Cheap oil has finally arrived – and it looks like being a disaster

This oil price slump is turning into a ‘black swan’: one of those economic events that seem to come from nowhere with strange and unforeseen effects. As Brent Crude dips below $70 a barrel and Opec sits on its hands, major banks face losses on financings for US energy companies that must have looked like the safest borrowers in the field in an earlier phase of the shale gas boom. As the rouble plunges and the Russian economy implodes, anyone holding debt paper issued by a Siberian oil giant or a contract to build an oligarch’s superyacht may end up lighting the fire with it. The only thing that has barely flickered is the price of petrol at the pump, so consumers are feeling scant benefit. Markets already nervous about global debt problems and deflation risks become daily more jittery. The world has learned to live with oil in the $80–$100 range, and the industry has invested and restructured with that as its breakeven target.