Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on October 11, 2014
Why Oil Is Plunging: The Other Part Of The “Secret Deal” Between The US And Saudi Arabia
Two weeks ago, we revealed one part of the “Secret Deal” between the US and Saudi Arabia: namely what the US ‘brought to the table’ as part of its grand alliance strategy in the middle east, which proudly revealed Saudi Arabia to be “aligned” with the US against ISIS, when in reality John Kerry was merely doing Saudi Arabia’s will when the WSJ reported that “the process gave the Saudis leverage to extract a fresh U.S. commitment to beef up training for rebels fighting Mr. Assad, whose demise the Saudis still see as a top priority.”
What was not clear is what was the other part: what did the Saudis bring to the table, or said otherwise, how exactly it was that Saudi Arabia would compensate the US for bombing the Assad infrastructure until the hated Syrian leader was toppled, creating a power vacuum in his wake that would allow Syria, Qatar, Jordan and/or Turkey to divide the spoils of war as they saw fit.
A glimpse of the answer was provided earlier in the article “The Oil Weapon: A New Way To Wage War“, because at the end of the day it is always about oil, and leverage.
The full answer comes courtesy of Anadolu Agency, which explains not only the big picture involving Saudi Arabia and its biggest asset, oil, but also the latest fracturing of OPEC at the behest of Saudi Arabia…
… which however is merely using “the oil weapon” to target the old slash new Cold War foe #1: Vladimir Putin.
To wit:
Saudi Arabia to pressure Russia, Iran with price of oil
Saudi Arabia will force the price of oil down, in an effort to put political pressure on Iran and Russia, according to the President of Saudi Arabia Oil Policies and Strategic Expectations Center.
Saudi Arabia plans to sell oil cheap for political reasons, one analyst says.
To pressure Iran to limit its nuclear program, and to change Russia’s position on Syria, Riyadh will sell oil below the average spot price at $50 to $60 per barrel in the Asian markets and North America, says Rashid Abanmy, President of the Riyadh-based Saudi Arabia Oil Policies and Strategic Expectations Center. The marked decrease in the price of oil in the last three months, to $92 from $115 per barrel, was caused by Saudi Arabia, according to Abanmy.
With oil demand declining, the ostensible reason for the price drop is to attract new clients, Abanmy said, but the real reason is political. Saudi Arabia wants to get Iran to limit its nuclear energy expansion, and to make Russia change its position of support for the Assad Regime in Syria. Both countries depend heavily on petroleum exports for revenue, and a lower oil price means less money coming in, Abanmy pointed out. The Gulf states will be less affected by the price drop, he added.
The Organization of the Petroleum Exporting Countries, which is the technical arbiter of the price of oil for Saudi Arabia and the 11 other countries that make up the group, won’t be able to affect Saudi Arabia’s decision, Abanmy maintained.
The organization’s decisions are only recommendations and are not binding for the member oil producing countries, he explained.
Today’s Brent closing price: $90. Russia’s oil price budget for the period 2015-2017? $100. Which means much more “forced Brent liquidation” is in the cards in the coming weeks as America’s suddenly once again very strategic ally, Saudi Arabia, does everything in its power to break Putin.
56 Comments on "Why Oil Is Plunging: The Other Part Of The “Secret Deal” Between The US And Saudi Arabia"
shortonoil on Sun, 12th Oct 2014 3:51 pm
PS: Cleveland has been using an EROI of 20:1 for conventional since he published his 1984 paper. It has gone down since then, and the ERoEI of conventional is now 9.1:1. I wish he would update his studies a little more frequently. Never the less, it was his work that most initiated our investigation. He is an icon in the field!
Northwest Resident on Sun, 12th Oct 2014 4:05 pm
shortonoil — Thank you for that info! I knew there had to be a good explanation and you certainly provided it.
So, my use of the term “ZILCH” in a response to Nony on another posted article to describe how much net energy fracking is delivering to the economy was even closer to the actual reality than I thought.
If only I could “guess” so accurately at Fantasy Football, then I’d be #1!! (instead of tied for last place in my league…)
fry10ck on Sun, 12th Oct 2014 7:52 pm
Agree with paulo1 and Davy about zerohedge. I’m not sure, but I think a lot of commenters are young, out of work traders and Ayn Rand aficionados.
Here’s where I go to learn about the intersection of fossil fuels and finance:
http://www.economic-undertow.com/
http://www.golemxiv.co.uk/
http://ourfiniteworld.com/
http://www.nakedcapitalism.com/
http://peakoilbarrel.com/
J-Gav on Mon, 13th Oct 2014 4:06 pm
Interesting article but it doesn’t say anything about certain recent media revelations concerning Saudi Arabia.
One is a NOT-off-the-cuff explanation of some problems in the Middle East re: the financing of extremists, by Joe Biden at Harvard. Wahhabi-inspired groups (from Al-Qaeda to the Islamic State)by some of our “allies.” (The Saudis and the Emirates at a minimum).
As for Assad and regional (semi)hegemony, that can wait for another post where Turkley’s role would have to be included (hint – they want Assad out too).
Those same “allies” are the subject of 28 redacted pages from the Joint Congressional Inquiry on 911, released in 2002 and led by Rep. Porter Goss and Senator Bob Graham. We know that Goss went on to become whorehead of the CIA. Graham did not, and is still vocal today, suggesting that if those 28 pages had not been redacted, ISIS wouldn’t exist today.
J-Gav on Tue, 14th Oct 2014 5:39 am
Another aspect might be that the Saudis wish to re-assert their oil-weapon power by testing the price limits of what the U.S. shale boom can handle.
GregT on Tue, 14th Oct 2014 9:42 am
“Iranian Deputy Foreign Minister Hossein Amir Abdollahian on Saturday warned the US that if America and its coalition tries to topple Syrian President Bashar Assad, Israel will be attacked, reports Associated Press.”
Associated Press? Associated with whom?
Has nobody noticed that the recent reports in the MSM coming out of Eastern Europe and the Middle East are all cut and paste jobs? Our press has been hijacked by a small group of very influential people.
As I have been saying all along, everything is still going as planned. Iran will be next on the list of countries to ‘destabilize’. 9/11 was the ‘New Pearl Harbour’ that spawned ‘The War on Terror’. Iraq was not about ‘weapons of mass destruction’, Afghanistan was not about Osama Bin Laden and women’s rights, Libya was not about Ghadafi, and Syria is not about Al Qeada/ FSA/ ISIS/ ISIL/ IS. This is all about oil, Israeli strength in the ME, and US global hegemony.