Tag Archives: Oil

Venezuela: Let’s Cut to the Chase, by Pepe Escobar

Venezuela has become a key battlefield in the global battle for energy dominance. From Pepe Escobar at strategic-culture.org:

Cold War 2.0 has hit South America with a bang – pitting the US and expected minions against the four key pillars of in-progress Eurasia integration: Russia, China, Iran and Turkey.

It’s the oil, stupid. But there’s way more than meets the (oily) eye.

Caracas has committed the ultimate cardinal sin in the eyes of Exceptionalistan; oil trading bypassing the US dollar or US-controlled exchanges.

Remember Iraq. Remember Libya. Yet Iran is also doing it. Turkey is doing it. Russia is – partially – on the way. And China will eventually trade all its energy in petroyuan.

With Venezuela adopting the petro crypto-currency and the sovereign bolivar, already last year the Trump administration had sanctioned Caracas off the international financial system.

No wonder Caracas is supported by China, Russia and Iran. They are the real hardcore troika – not psycho-killer John Bolton’s cartoonish “troika of tyranny” – fighting against the Trump administration’s energy dominance strategy, which consists essentially in aiming at the total lock down of oil trading in petrodollars, forever.

Venezuela is a key cog in the machine. Psycho killer Bolton admitted it on the record; “It will make a big difference to the United States economically if we could have American oil companies invest in and produce the oil capabilities in Venezuela.” It’s not a matter of just letting ExxonMobil take over Venezuela’s massive oil reserves – the largest on the planet. The key is to monopolize their exploitation in US dollars, benefitting a few Big Oil billionaires.

Once again, the curse of natural resources is in play. Venezuela must not be allowed to profit from its wealth on its own terms; thus, Exceptionalistan has ruled that the Venezuelan state must be shattered.

In the end, this is all about economic war. Cue to the US Treasury Department imposing new sanctions on PDVSA that amount to a de facto oil embargo against Venezuela.

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Energy Dominance Isn’t Just a Trump Obsession, by Tom Luongo

The world jockeys for oil. From Tom Luongo at tomluongo.me:

Energy Dominance should be the catchphrase of the day. It’s on the minds of every political figure, and the focus of every economy.

This is especially true of those vulnerable to a change in the status quo, namely Saudi Arabia.

While some continue to believe the gyrations of the oil market over the past few months are evidence of our running up against the limit of the petroleum based global economy, I disagree.

The world is awash in decades of easily-extracted oil and gas. The supply of it has been kept off the market due to its centrality in the grand game of geopolitics. But, it has nothing to do with the amount of oil and gas out there.

Peak oil has become a religion among its adherents. Decrying the U.S. shale boom, rightly, for its profligacy has more to do with it being a consequence of disastrous central bank inflation rather than some grand plan of the ‘cabal’ because we passed peak EROEI some time ago.

When you drop interest rates to zero and flood the world with liquidity that can only find a home in equity markets, the natural result is malinvestment into unsustainable business practices.

The first wave of the shale boom in the U.S. occurred during this period and created the dynamic we have today. It’s groundwork was laid when oil prices spiked during Greenspan’s post-9/11 reflation and the Iraq War took a lot of marginal supply off the table.

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Venezuela’s collapse is a window into how the Oil Age will unravel, by Nafeez Ahmed

A comprehensive examination of Venezuela’s oil industry, mostly free of political dogma. From Nafeez Ahmed at medium.com:

For some, the crisis in Venezuela is all about the endemic corruption of Nicolás Maduro, continuing the broken legacy of Chavez’s ideological experiment in socialism under the mounting insidious influence of Putin. For others, it’s all about the ongoing counter-democratic meddling of the United States, which has for years wanted to bring Venezuela — with its huge oil reserves — back into the orbit of American power, and is now interfering again to undermine a democratically elected leader in Latin America.

Neither side truly understands the real driving force behind the collapse of Venezuela: we have moved into the twilight of the Age of Oil.

So how does a country like Venezuela with the largest reserves of crude oil in the world end up incapable of developing them? While various elements of socialism, corruption and neoliberal capitalism are all implicated in various ways, what no one’s talking about — especially the global oil industry — is that over the last decade, we’ve shifted into a new era. The world has moved from largely extracting cheap, easy crude, to becoming increasingly dependent on unconventional forms of oil and gas that are much more difficult and expensive to produce.

Oil isn’t running out, in fact, it’s everywhere — we’ve more than enough to fry the planet. But as the easy, cheap stuff has plateaued, production costs have soared. And as a consequence the most expensive oil to produce has become increasingly unprofitable.

In a country like Venezuela, emerging from a history of US interference, plagued by internal economic mismanagement, combined with external intensifying pressure from US sanctions, this decline in profitability became fatal.

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Trump Betrays MAGA Over Venezuela, by Tom Luongo

It looks like the US government-backed coup in Venezuela is coming a cropper and the US won’t get its hands on Venezuela’s oil this go around. That doesn’t mean it won’t keep trying. From Tom Luongo at tomluongo.me:

The U.S. backed a coup in Venezuela that has failed. And President Trump was the architect of it. This is a farce surrounding an intrigue contained within a tragedy.

What has happened in Venezuela is tragic. Nicolas Maduro is a comical figure straight out of central casting for a South American leader of a junta. But it has been the U.S.’s designs on Venezuela’s oil and gas reserves (the largest proven in the world as of 2017) that is the real story behind this week’s events.

For anyone still harboring doubts as to who Trump truly is Venezuela should end them. Trump’s Energy Dominance policy is at the core of his foreign policy. And he will do whatever it takes to secure that policy and deliver a long-standing order to the U.S. and European oligarchy to gain control over Venezuela.

Energy Dominance

As Alistair Crooke succinctly put it last year at Strategic Culture:

The US – were energy dominance to succeed – simply would control the tap to the economic development – or its lack thereof – for rivals China, and Asia. And the US could squeeze Russia’s revenues in this way, too. In short, the US could put a tourniquet on China’s and Russia’s economic development plans. Is this why JCPOA was revoked by President Trump?
Here then, is the squaring of that circle (more US power, yet less empire): Trump’s US aims for ‘domination’, not through the globalists’ permanent infrastructure of the US defence umbrella, but through the smart leveraging of the US dollar and financial clearing monopoly, by ring-fencing, and holding tight, US technology, and by dominating the energy market, which in turn represents the on/off valve to economic growth for US rivals. In this way, Trump can ‘bring the troops home’, and yet America keeps its hegemony. Military conflict becomes a last resort.

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The real reason Western media & CIA turned against Saudi MBS, by Darius Shahtahmasebi

In the eyes of Western politicians and media, Mohammed bin Salman’s unforgivable crime has been his independent, hard-to-control streak, not murder. From Darius Shahtahmasebi at rt.com:

The real reason Western media & CIA turned against Saudi MBS
Forces are aligning against Saudi Arabia’s Crown Prince, lead by elements within the CIA and strong players in the mainstream media. But what is really behind this deterioration in relationship, and what are its implications?

Following the brutal murder of Washington Post columnist Jamal Khashoggi, western media and various entities, including the CIA, appear to have turned their back on Saudi Crown Prince Mohammad Bin Salman (MBS). In response to the scandal, the Guardian released a video which its celebutante, Owen Jones, captioned“Saudi Arabia is one of the biggest threats on Earth. Time to stop propping up its repulsive regime.”

The Guardian was not alone in its condemnation. “It’s high time to end Saudi impunity,” wrote Hana Al-Khamri in Al-Jazeera. “It’s time for Saudi Arabia to tell the truth on Jamal Khashoggi,” the Washington Post’s Editorial Board argued. Politico called it “the tragedy of Jamal Khashoggi.”

Even shadowy think-tanks like the Council on Foreign Relations (CFR) and the Atlantic Council released articles criticising Saudi Arabia in the wake of Khashoggi’s death.

A number of companies began backing away from Saudi money after the journalist’s death, including the world’s largest media companies such as the New York Times, the Economist’s editor-in-chief Zanny Minton Beddoes, Arianna Huffington, CNN, CNBC, the Financial Times, Bloomberg, Google Cloud CEO, just to name a few.

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Oil Sends A “Crude Warning”, by Lance Roberts

Weakness in the price of oil often signals weakness in the overall economy. From Lance Roberts at realinvestmentadvice.com:

Oil Sends A “Crude Warning”

As with many Americans, I am on the road with the family making the traditional holiday rounds. Of course, my family is more “The Griswolds” than “The Waltons. but even with all of the antics, comedy, and occasional drama, it is always an enjoyable time of the year.

However, I did wake up from my tryptophan-induced coma long enough to pen a few thoughts on the crash in crude oil and the message it is sending.

On Monday, I am publishing an article on the fallacy that “falling energy prices are an economic boost.” It isn’t, and we dig into all the reasons why in that article.

However, the short version is that oil prices are a reflection of supply and demand. Global demand has already been falling for the last several months and oil prices are now waking up that reality. More importantly, falling oil prices are going to put the Fed in a very tough position in the next couple of months as the expected surge in inflationary pressures, in order to justify higher rates, once again fails to appear. The chart below shows breakeven 5-year and 10-year inflation rates versus oil prices.

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Two Numbers That Explain Why Trump Won’t Sanction Saudi Arabia, by Thomas Knapp

It all boils down to oil, money, and Iran. From Thomas Knapp at antiwar.com:

“[W]e may never know all of the facts surrounding the murder of Mr. Jamal Khashoggi,” US president Donald Trump told the nation on November 20, but “[t]he United States intends to remain a steadfast partner of Saudi Arabia to ensure the interests of our country, Israel and all other partners in the region.”

Many find the president’s statement curious indeed given the seeming consensus among the Turkish and US intelligence communities that Saudi Crown Prince Mohammad bin Salman ordered Khashoggi’s murder at the Saudi consulate in Istanbul. But two simple numbers clarify just how much importance successive administrations, including Trump’s, have placed on the US-Saudi relationship.

The first number is the number one.

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