The last time around the US used oil as a tool to combat Russia (at the time the Soviet Union), on a nominal basis Brent underwent a correction from over $30 toward the range of $11-13.5 where it remained until the defeat of the Soviet Union and the withdrawal of the Red Army from Afghanistan in February 1989 after the signing of Geneva Accords in 1988.
Meanwhile such weakness in oil markets leads to strength in the Natural Gas sector as the aged, inverse correlation between the two (as oil rises NG prices fall and vice versa) combined with winter conditions boost a price, which in itself is stable-NG prices are not in the process of price discovery but rather in the stage of consolidation, after a violent upswing last winter. While since October NG prices have sold off from 4.5 to 3.7 currently, the 20% drop is nothing compared to the drop in WTI.
Anything below 50 is scary for the energy sector, which accounts for a third of capex in a world dominated by buybacks and dividends fueled by cheap financing. But credit markets are already actively taking that option away.
After spending a few billion along with the Saudi’s fighting a covert war, the Senate committee in charge of the budget did not see fit for the US to spend a few more million to build schools and infrastructure, indirectly enforcing the belief that God helped the Afghan people, (who for the most part were under the age of 20 at a rate of 1 out of three) fight off the Red Army, not the US taxpayer.This time, after spending billions to make the USA energy independent, at great risk, they are falsely using a vulnerable geopolitical tool as a weapon against a highly formidable opponent. In the game of career politician versus former spy, like in the game of follow the leader, the bets are in favor of the side with less layers of political red tape and influence.As George R.R. Martin’s King Robert Baratheon stated “which is the bigger number 5 or 1?... One, one army, united behind one leader with one purpose.