More are expected to follow. A recent report by the consulting firm Rystad Energy said “more than 70” firms had trouble servicing their debt with crude at $30. $30? Prices today are south of $12 on the Nymex, and a potential rebound is anybody’s guess.

One thing’s for certain: A lot of people in the once red-hot industry have already lost — or are about to lose — their jobs.

“I would expect we’ll see a 30% to 40% reduction in labor in the Permian,” the huge oil production region of western Texas and New Mexico, says Dr.Gregory Brew of Southern Methodist University, an oil historian who focuses on petroleum and its role in geopolitics and the global economy. He notes that activity in North Dakota’s Bakken formation had already been slowing down.

The history of the oil industry is one of busts and booms, of course, but the current bust is harder to analyze, given two extraordinary factors.

The coronavirus sparked a shutdown of huge chunks of the U.S. economy, crushing demand. Then there was the March decision by Russia to say “nyet” to OPEC’s call to further slash production in order to prop up prices. Moscow’s move was quickly followed by a similar announcement by Saudi Arabia. It’s been a race to the bottom ever since.

Reports from Moscow indicate that the Russians were sick of losing market share to American companies, which have been selling crude wherever they could, while Russia was handcuffed by OPEC’s production limits. “Let’s see how American shale exploration feels under these conditions,” a spokesman for state oil giant Rosneft says.

Brew thinks the Saudi motives seem derived more from Russia’s actions, and perhaps miscalculation on the part of Mohammed bin Salman (MBS), the 34-year old crown prince, who for all intents and purposes is the hard-line ruler of the Mideast kingdom.

”My sense is that both Putin and MBS miscalculated,” he says. “They didn’t quite expect each other to follow each other to the brink. Russia didn’t want to cut as much as Saudi Arabia was asking, Saudi Arabia was asking for more than they should have. Neither side could reach an agreement, and rather than continue to talk, they launched their price war.” And here we are.

What’s illogical about a Saudi-Russia price war is that both countries are heavily dependent on oil revenue to prop up their economies and frankly, to pay off their citizens.

For example, the CIA estimates that oil accounts for 87% of Saudi budget revenues, 42% of its GDP, and 90% of export earnings. Remember the Arab Spring—the uprisings that swept across the Middle East a decade ago? Numerous governments fell. It helped fuel Syria’s still ongoing civil war.

But Saudi Arabia emerged unscathed, because its citizens didn’t revolt. There was little reason to. The royal family has long used its petrodollars to buy them off: Free health care. Free schooling. No income tax. Public pensions (90% of Saudis work for the government). Subsidized water, electricity, gasoline, and more.

But cuts to these things since then have hurt, and rock-bottom petroleum prices could up the pain. It’s no coincidence that MBS’s crackdown on dissidents and writers — including the 2018 murder of Washington Post columnist Jamal Khashoggi — has occurred amid increasing domestic restlessness.

Oil revenues, meanwhile, have typically accounted for close to half of Russia’s budget. Its Finance Ministry said in March that it could do OK for an extended period with oil prices as low as $25. Given the price of Brent crude BRN00, 9.19% — around $23, future sales could squeeze the Russians (they and the Saudis are getting more than that now thanks to prior contracts), but what if prices stay low?

Even before the collapse, the number of Russians living in poverty was on the rise. (Russians last year were guaranteed a minimum subsistence level of about $56 a month) Street protests over everything from civil liberties to living conditions were also growing before this year. What happens when Putin runs out of money?

If the Russians were out to inflict pain on the U.S. oil patch, they’ve succeeded. But what happens over the long term? If Moscow thinks they’re going to put the Americans out of business, they’d better think again.

“There’s a lot of talk about how this might be the end of the shale sector, the end of the U.S. energy industry,” Brew says. “That’s just not going to happen. Shale’s not going anywhere. Fracking’s not going away. That oil’s going to stay in the ground while it’s not marketable, but once prices start to recover, you’ll start to see a recovery in investment.”