Oil collapse under $ 20 could boost a new generation of digital currencies

The Future of the Petrodollar – The Petrodollar explained and what’s next in oil markets

CONTENT

  • Oil quotes continue to fall, reaching $ 7 per barrel in some regions.

  • Oil market collapse will shatter dollar’s dominance.

  • Perhaps a new generation of digital currencies will grow out of this crisis.

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WTI oil is testing the $ 20 mark, and this darkens the prospects for the further dominance of the petrodollar. Perhaps against this background, interest in digital currencies will grow again.

The oil price war unleashed by Saudi Arabia and Russia shows no signs of fading away, and global demand for raw materials is falling. In the United States, representatives of the shale industry fear an imminent wave of bankruptcies. A barrel of WTI crude today attempted to break below the $ 20 mark. Although the price bounced right away, black gold continues to look very vulnerable – as does the outlook for the oil market in general..

When oil becomes cheaper than pizza

The main focus of the markets is on two benchmark crude oil – WTI and Brent. Their dynamics looks really alarming. However, against this background, other news from American oil producers is lost, where the situation is even more sad.

Thus, Mars oil, produced in the Gulf of Mexico, fell in price to about $ 10 per barrel. Yesterday it was reported that in Texas the value of oil contracts at the moment was sagging under the $ 7 mark.

If you think sub- $ 20 WTI is bad, in Texas the WTI Midland contract just slipped below $ 7 a barrel (according to Eikon).

Total collapse underway.

Is Cryptocurrency The Future?

A barrel of oil from the shale heartlands of America now costs less than a pint in London. And this isn’t some niche grade. #OOTT pic.twitter.com/qzLM1BqSLQ

– David Sheppard (@OilSheppard) March 30, 2020

To illustrate this point, Twitter readers were asked to realize that in some regions of the United States, a barrel of crude oil has become cheaper than a large pepperoni pizza..

A barrel of oil is cheaper than a large pizza with pepperoni.

– Jason A Williams (@GoingParabolic) March 30, 2020

If this state of affairs continues, it threatens the collapse of the US shale industry. Now almost no one doubts that the quarantine caused by the coronavirus pandemic will last until May. This will put strong downward pressure on demand and, coupled with falling oil prices, it could be a devastating blow to US oil producers..

The end of the petrodollar era?

Oil collapse under $ 20 could boost a new generation of digital currencies

It’s no secret that the global hegemony of the US dollar was largely based on oil sales. It so happened historically (at least in the 20th century) that oil export-oriented countries used to rely on the dollar in all their calculations..

This supported the wide spread of the dollar and the accumulation of its reserves around the world. The term “petrodollar” itself was coined to describe the unique relationship that emerged between the oil markets and the US currency. In fact, this allowed the dollar to become the main currency in international trade..

However, the situation has now begun to change slowly. Recently, export-oriented oil states have had many reasons to reorient national economies and jump off the oil needle in general and the dollar needle in particular. This is largely due to the aggressive foreign policy of the United States, imposing economic and political sanctions against many countries that are major players in the oil market..

In these conditions, governments of different countries are increasingly recalling such a convenient alternative as digital currencies. So, Venezuela is actively moving in this direction. China is also working on its own digital currency, promising that the currency will be ultra-fast and will allow Beijing to challenge the global dominance of the US dollar. At the end of last year, the head of Rosneft Igor Sechin spoke about the relevance of using cryptocurrencies for trading in raw materials..

Perhaps now the weakening of the position of the petrodollar will intensify the implementation of such crypto projects and the launch of state-supported stablecoins. In the end, as the popular member of the crypto community PlanB recalls, after the oil collapse during the 2008 financial crisis, bitcoin (BTC) was created.

Oil below $ 20… back at 1990’s level. Note the steep drop in oil price during the 2008 Global Financial Crisis. #Bitcoin was born at that very moment. Compare with now. pic.twitter.com/mtTensIP7c

– PlanB (@ 100trillionUSD) March 30, 2020

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Oil collapse under $ 20 could boost a new generation of digital currencies
Oil collapse under $ 20 could boost a new generation of digital currencies
Oil collapse under $ 20 could boost a new generation of digital currencies