Tag Archives: OPEC

Patrick Lawrence: The Non-West Coalesces

Posted on October 17, 2022 | 1 comment

A lot of countries are deciding that they don’t have to be the U.S.’s vassals. From Patrick Lawrence at sheerpost.com:

Nations representing more than 80 percent of the global population and a like percentage of global gross domestic product are perfectly capable of seeing the Biden administration’s pointed provocations and do not approve.

OPEC President Bruno Jean-Richard Itoua Leads First In-Person OPEC Meeting Since COVID-19. Image source: OPEC

Something of epochal importance happened in Vienna, where the Organization of Petroleum Exporting Countries, now known as OPEC–Plus with the inclusion of the Russian Federation, convened recently for its first in-person session since 2020. You would not know of this development if you rely solely on the reports carried in our corporate-owned media.

The world just took a significant turn into the 21st century. Let us stay abreast of it, leaving those who refuse to see this to their own devices.

President Biden, apparently not intelligent enough to understand the emergent new era and indifferent to the interests and aspirations of others, quickly made as big a mess of things as could be made. Last week he threatened Saudi Arabia, which co-chairs OPEC–Plus with the Russian Federation, with “consequences” for what transpired in Vienna. This is what imperiums do when their primacy is threatened—they encourage the very currents in history they are determined to disrupt.

As reported everywhere, OPEC–Plus decided to reduce the oil production of member nations by two million barrels per day as of next month. This may amount to an actual cut of half that amount, as many OPEC–Plus members—Nigeria, for instance—have not been lifting to their quotas anyway. But oil prices are already increasing, and we will soon see this at our filling stations. As retail prices rise, it is likely to complicate the political fortunes of the Biden administration and Democrats on Capitol Hill just as the midterm elections approach. So, a pretty big deal.

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OPEC’s Body Blow to Biden, by M.K. Bhadrakumar

Posted on October 11, 2022 | 1 comment

Saudi Arabia and the Gulf States are shifting towards the Eurasian axis. The Russians may throw in some arms deals of their own. From M.K. Bhadrakumar at consortiumnews.com:

M.K. Bhadrakumar says the OPEC+ decision could change the security picture in West Asia more than anything since the 1979 Iranian Revolution.

President Joe Biden and Saudi Crown Prince Mohammed bin Salman bin Abdulaziz bump fists at Al-Salam Palace in Jeddah, on July 15. (Saudi Press Agency, Wikimedia Commons, CC BY 4.0)

The Biden administration is swiftly establishing a narrative that the recent OPEC decision to cut oil production by 2 million tonnes is a geopolitical “aligning” by Saudi Arabia and Russia.

It taps into the Russophobia in the Beltway and deflects attention from the humiliating defeat of President Joe Biden’s personal diplomacy with Saudi Arabia. But it is not without basis, either.

Foreign policy was reputed to be Biden’s forte but is turning out to be his nemesis. An ignominious end is not unlikely; as with former U.S. President Jimmy Carter, West Asia may become the burial ground of his carefully cultivated reputation.

The magnitude of what is unfolding is simply staggering. Biden realizes belatedly that territorial conquests in Ukraine is not the real story but embedded in it is the economic war and within that is the energy war that has been incubating through the past eight-month period following the Western sanctions on Russia.

The paradox is, even if Ukraine President Volodymyr Zelensky wins the war, Biden would still have lost the war unless he wins the energy war and goes on to win the economic war as well.

Russian President Vladimir Putin visualized such an outcome as far back as in 2016 when on the sidelines of the G20 Hangzhou summit, the tantalizing idea of OPEC+ crystallized between him and then Saudi Deputy Crown Prince Mohammed bin Salman.

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Biden’s Options To Counter OPEC+ Are Limited, by Irena Slav

Posted on October 10, 2022 | Leave a comment

What does OPEC’s, and particularly Saudi Arabia’s, humiliation of Joe Biden say about the U.S.’s current geopolitical standing? From Irena Slav at oilprice.com:

  • Despite repeated requests from the Biden Administration not to cut oil production, OPEC+ went ahead and did just that.
  • The geopolitical rationale behind OPEC+’s move might be more worrying than the output cut itself.
  • Besides suspending deliveries of weapons to Saudi Arabia, there’s little that the U.S. can do to raise the pressure on the Kingdom.

This week, OPEC+ made a decision unprecedented in its history and the history of OPEC. The extended cartel approved production cuts of 2 million bpd at a time of steady demand, tight supply, and runway inflation in the world’s biggest economies.  More significantly, perhaps, OPEC+ made this decision despite Washington’s numerous attempts to change the mind of the cartel leaders, notably Saudi Arabia and the UAE.

Just a day before the OPEC+ meeting, CNN reported that all available human resources in the administration had been mobilized, with the White House “having a spasm and panicking,” per one unnamed official.

Top officials such as Amos Hochstein and Janet Yellen had been tasked with talking the Saudis and the Emiratis out of a production cut. Talking points included a not too thinly veiled threat of reputational and foreign relations damage: “There is great political risk to your reputation and relations with the United States and the west if you move forward.” Yet the Saudis and the Emiratis did just that. They went forward.

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OPEC Humiliates President Biden On A Global Stage, by Quoth the Raven

Posted on October 8, 2022 | Leave a comment

OPEC leaves Biden and company sputtering with impotent rage. From Quoth the Raven at zerohedge.com:

Today, you get a two-fer. Since my dear friend Kenny Polcari has released new thoughts on the OPEC debacle – and since that was also the topic of my latest podcast, published yesterday, which you can listen to here – I am bringing you both his thoughts and mine, together.

In short, yesterday OPEC humiliated President Biden on a global stage by cutting oil production after he specifically lobbied them not to. There’s no “nice” way of putting it – they straight-up snubbed the U.S. and have now, in my opinion, made it officially clear that they 1) are not our friends, 2) do not care what we want, 3) do not take us seriously and 4) are not here to help us and/or Biden get re-elected by lowering prices.

To use Biden’s parlance, “Let me tell you something, Jack – we’re not in bed with the Saudis anymore. They are more allied with China and Russia than they have ever been, at arguably the most crucial moment in recent history for our global economy.”

As I pointed out last night on my podcast, there was nothing quite like the “fist bump heard round the world” a couple months ago when President Biden – who spends his time here domestically fighting for “equality” and human rights – decided to embrace the Saudis, and their track record of disapproving of gay rights, murdering journalists and multiple other human rights violations – instead of simply ramping up domestic oil production here in the U.S.

Biden probably went into the meeting he had with MBS months ago thinking we had some type of leverage, like we have had decades ago. The sad reality is that we simply don’t anymore: the Saudis have the oil, they have gold, and now they have allies just as big and powerful as the U.S. when combined. And those allies provide financial and military support at a crucial juncture for geopolitics.

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OPEC’s Counterattack…, by Kuppy

Posted on October 5, 2022 | Leave a comment

Come hell or high water, OPEC is determined to maintain their oil revenues. From Kuppy at adventuresincapitalism.com:

The Federal Reserve has been attacking inflation. The problem is that after printing trillions of dollars, they’re ill-equipped to succeed at their task. Partly, this is because all that cash has to go somewhere and partly this is because their mandate does not extend into ensuring that global energy production expands. While Owners’ Equivalent Rent and wages have remained elevated, those are often seen as the “good” sort of inflation—or at least the benign sort. Meanwhile, all other forms of inflation tend to be characterized as “bad” and frequently the “bad” inflation is caused by elevated energy prices, which then increase the costs of producing and transporting everything else. Therefore, despite the Fed ignoring the inflation they caused for well over a year, when oil cleared $100 a barrel, the Fed finally felt that they had no choice but to do something.

The problem is that the only ways to reduce the price of oil are to produce more of it or consume less of it. It’s hard to produce more when the President and many of his powerful oligarch buddies are aggressively intervening to ensure that it’s difficult to expand or finance production. Meanwhile, no one wants to invest when there are constant threats of excess profits taxes, carbon taxes, expropriation and price caps. Since the obvious solution has been made so impossible, the Fed has been forced to embark on a plan to reduce global energy consumption.

How do you reduce oil consumption?? Well, it seems that their plan is to create a global depression. So, after a decade of paying lip-service to “inclusive economics” and “closing the wealth gap,” the Fed has been forced to pivot and destroy the finances of the world’s poor, in the hopes that they’ll consume less oil. For the past half-year, this plan has unfolded with the usual crescendo of mini-temblors as global growth screeches to a halt and over-leveraged institutions find themselves on the wrong side of asset depreciation. The Fed is now well on its way towards creating an economic crisis that will reduce global energy consumption—consequences be damned.

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Rabobank: The World’s Biggest Oil Consumer Showed Its Political Vulnerability To Higher Oil Prices And Skyrocketing Inflation, by Ryan Fitzmaurice

Posted on August 15, 2021 | Leave a comment

I don’t recall Donald Trump ever groveling to OPEC to increase their oil production. From Ryan Fitzmaurice at zerohedge.com:

Summary

  • The White House released a statement on Wednesday pleading with OPEC+ to increase oil production to stem off inflationary pressures from higher domestic gasoline prices
  • The world’s biggest oil consumer showed its political vulnerability to higher oil prices this week and more specifically skyrocketing consumer inflation
  • The push for “green” energy is also putting upward pressure on commodity price inflation

Oil markets started off the week under pressure as continued speculative “long” liquidation amid delta variant demand concerns weighed on prices. However, in an ironic twist, the oil market got a boost from an unlikely source on Wednesday as the Biden administration announced it was pleading with OPEC+ members to increase oil production to stem inflationary pressures from rising domestic gasoline prices.

The White House announcement was naturally intended to pressure oil prices lower as has worked under past administrations but instead the opposite occurred as the oil market saw right through the veiled attempt (while spurring criticism from all sides including industry lobbyists, “climate scientists”, progressives and conservatives). For starters, OPEC+ and more importantly Saudi Arabia, are unlikely to answer Biden’s calls for more crude oil as they already have a fully agreed to plan in place. Further to that end, the US/Saudi relationship is quite strained as the Biden administration has pivoted towards Iran as it anxiously looks to re-enter the Iran nuclear deal, but so far with little success. As such, the oil market rightly interpreted the desperate plea as coming from a place of weakness and not strength which led to strong gains in the notoriously unforgiving financial oil markets on Wednesday.

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Inferno and the “Fourth Circle”. The American Empire and the 2020 Pandemic, by Dr. T. P. Wilkinson

Posted on September 28, 2020 | 2 comments

Are oil, armaments, drugs, and the dollars the cornerstones of the American empire? From Dr. T. P. Wilkinson at globalresearch.ca:

In 1973, the world economy was brought almost to a halt by a supposed shortage of oil. The ostensible trigger for this alleged shortage was the so-called Yom Kippur War in which the armed forces of the Anglo-American Empire’s settler-colonial offshore enterprise in Palestine, also known as the State of Israel, repelled the forces of Egypt and Syria, which had moved to reoccupy the territory stolen from them by Israel in the 1967 Six Day War. One response to the Anglo-American Empire’s support of its client state against those states Israel wished to conquer was an oil embargo proclaimed by OPEC, with the largest producer– the autocratic Anglo-American protectorate Saudi Arabia at the lead.

Portrayed in the mainstream Western media as a sign of Arab economic strength– also as anti-Semitism in some quarters– the embargo led to massive economic disruption in all the countries that had to import oil, mainly Europe and its former colonies.

This embargo created the impression of a global oil shortage—which although there was none, could not be overcome without violating the power of the oil cartel. While the OPEC embargo formally restricted the sale of crude oil to Israel’s sponsors, there was no real oil shortage since oil supplies to Europe and the US have always been in the hands of the majors (now super-majors), then known as the “seven sisters”.[1] OPEC’s announcement of an embargo at the well had no impact on the enormous upstream reserves held by the mainly American majors. However it did provide the pretext for massive price increases at the pump– presented as shortage-induced.[2]

Unnoticed except in the aftermath and ignored generally in popular debate or historical literature was the far more insidious deal made secretly while everyone from Bonn to Boston and Lyon to Los Angeles was queuing for petrol or the dole. In 1971 Richard Nixon had announced that the US dollar would no longer be redeemable for gold– at any price. This decision had been largely induced by the enormous debt incurred funding the US war against Vietnam. In the course of this fateful decision, secret negotiations were undertaken with the Kingdom of Saudi Arabia, which led to an agreement that Saudi Arabia and OPEC would not sell oil in any currency except US dollars. The oil crisis pushed the price of oil to such heights that many countries in Europe and especially the newly independent countries, soon exhausted their foreign exchange reserves and were compelled to borrow US dollars to pay for oil imports. The result was a boom for the US regime, e.g. oil and banking– not its ordinary citizens– as the demand for US currency led to an inflow of foreign exchange and an overall improvement in its current accounts. Meanwhile the US Treasury could literally print dollars to buy oil– when the time was right.

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Saudi Arabia Starts All-Out Oil War: MbS Destroys OPEC By Flooding Market, Slashing Oil Prices, by Tyler durden

Posted on March 8, 2020 | 1 comment

This won’t knock the Russians, who produce oil cheaply and have little debt, out of the oil market, but it may well knock out an appreciable percentage of American frackers, who have both high debt and a higher production costs. From Tyler Durden at zerohedge.com:

With the commodity world still smarting from the Nov 2014 Saudi decision to (temporarily) break apart OPEC, and flood the market with oil in (failed) hopes of crushing US shale producers (who survived thanks to generous banks extending loan terms and even more generous buyers of junk bonds), which nonetheless resulted in a painful manufacturing recession as the price of Brent cratered as low as the mid-$20’s in late 2015/early 2016, on Saturday, Saudi Arabia launched its second scorched earth, or rather scorched oil campaign in 6 years. And this time there will be blood.

Following Friday’s shocking collapse of OPEC+, when Russia and Riyadh were unable to reach an agreement during the OPEC+ summit in Vienna which was seeking up to 1.5 million b/d in further oil production cuts, on Saturday Saudi Arabia kick started what Bloomberg called an all-out oil war, slashing official pricing for its crude and making the deepest cuts in at least 20 years on its main grades, in an effort to push as many barrels into the market as possible.

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Russia Just Told the World, “No.” by Tom Luongo

Posted on March 6, 2020 | 2 comments

For a supposed global pariah, many nations want a lot from Russia. Not surprisingly, Russia’s response is often no. From Tom Lungo at tomluongo.me:

There is real power in the word “No.”

In fact, I’d argue that it is the single most powerful word in any language.

In the midst of the worst market meltdown in a dozen years which has at its source problems within global dollar-funding markets, Russia found itself in the position to exercise the Power of No.

Multiple overlapping crises are happening worldwide right now and they all interlock into a fabric of chaos.

Between political instability in Europe, presidential primary shenanigans in the U.S., coronavirus creating mass hysteria and Turkey’s military adventurism in Syria, the eastern Mediterranean and Libya, markets are finally calling the bluff of central bankers who have been propping up asset prices for years.

But, at its core, the current crisis stems from the simple truth that those prices around the world are vastly overvalued.

Western government and central bank policies have used the power of the dollar to push the world to this state.

And that state is, at best, meta-stable.

But when this number of shits get this freaking real, well… meeting the fan was inevitable.

And all it took to push a correction into a full-scale panic was the Russians saying, “No.”

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U.S-Saudi Clash Could Spell Disaster For OPEC, by Cyril Widdershoven

Posted on October 19, 2018 | 1 comment

A US-Saudi clash might be both a disaster for OPEC and a boon for Russia and Iran. From Cyril Widdershoven at oilprice.com:

The Khashoggi case is far from over, as current harsh statements coming from Washington are showing.

Not only is there a long line of U.S. Senators calling for an in-depth investigation of the matter, some have even openly called for the removal of Saudi Crown Prince Mohammed bin. Senior R-Senator Lindsay Graham, one of the staunchest supporters of US president Trump and Saudi Arabia, has broken ranks as he asked on US Fox-News to remove MBS from his position.

These moves from Washington are not only endangering the very strong ties between Washington and Riyadh, but also endanger the overall Middle East and internal stability of OPEC. The oil cartel, led by Saudi Arabia, is looking at a very stormy ride the next couple of months, while the U.S. is heading for another showdown in the Arab world.

The Khashoggi case has become a possible watershed in international relations. Statements made by US R-Senator Graham, already supported by other high-ranking U.S. officials, show that the position of Saudi Arabia as a strategic ally of Washington in the Middle East, and MBS in particular, is under severe pressure.

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