A scary picture to go along with an intimidating week…

As if it weren’t difficult enough to ignore one elephant in a room, try being oblivious to three!

Taking this metaphor all the way to the edge, we have the global economic Titanic on a collision course with three icebergs.

The three elephants in this global room are in the persons of the leaders of Saudi Arabia, Russia, and the United States. And to complicate matters even further, we are in the midst of a mounting global health crisis of historic proportions.

We find ourselves bobbing up and down in an ocean in a not so perfect storm.

So, here’s my take on where we are, how we got here, and where we’re going:

There are two sides to this equation, which is what an equation is.

One factor that the oil producers can control, or influence, is the supply, and therefore, price of crude. One thing they cannot control is demand for crude oil and its refined derivatives.

The three aforementioned crude producers want the price of crude to increase. To do that OPEC needs its members, plus Russia, to agree to a production decrease. Not wanting to lose face by having his country’s crude production levels dictated by the Saudis, Russian president Vladimir Putin decided to decline the penalty.

So, he took his barrels of oil and went home.

In an almost instant knee-jerk reaction, the Saudis then decided to flood the market and crater the crude oil price hoping this would be an incentive to get the Russians back to the table.

So, basically, this is like a scrap in a playground.

But I do not believe that this is a fight between the Russians and the Saudis. The real target here is the U.S. shale oil production, which has turned the U.S. into the world’s largest crude oil and refined product producer.

The Russians are determined to protect their market share and need U.S. shale put out of business — and the best way to do that is to crater the cost of oil to the point that shale oil recovery is not economically feasible.

What they can’t control is crude oil demand.

This is currently at the mercy of a bug that is merciless.

What was, not even a month ago, demand destruction isolated to the Chinese industrial heartland has now transgressed global borders and has depleted the demand for crude oil, gasoline and diesel to a dribble of its former self.

Can the demand corrosion be stopped? Who will blink first? The Russians? The Saudis?

With an election just months away, will President Trump step up to the plate and protect his electorate based in the Texas panhandle oil patch?

Or, is he standing at the plate looking for a pitch he can’t see or even hit for that matter?

~ The Grouch