Oil price collapse poses 'real risks' to Mideast states' security: US' Pompeo

Washington — The Trump administration sees the potential for security risks in the Middle East as a result of the collapse in global oil prices, US Secretary of State Mike Pompeo said Wednesday.

Pompeo said the White House is "incredibly focused on trying to create a more stable energy market in light of the enormous decrease in demand."

He struck a similar tone to recent comments by President Donald Trump, who has said any real relief from oil market instability would come from global economic activity restarting after coronavirus lockdowns.

Factbox: Key Brent crude benchmark hits 21-year low

Earlier Wednesday, Trump tweeted that he had ordered the US Navy to "shoot down and destroy any and all Iranian gunboats if they harass our ships at sea," which briefly boosted oil prices. Tensions between the US and Iran resurfaced last week in the Persian Gulf, where the Navy said 11 Iranian vessels conducted "dangerous and harassing" approaches of US ships.

OPEC exporters face an average fiscal breakeven Brent price of $102/b, according to S&P Global Platts Analytics, ranging from Kuwait's $56/b to Libya's staggering $338/b.

"There's real risk with low prices and low volumes of demand, those countries are really going to face real crisis," Pompeo said during a State Department briefing. "So there's talk about how we can bridge that gap collectively."

Pompeo said the global economy needed to be "cranked up again," to return oil demand to levels seen late last year.

Platts Analytics expects the pandemic to shrink global oil demand this year by at least 7.8 million b/d from 2019 levels, with further downgrades possible depending on the pace of recovery.