In petro-economies, often in nations that are not politically and culturally stable, the "good" times can promote cash fueled aggression and radicalism, and the "bad" create instability that is far more complicated and unpredictable.
The rich can be erratic and are drawn to flights of fancy; poor and desperate people are dangerous.
Two articles on the subject are worth your time to start the month. The first I quibble a bit here and there about, but on balance good stuff to chew on. The second are just facts and graphs - stuff I like to get nakid and roll around in. Some of the data in the second conflict with the opinion in the first - so keep that in mind.
First from the problematic but well-versed Juan Cole;
It is clear that among the major losers in the fall in the price of Brent crude petroleum from $115 a barrel last summer to about $75 a barrel today are Russia, Iraq and Iran. Petroleum sales are 50% of Russia’s income, and are also central for Iran and Iraq.I've used a few of the graphics from the second article I'd like you to review, from Pat Minczeski and Sarah Kent at the WSJ. Spend some time there pondering.
But the big loser will likely be shale oil producers and prospectors in the US, who probably cannot make a profit if the price falls into the 60s.
The cause of the fall, by $40 a barrel, in petroleum prices since last summer is almost completely on the demand side. Asian economies, especially China, are dramatically slowing, and won’t be requiring as much petroleum to fuel trucks, trains and cars to deliver people and goods around the country.
It isn’t that there is more oil being pumped, it is that the world doesn’t want it as much because of cooling economies.
The Iraqi government of Haydar al-Abadi will also have much less income with which to fight Daesh/ ISIL.
Saudi Arabia did not cause the oil price fall, though since 2011 it has been flooding the market to offset the decrease in Iranian exports because of US sanctions. Riyadh, however, is the main geopolitical winner here, which is why the Saudis stopped the Organization of Petroleum Exporting Countries from reducing country production quotas. (That step would have reduced supply and put up prices). As it is, the Saudis can afford to wait as fracked oil is driven out of the market because too expensive, so that they regain their market share.
The Saudis must enjoy punishing Iran and Russia for defying them by propping up the Bashar al-Assad regime in Damascus and the Da’wa Shiite regime in Baghdad.
...Saudi Arabia, Iran, Russia and North Dakota are all up the creek in the medium term. But for the latter three, which have complex economies and in the case of Russia and Iran, sizeable populations, the economic benefit of inexpensive renewable electriicity will likely outweigh the loss of oil income. Everywhere, renewables are likely to put money and power in the pockets of ordinary people and workers, and may spell a weakening of the oil-based rentier state.
Saudi Arabia should enjoy its brief moment of triumph. Its business model is actually a dinosaur, as is that of the rivals it is punishing.
…but the Saudis depend less on high oil prices to balance their budget than some OPEC countries.
Breakeven price per barrel for crude oil in 2015 for select OPEC producers