As GZero Media’s Alex Kliment puts it, Russia and Saudi Arabia have engaged in “a crude game of chicken.” Over the weekend, Riyadh decided to flood the market with cheap oil in retaliation for Moscow backing out of a deal by members of the Organization of the Petroleum Exporting Countries (Opec) to artificially inflate international prices, amid a cooling in demand caused by the coronavirus outbreak.
The first effect of this price war was a 2020 version of Black Monday, with markets around the world suffering their biggest losses since the 2008 financial crisis. In São Paulo and New York, stock markets triggered circuit breakers in order to stop hemorrhaging money. By the end of the day, Brazil’s benchmark stock index Ibovespa lost over 12 percent.
But is the economic outlook that terrible for everyone?