SOL:
SAUDI ARABIA'S LOW OIL PRICES PUSHED BY WASHINGTON HAS INDIRECTLY
SEVERELY DAMAGED THE FRACKING INDUSTRY IN ADDITION TO THE ECONOMY OF
AMERICAN OIL PRODUCING STATES. THE WASHINGTON/SAUDI STRATEGY IS HURTING
BOTH AMERICA AND THE SAUDIS POSSIBLY MORE THAN THEIR TARGETED ECONOMY OF
RUSSIA. IN MY OPINION... ITS A TOTAL FAILURE BUT THE NEOCONS ARE TOO
FOCUSED ON HURTING RUSSIA'S ECONOMY TO REALIZE IT. RUSSIA HAS BECOME
MORE DIVERSIFIED, SELF SUFFICIENT AND HAS TURNED TO THE EAST FOR TRADE
BECAUSE OF THE WEST'S ILLEGAL SANCTIONS. IN THE LONG TERM RUSSIA IS
BECOMING EVEN STRONGER BECAUSE OF THE ACTIONS OF THE WEST AND THE
RUSSIAN PEOPLE SUPPORT PUTIN AND THE RUSSIAN POLICY EVEN MORE..
Saudi-Iranian spat: Another skirmish in the oil war
Pepe
Escobar is an independent geopolitical analyst. He writes for RT,
Sputnik and TomDispatch, and is a frequent contributor to websites and
radio and TV shows ranging from the US to East Asia. He is the former
roving correspondent for Asia Times Online. Born in Brazil, he's been a
foreign correspondent since 1985, and has lived in London, Paris, Milan,
Los Angeles, Washington, Bangkok and Hong Kong. Even before 9/11 he
specialized in covering the arc from the Middle East to Central and East
Asia, with an emphasis on Big Power geopolitics and energy wars. He is
the author of "Globalistan" (2007), "Red Zone Blues" (2007), "Obama does
Globalistan" (2009) and "Empire of Chaos" (2014), all published by
Nimble Books. His latest book is "2030", also by Nimble Books, out in
December 2015.
Published time: 6 Jan, 2016 16:20
Saudi
Arabia is a beheading paradise. But this PR nightmare is the least of
all problems in an oil crisis. Once again, the heart of the matter is –
what else – black gold.
So
far, the House of Saud’s whole energy strategy has boiled down to
shaving off its oil production no matter what it takes, even issuing
bonds to cover its massive deficits.
Now the strategy has been moved one step ahead via a flagrant provocation: the execution of Shiite cleric Nimr al-Nimr.
The
House of Saud believes that by stoking the flames of a Riyadh-Tehran
confrontation it may raise the fear factor in the oil supply sphere,
leading to higher oil prices (which it needs), while maintaining the
Holy Wahhabi Grail of keeping imminent Iranian oil off the market.
From
the beginning, Riyadh bet on the possibility of extra energy-related
sanctions on Iran in case Tehran forcefully responded to its beheading
provocation. Yet Iranians are too sophisticated to fall for such a crude
tap.
Persian Gulf traders have confirmed the 2016 Saudi budget is based on an average crude oil price of only $29 per barrel, as first reported by Jadwa Investment in Riyadh.
From
the House of Saud’s budget dilemma perspective, this is absolutely
unsustainable. The House of Saud is the biggest OPEC oil exporter. Yet
their supreme hubris is to deny Iran any leeway in exports, which will
be inevitable especially in the second half of 2016. Moreover, the low
oil price strategy doesn’t apply solely to Iran: it’s still part of the
oil war against Russia.
Somebody
though is not doing the math right in Riyadh. The Saudi low oil price
strategy has been punishing Russia – the number two global oil producer -
badly. The Saudis cannot possibly expect that their beheading
provocation will simultaneously scotch an OPEC-Russia deal on cutting
production and also lead to higher oil prices, which would mostly
benefit – guess what - Iran and Russia.
Six months to destroy Russia
A
case can be made that the House of Saud’s low oil price strategy has
been a slow motion Wahhabi hara-kiri from the start (which, by the way,
is hardly a bad thing.)
The
House of Saud budget has collapsed. Riyadh is financing an unwinnable,
mightily expensive war on Yemen, financing and weaponizing all manner of
Salafi-jihadists in Syria, and is spending fortunes to prop up al-Sisi
in Egypt against any possible Daesh (Islamic State) and/or Muslim
Brotherhood offensive. As if this were not enough, internally the
succession is a royal mess, with King Salman's 30-year-old
warrior-in-chief, Mohammad bin Salman, stamping his toxic mix of
arrogance and incompetence on a daily basis.
Predictably, Riyadh once again is following Washington’s orders.
The
United States government is frantically trying to hold the oil price
down to destroy the Russian economy, using their proxy Persian Gulf
producers who are pumping all out. That amounts to no less than seven
million barrels a day over the OPEC quota, according to Persian Gulf
traders. The US government believes it can destroy the Russian economy -
again - as if the clock had been turned back to 1985, when the global
glut was 20 percent of the oil supply and the Soviet Union was bogged
down in Afghanistan and internally bleeding to death.
Oil
went down to $7.00 a barrel in 1985, and that low figure is where the
US government is now trying to drive the price down. Yet today the
global glut is less than three percent of the oil supply, not 20 percent
as in 1985.
The
surplus today is only 2.2 million barrels a day, according to Petroleum
Intelligence Weekly. Iran will bring on initially around 600,000
barrels a day of new oil in 2016. That means later this year we will
have a 2.8-million potential surplus.
The
problem is, according to Persian Gulf traders, an annual oil depletion
of seven million barrels a day, and that cannot be replaced with the
collapse in drilling. What this means is that all surplus oil could be
wiped out in the first or second quarters of 2016. By mid-2016, oil
prices should start surging dramatically, even with additional oil from
Iran.
So
the US government strategy has now metastasized into trying to destroy
the Russian economy before the oil price inevitably recovers. That would
give the US government a window of opportunity spanning only the next
six months.
How
this could have been pulled off so far is a testament, once again, to
the irresistible force of Wall Street manipulators using cash
settlement; they are able to create a crash where there is hardly any
surplus oil at all. Yet even as the Empire of Chaos frantically
manipulates the oil price down, it may not go down fast enough to
destroy the Russian economy.
Even Reuters was forced to admit briefly the oil surplus was less than two million barrels a day, and may even be alarmingly less than a million barrels a day before returning to
the usual oil-at-an-all-time-low story. This information on the real
oil surplus so far had been completely censored. It confronts head on
the hegemonic US narrative of surpluses lasting forever and the imminent
collapse of the Russian economy.
As
for Saudi Arabia, it’s just a mere pawn in a much nastier game. Common
sense now rules that it’s essentially a matter of Black Daesh (the fake
“Caliphate”) and White Daesh (the House of Saud). After all, the
ideological matrix is the same, beheadings included. It’s the next stage
of the oil war that may well decide which Daesh will be the first to
fall.
No comments:
Post a Comment