger was doing well unless he became very overconfident and started thinking that he is the biggest player of the Game and underestimated her opponents and eventually got killed. When it comes to Russia who thinks only the ladder is real, let’s see how far Russia can climb this ladder.

Coming back to United States and Kingdom of Saudi Arabia. After repetitive unsuccessful attempts by Kingdom of Saudi Arabia to not be able to crush U.S. shale industry. Kingdom of Saudi Arabia has decided to do what Daenerys did in the finale of Game of thrones to go after their rivals with all power (dragons) she was left with. Kingdom of Saudi Arabia has also launched the ultimate oil power play by flooding markets with oil to a level that oil prices plunge below zero in stunning collapse in April 2020.


As shown by media worldwide, this time Kingdom of Saudi Arabia has finally tasted some success in creating troubles for U.S. shale industry:


· A group of six U.S. senators wrote a letter to Secretary of State Mike Pompeo this week saying Saudi Arabia and Russia “have embarked upon economic warfare against the United States” and were threatening U.S. “energy dominance”.


· Two other senators from oil-producing states in United States introduced a bill that would remove U.S. armed forces from the Kingdom of Saudi Arabia.


After looking carefully at the global energy landscape and possible shifts in the global energy landscape of future. In my opinion, just like the Love–hate relationship of John and Daenerys got Daenerys killed in the end. Similarly, Love–hate relationship of Kingdom of Saudi Arabia and United States (especially President Trump in Office) could turn out to be fatal for Kingdom of Saudi Arabia.


I think so, because according to a recent article published Brad Plumer in The New York Times, The United States is on track to produce more electricity this year from renewable power than from coal for the first time on record, and also overall, renewable energy sector is the fastest-growing when it comes to energy in the United States. United States is much less dependent on Middle East oil than she used to be. On the contrary, Kingdom of Saudi Arabia struggles to end oil addiction as they say old habits die hard.


As one energy expert observed, the Stone Age didn’t end because they ran out of stones-it ended because better technologies were developed to meet humanity’s changing needs. Likewise, the age of fossil fuel won’t end because we run out of oil and coal. Non-renewable energies will be replaced by renewable sources as new technologies make them more cost-effective than non-renewable sources.

References:


https://www.reuters.com/article/us-oil-opec/saudi-arabia-says-no-talks-on-new-oil-deal-as-moscow-suggests-larger-opec-idUSKBN21E202

https://edition.cnn.com/2020/03/13/business/saudi-arabia-oil-markets/index.html

https://edition.cnn.com/2020/03/20/perspectives/saudi-arabia-oil-market/index.html

https://www.reuters.com/article/us-global-oil-saudi/saudi-arabia-delays-setting-may-prices-looks-to-opec-meeting-to-settle-price-war-idUSKBN21N09V

https://www.ecfr.eu/article/commentary_saudi_arabia_energy_geopolitics_and_the_big_production_cut

https://foreignpolicy.com/2020/03/14/oil-price-war-russia-saudi-arabia-no-end-production/

https://theconversation.com/saudi-arabia-is-allying-with-russia-to-shore-up-oil-prices-as-opecs-power-wanes-108310

https://www.rferl.org/a/saudi-oil-production-output-russia-opec/30529688.html

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