The dramatic fall of oil prices could upend the American fracking industry, analysts said Monday, as panic over the coronavirus outbreak lessened global demand and Saudi Arabia and Russia flooded the market with new supply.

Oil prices plunged by as much as 30% on Sunday, which is the steepest tailspin since the United States began bombing Iraq in the 1991 Gulf War. The Organization of the Petroleum Exporting Countries, the 14-nation cartel that, along with Russia, manages much of the world’s oil supply, failed to reach a deal to cut oil production, triggering a price war that risks bankrupting debt-loaded U.S. frackers.

Now the fracking industry, which President Donald Trump sought to expand with hard-line support for increased fossil fuel production, faces potential ruin. The spread of the coronavirus, which causes the disease known as COVID-19, is grounding flights and halting factory production in China, while rival producers oversupply the market to defend their share. Fracking, a ballyhooed but financially fragile sector, struggled to stay afloat with crude selling at $50 per barrel. If prices stay around $30, or even fall as low as $20, U.S. frackers simply might be unable to keep up.

“It’s a financial bloodbath,” said Clark Williams-Derry, an analyst at the Institute for Energy Economics and Financial Analysis. “With oil prices at the current level, there’s a real risk many of them will simply go bankrupt.”

Andrew Cullen/Reuters Sunflower stalks punctuate the snow in a field near dormant oil drilling rigs that have been stacked in Dickinson, North Dakota.

Occidental Petroleum Corp.’s stock price nearly halved as trading closed on Monday. Debt-burdened firms such as Chesapeake Energy Corp. and Whiting Petroleum Corp. finished the day with stock prices down between 30% and 41%. Even behemoths big enough to weather almost any shock took big hits as Exxon Mobil Corp. fell nearly 12% and Chevron Corp. dropped 15%.

Forecasters are still determining the extent of the likely effect the price drop will have on the broader economy. But it could also have an effect on politics, which are particularly fraught around fracking, the colloquial term for hydraulic fracturing, a drilling practice that breaks bedrock with high-pressured water and chemicals to release difficult-to-reach fossil fuel reserves.

Fracking now makes up 63% of U.S. oil production, the Energy Information Administration estimates. That figure looks set to increase as oil and gas drilling grows faster in the U.S. than any other country, and 90% of that is dependent on fracking, according to a report by scientists at more than a dozen environmental groups. Contenders in the 2020 presidential election are currently battling over whether to expand, preserve or entirely phase out an industry whose growth all but guarantees climate catastrophe.

The fracking sector expanded rapidly over the past decade as Wall Street investors bet big on a growing demand for oil and gas. In some ways, those bets paid off. More than a decade after Congress rushed to shore up U.S. supplies in the face of possible oil shortages, the country pumped so much crude and fracked gas that former President Barack Obama lifted an export ban put in place during the 1970s oil crisis. It also gave the U.S. new geopolitical muscle as it briefly overtook Saudi Arabia as the world’s top exporter of oil.

But market dominance came at a high cost. Despite lax regulations and low-interest loans, the high cost of fracking wells, coupled with oil prices hovering around $50 per barrel, made it impossible for drillers to turn a profit. Between 2012 and 2017, the 30 largest shale producers lost more than $50 billion, according to a Wall Street Journal estimate. From 2015 to 2016, a whopping 91% of all corporate debt defaults in the United States were in the oil and gas sector, the financial research firm Moody’s calculated last year.

The gushing fount of Wall Street money slowed. In 2018, the consultancy Dealogic pegged the total the fracking sector raised in equity and debt financing at $22 billion, less than half of what it raised in 2016 and nearly one-third of the 2012 sum.

“Investors have been tightening access to capital and expecting more capital discipline for these companies,” said Anastacia Dialynas, the lead oil analyst at the research group Bloomberg New Energy Finance. “So there isn’t much bandwidth for them to run a negative balance sheet for a long time.”

One response may be for smaller fracking companies to consolidate. Oil giants such as Exxon Mobil and Chevron, which are heavily invested in fracking for oil in Texas’ Permian Basin, could scale back production but still weather the storm in the short term due to their size. Stock prices for frackers that drill mostly for gas in Appalachia, such as Antero Resources Corp., Cabot Oil & Gas Corp. and EQT Corp., actually increased slightly on Monday, a sign that investors see the possibility of oil majors’ slowing output as a short-term benefit for smaller, gas-focused firms.

With oil prices at the current level, there’s a real risk many of them will simply go bankrupt. Clark Williams-Derry, analyst at the Institute for Energy Economics and Financial Analysis

But tighter limits on investment could have grave political implications for the sector. Less cash to throw around means fewer investments in jobs the Trump administration touts as worthy of the trade-offs that come from fracking, including increased pollution, threats to water resources and worsening climate change.

It poses a big risk to Democrats, too, who look increasingly likely to nominate former Vice President Joe Biden as their presidential candidate to take on Trump. Biden, whose campaign is stacked with oil and gas boosters, vowed to preserve the fracking industry and attacked Sen. Bernie Sanders (I-Vt.), his only serious remaining rival for the nomination, for proposing to ban fracking and guarantee federally backed transition jobs for affected workers.

Places that bet big on fracking as an engine for economic stability “are going to fall on hard times,” Williams-Derry said. He likened the effect of low oil prices on U.S. frackers to an unhealthy person contracting the rapidly spreading coronavirus.

“You think of someone with a weakened immune system, and now they’re facing the coronavirus,” Williams-Derry said. “This was an industry that was already touch-and-go financially, already having severe difficulties managing debt loads. This just accelerates that problem, and brings all the other problems to the fore.”