Tag Archives: Oil

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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Chaos Reigns in Trump Administration over Iranian Sanctions, by Thomas Luongo

Iran’s position is stronger than it was in 2012 when Obama imposed sanctions. From Tom Luongo at strategic-culture.org:

Sanctions may indeed be coming but will they have the bite that Donald Trump is hoping for? It’s a good question as we open November with a flurry of edicts from Trump’s State and Treasury Departments.

Let’s go over them all and see just how contradictory they are while at the same time acceding to the reality of just how much the world has changed in the six years since President Obama first went nuclear on Iran with sanctions.

It starts with Trump’s tweet that “Sanctions are Coming.” Okay, fine we knew this. But sanctions don’t account for much if the State Department is handing out 180 day waivers to countries.

Next up was Pompeo saying on the same day that no less than eight countries would be exempt from sanctions for buying oil from Iran.

A little news for Mike Pompeo, Halloween was last week.

Contrast this with 2012 where India, for example, to get around the sanctions had to essentially barter to get much needed Iranian oil, because no such exemption was forthcoming.

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America’s Oil Boom Is a Fraud, by Bill Bonner

Even at ultra-low interest rates, a lot of fracking in the US wasn’t making any money. From Bill Bonner at bonnerandpartners.com:

PARIS – We promised to end the week with a bang!

You’ll recall that Fed policy always consists of the same three mistakes… 1) Keeping interest rates too low for too long, resulting in too much debt; 2) Raising interest rates to try to gently deflate the debt bubble; and 3) Cutting rates in a panic when stocks fall and the economy goes into recession.

Well, here comes the Big Bang: Mistake #4 – rarely seen, but always regretted.

Mistake #4 is what the feds do when their backs are to the wall… when they’ve run out of Mistakes 1 through 3.

It’s a typical political trade-off. The future is sacrificed for the present. And the welfare of the public is tossed aside to buy money, power, and influence for the elite.

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European Firms Hit Hard By U.S. Sanctions On Iran, by Scott Belinksi

If sanctions against Iran jolt oil prices higher, Europe will suffer. From Scott Belinski at oilprice.com:

As Iran is turning to the UN’s International Court of Justice to have the US-imposed sanctions against its oil suspended, the EU is preparing for the hit its economies will have to absorb once the full weight of Washington’s punitive measures comes into effect in the fourth quarter of this year. With these latest moves, American intentions are clear: cut off Iranian oil from the market entirely and reduce Tehran’s financial power. As oil prices rise, however, the White House’s policy looks set to hurt more countries than just Iran. Will Europe’s economies take the hit – or will they fight back?

Iran is the world’s third largest oil producer within OPEC (after Saudi Arabia and Iraq) with a daily production of 4 million barrels. Currently, major economic regions from North America to Europe and East Asia are witnessing growing economic activity, causing global oil consumption in 2017 to rise by 1.5 million barrels per day, further tightening the market. As Tehran has already warned, OPEC capacity will be unable to meet shortfalls if the US pursues its policy of reducing Iranian oil exports to zero.

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Russia’s High Risk Global Oil Strategy, by Vanand Meliksetian

Russian oil companies are rushing in where western oil companies fear to tread. From Vanand Meliksetian at oilprice.com:

The energy industry is highly sensitive to U.S. sanctions due to the petrodollar being the single most important currency in global trade. Washington is able to exert significant influence by limiting access to the dollar through its financial institutions. Russia is especially exposed to Washington’s ire as a significant part of its governments’ coffers are filled by revenues from its oil and gas sector. In recent years, Russian companies have been increasing their activities in several unstable countries where the U.S. has imposed sanctions. This tactic from Russia comes with huge opportunities but also a significant amount of risk.

The level of this risk is illustrated by the absence of western oil companies in these areas as they are accountable to their shareholders. Privately held companies also struggle to operate in these areas due to their reliance on international financial markets and the difficulty with carrying out due diligence. Venezuela and Iran are prime examples of oil rich areas that are struggling under U.S. sanctions.

At the same time, absence of many major western oil companies in unstable regions is one of the reasons why Russian companies, both majority state-owned and privately held organizations, have got involved. Limited competition strengthens the position of Russian firms during negotiations. The host countries face a predicament in many cases as they have to choose between a bad deal or no deal at all.

A prime example of this is Moscow’s involvement in Iran, which has been ongoing for years. Even during the years of sanctions due to Tehran’s nuclear program, Russia was able to strike a barter deal where Iranian oil was exchanged for other products. This deal bypassed the international financial system and sanctions. Even now when the U.S. has unilaterally withdrawn from the Iran Nuclear Deal and is about to reinstate sanctions, Moscow and Iran are intensifying cooperation.

Days before the Helsinki summit and the meeting of Presidents Putin and Trump, Iranian officials struck a deal in Moscow for an investment of $50 billion in the oil and gas sector. While western firms are reluctant to continue doing business in Iran, let alone increase cooperation, Russian firms are seizing the opportunity to boost their portfolio with even more Middle Eastern assets.

To continue reading: Russia’s High Risk Global Oil Strategy