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Is The U.S. Using Force To Sell Its LNG To The World?

Public Policy Middle East

The Trump Administration trade policy is nowhere so clear as in the energy area. For years it was thought that the younger Bush Administration was one of the most energy industry friendly in history. But the Trump Administration has gone far beyond that.

Hiring Ray Tillerson, the former CEO of ExxonMobil, as U.S. Secretary of State, sent a strong signal to the entire industry, even though his tenure proved to be temporary.

Prior to that, the Administration withdrew from the Paris Climate Agreement, a long-held priority of Exxon and the entire oil industry. Following hard upon that, the Environmental Protection Agency (EPA) has reduced or eliminated regulations limiting carbon and other pollutants.

Exxon has for more than a decade underwritten the now discredited, right wing attack on climate change as a hoax. Although the energy industry has now publicly acknowledged climate change as a global threat, in practice the subject is still largely ignored.

Going further, the Trump Administration has removed and reduced regulations that hampered the industry expansion, including allowing drilling on both ocean coast, while easing safety regulations that were brought into effect after BP’s Gulf of Mexico disastrous spill, the worst in U.S. history.

Government protected nature preserves are being opened to exploration and drilling for the first time in generations. Added to that was the dropping of regulations that for many years prohibited export of U.S. crude. Since then, the U.S. has become a major player in the global energy industry.

The Administration currently plans to rescind and lower fuel efficiency standards for autos and trucks. That is likely to encourage increased purchase of larger SUVs, increased oil consumption, and rising gasoline prices.

The Administration corporate tax cut, one of the largest in U.S. history, also strongly benefitted the energy industry, as it did other industries.

From the moment he chose to run for President, Trump has embraced the new shale revolution in the U.S. as a major contributor to the country’s economic growth and energy independence.

Increasingly, Trump has become the top promoter for increasing exports of U.S. Liquid Natural Gas (LNG) to world markets. He openly threatened to place economic sanctions on Germany if it went ahead with the deal for Russia’s new Nordstream 2 pipeline, that would nearly double natural gas supplies from Russia, Germany’s largest supplier.

As most observers noted, the U.S. sanction threat was accompanied by the offer of U.S. LNG to Germany and Europe, as a replacement of Russian gas.

No doubt that Trump’s bullying offended European sensibility, but despite the German protest regarding outside interference in its domestic economic affairs, and its intention to complete the Russian pipeline, Germany is quietly building up LNG importing facilities, “as a gesture to American friends.”

Most energy experts agree that it is inevitable that U.S. LNG will eventually become a component of European markets, despite its significantly higher price to Russian and Norwegian gas, if for no other reasons to keep the peace with America, Europe’s largest ally, and assure Europe’s access to the U.S. market.

This will also serve to assuage the U.S. complaints about unfair trade. It matters little that the U.S. trade deficit with Germany centers on its auto industry rather than energy, if the sale of natural gas serves to reduce the U.S. trade deficit.

The same could be said about the U.S./China trade deficit. China, the largest energy consumer, is the one country where solutions to the trade deficit is clearly at hand, involving increased U.S. LNG imports. China already has a long-term, 20-year deal to import LNG from the leading U.S. LNG company, Cheniere Energy.

China could easily reduce the amount of gas imports from variety of other suppliers (i.e., Qatar, Australia, New Guinea, Iran, Russia) and replace these with U.S. supplies. That would be a near costless transaction for China, as it is already paying other producers for natural gas and LNG supplies.

Consider the effects of a possible LNG deal could have on the trade dispute. In terms of the current deficit, China sales to the U.S. is estimated at around $350 billion, while U.S. sales to the China is around $150 billion.

Last May, the China signed a $25 billion deal for importing U.S. LNG. If we assumed that in current negotiations the two countries could strike a modest deal for another $25 billion in annual U.S. LNG sales to China, U.S. sales to China increases to $200 billion, reducing China’s surplus to $300 billion.

If that were to take place, the trade deficit would reduce to around $100 billion, and Trump would no doubt return to the election campaign trail to boast of the first U.S. trade victory over China.

The risk to this scenario is the presumption that everyone involved really wants a solution to the trade dispute, but there is widespread suspicions that U.S. tariffs on China may be less about fair trade and more about economic warfare to contain China’s growth.

George Friedman’s “Geopolitical Futures” recently noted that “The U.S. is beginning to see it [tariffs] more as a strategic opportunity to contain Chinese assertiveness than as a play to invigorate U.S. manufacturing.”

On various Asian websites, there remains a stalwart band of journalists, led by Pepe Escobar, who maintain that Europe, Russia, China, and Iran will band together to thwart U.S. sanctions on Iran, and that ‘Iran’s oil sales will be totally unaffected. They also hold strongly to the opinion that China will not yield to U.S. threats and ultimatum.

This despite the fact that major energy companies, like Royal Dutch Shell and Total have already fled Iran in fear of US sanctions, while major countries are severely cutting Iran imports.

Sanctions against Iran will certainly reduce its exports substantially, with the worst case estimates of a loss to the markets of 1.5 million barrels of oil per day. This will also open opportunities in under supplied markets that will almost certainly be exploited by U.S. and other competitors.

Currently, Japan and India have agreed to major reductions of energy imports from Iran. Recent news has it that Sinopec, China’s largest oil and gas refiner, under threats of US sanctions, also agreed to severely cut imports from Iran. It’s no secret that nearly all of Iran’s competitors, it’s OPEC ‘partners’, will go after those under supplied markets, as will the U.S.

Some observers believe that because the upcoming election is uppermost in the minds of both U.S. political parties, a trade victory with China is extremely important to the Republican election campaign. If so, their thinking goes, a deal will result in easing tariffs with China by November.

Trump himself recently stated that he’s ready to talk trade with China, but continues to add the qualifier, “not now.” Many Trump watchers interpret this to mean that ‘getting tough with China’ plays well to Trump’s base, boosts the Republican election prospects, and afterwards a trade deal is likely to be struck.

Any trade deal with China could also be used by the U.S. as a template for deals with Japan, India, and South Korea, the next largest Asian importers of natural gas. It can hardly be coincidence that, as in Europe, these energy importing countries are threatened by US tariffs over unfair trade.

However, Geopolitical Futures states that “the broad impression in China appears to be that Trump isn’t actually interested in a deal – certainly not one that China could accept – and that this is just the first major salvo in an emerging Cold War and that instead … the world needs to get ready for a new cold war with China.

In a recent speech, Richard Haas, president of New York-based think tank Council on Foreign Relations stated that “…the Trump administration initially focused just on trade, “but now it’s broadening, and it almost seems as if the administration wants to have something of a cold war with China.”

What about Venezuela, a country estimated to have the largest oil reserves in the world, also laboring under U.S. sanctions? It’s also a country about which the Administration has made no secret of its plans for a possible U.S. military invasion to topple the Maduro government.

Why go public with that story now, with only a little more than a month towards U.S. Congressional elections?

There is widespread speculation that this announcement may be a trial balloon, as part of the preparation for laying the ground work for an invasion aimed at bolstering Republican election prospects. To date, there has been no sign of opposition to these threats from Democrats.

Conclusion:

It’s no accident that sanctions are aimed at the U.S. largest energy competitors, Russia and Iran, nor is it coincidence that the largest energy importers, Europe, China, Japan, south Korea are also under threat of U.S. tariffs or sanctions.

Instead, it clearly shows that the U.S. is using the threat of economic warfare and possible military conflict as leverage to open markets to the newest player on the world’s energy market, American LNG.

If the U.S. is successful in these deals, it’s likely that in future, there will be a parallel attempt to make inroads for US crude export to the very same oil importing countries, relying upon the very same LNG game plan.

By Robert Berke for Oilprice.com



19 Comments on "Is The U.S. Using Force To Sell Its LNG To The World?"

  1. energy investor on Sun, 7th Oct 2018 4:14 pm 

    At least they should be able to get Rex Tillerson’s name right.

    As for Trump’s plans for an invasion of Venezuela? Who says he actually plans to do this? All Trump has said is that certain Venezuelans think it would be a good idea.

    This article seems somewhat speculative. But perhaps he could be right. Nothing would surprise me.

  2. dave thompson on Sun, 7th Oct 2018 6:54 pm 

    “Is The U.S. Using Force To Sell Its LNG To The World?” The U$ has the largest military budget in the world, Does it ever use force for anything? Snark.

  3. makati1 on Sun, 7th Oct 2018 7:29 pm 

    The Us is terrorizing every country that will not kiss the imperial ass. It is using the dollar’s reserve status as a weapon, to its own demise.

    More and more countries are moving away from the USD for trade. Soon that flow will hit the steep curve on the graph that kills the USD, or at least cripples it, and forces the US into the 3rd world where it has to produce real things and not paper, to survive.

  4. makati1 on Sun, 7th Oct 2018 8:15 pm 

    In support of my assertion above:

    “India Explores Ditching Dollar Oil Trade With Russia, Iran, Venezuela”
    “Russia Lays Plans to Cut Dollar Use Amid Sanctions Fears”
    “How Russia plans to disentangle its economy from US dollar”
    “Government may explore barter trade for oil purchases (India)”
    “US Commerce’s Ross eyes anti-China ‘poison pill’ for new trade deals”
    “India to keep buying Iranian oil despite U.S. sanctions: sources”
    “India, Russia To Cooperate On Russian LNG, Oil Field Development”
    “The Tyranny of the U.S. Dollar”

    https://ricefarmer.blogspot.com/

    And on and on. Slip slidin’…

  5. boney joe on Sun, 7th Oct 2018 9:04 pm 

    IN THE HEART OF A DYING EMPIRE

    “When you think about it, the Earth is a relatively modest-sized planet — about 25,000 miles in circumference at the Equator, with a total surface area of 197 million square miles, almost three-quarters of which is water. It’s not so hard, if you’re in a certain frame of mind (as American officials were after 1991), to imagine that a single truly great nation — a “sole superpower” with a high-tech military, its capabilities unparalleled in history — might in some fashion control it all.

    Think back to that year when the other superpower, the lesser one of that era, so unbelievably went down for the count. Try to recall that moment when the Soviet Union, its economy imploding, suddenly was no more, its various imperial parts — from Eastern Europe to Central Asia — having largely spun free. It’s hard now to remember just how those months after the fall of the Berlin Wall in 1989 and that final moment in 1991 stunned the Washington establishment. Untold sums of money had been poured into “intelligence” during the almost half-century of what became known as the Cold War (because a hot war between two nuclear-armed superpowers seemed unimaginable — even if it almost happened). Nonetheless, key figures in Washington were remarkably unprepared for it all to end. They were stunned. It simply hadn’t occurred to them that the global standoff between the last two great powers on this planet could or would ever truly be over.

    And when you think about it, that wasn’t so illogical. Imperial rivalries had been the name of the game for so many centuries. A world without some version of such rivalries seemed genuinely unimaginable — until, of course, it happened. After the shock began to wear off, what followed was triumphalism of a soaring sort. Think of that moment as the geopolitical equivalent of a drug high.

    Imagine! After so many centuries of rivalries between great powers and that final showdown between just two superpowers, it was all over (except for the bragging). Only one power, the — by definition — greatest of all, was left on a planet obviously there for the taking.

    Yes, Russia still existed with its nuclear arsenal intact, but it was otherwise a husk of its former imperial self. (Vladimir Putin’s sleight-of-hand brilliance has been to give what remains a rickety petro-state the look of a great power, as in MRGA, or Make Russia Great Again.) In 1991, China had only relatively recently emerged from the chaos of the Maoist era and was beginning its rise as a capitalist powerhouse overseen by a communist party — and, until that moment, who would have believed that either? Its military was modest and its leaders not faintly ready to challenge the U.S. It was far more intent on becoming a cog in the global economic machinery that would produce endless products for American store shelves.

    In fact, the only obvious challenges that remained came from a set of states so unimpressive that no one would have thought to call them “great,” no less “super” powers. They had already come to be known instead by the ragtag term “rogue states.” Think theocratic Iran, Saddam Hussein’s Iraq, and Kim Il-sung’s (soon to be Kim Jong-il’s) North Korea, none then nuclear armed. A disparate crew — the Iraqis and Iranians had been at war for eight years in the 1980s — they looked like a pushover for… well, you know who.

    And the early results of American global preeminence couldn’t have been more promising. Its corporate power initially seemed to “level” every playing field in sight, while conquering markets across the planet. Its thoroughly high-tech military crushed the armed forces of one rogue power, Iraq, in a 100-hour storm of a war in 1991. Amid a blizzard of ticker tape and briefly soaring approval ratings for President George H.W. Bush, this was seen by those in the know as a preview of the world that was to be.

    So what a perfect time — I’m talking about January 2000 — for some of the greatest geopolitical dreamers of all, a crew that saw an “unprecedented strategic opportunity” in the new century to organize not half the planet, as in the Cold War, but the whole damn thing. They took power by a chad that year, already fearing that the process of creating the kind of military that could truly do their bidding might be a slow one without “some catastrophic and catalyzing event — like a new Pearl Harbor.” On September 11, 2001, thanks to Osama bin Laden’s precision air assaults on the World Trade Center and the Pentagon, they got their wish — what screaming newspaper headlines promptly called “a new day of infamy” or “the Pearl Harbor of the twenty-first century.” Like their confreres in 1991, the top officials of George W. Bush’s administration were initially stunned by the event, but soon found themselves swept up in a mood of soaring optimism about the future of both the Republican Party and American power. Their dream, as they launched what they called the Global War on Terror, would be nothing short of creating an eternal Pax Republicana in the U.S. and a similarly never-ending Pax Americana first in the Greater Middle East and then on a potentially planetary scale.

    As their 2002 national security strategy put it, the U.S. was to “build and maintain” military power “beyond challenge” so that no country or even bloc of countries could ever again come close to matching it. For them, this was the functional definition of global dominance. It gave the phrase of that moment, “shock and awe,” new meaning.

    A Smash-Up on the Horizon?

    Of course, you remember this history as well as I do, so it shouldn’t be hard for you to jump into the future with me and land in September 2018, some 17 years later, when all those plans to create a truly American planet had come to fruition and the U.S. was dominant in a way no other country had ever been.

    Whoops… my mistake.

    It is indeed 17 years later. Remarkably enough, though, the last superpower, the one with the military that was, as President George W. Bush put it, “the greatest force for human liberation the world has ever known,” is still fruitlessly fighting — and still losing ground — in the very first country it took on and supposedly “liberated”: poor Afghanistan. The Taliban is again on the rise there. Elsewhere, al-Qaeda, stronger than ever, has franchised itself, multiplied, and in Iraq given birth to another terror outfit, ISIS, whose own franchises are now multiplying across parts of the planet. In no country in which the U.S. military intervened in this century or in which it simply supported allied forces in a conflict against seemingly weaker, less-well-armed enemies has there been an obvious, lasting victory of the kind that seemed so self-evidently an American right and legacy after 1991 and again 2001.

    In fact, there may not be another example of a truly great power, seemingly at the height of its strength and glory, so unable to impose its will, no matter the brutality and destructive force employed. The United States had, of course, been able to do exactly that, often with striking success (at least for a while), from Guatemala to Iran in the Cold War years, but “alone” on the planet, it came up cold. Of those three rogue powers of the 1990s, for instance, Iran and North Korea are now stronger (one of them even nuclear-armed) and neither, despite the desires and plans of so many American officials, has been toppled. Meanwhile, Iraq, after a U.S. invasion and occupation in 2003, has proven a never-ending disaster area.

    Not that anyone’s drawing lessons from any of this at the moment, perhaps because there’s that orange-haired guy in the Oval Office taking up so much of our time and attention or because there’s an understandable desire to duck the most obvious conclusion: that Planet Earth, however small, is evidently still too big for one power, however economically overwhelming or militarily dominant, to control. Think of the last 27 years of American history as a demo for that old idiom: biting off more than you can chew.

    In 2016, in what came to be known as the “homeland,” American voters responded to that reality in a visceral way. They elected as president a truly strange figure, a man who alone among the country’s politicians was peddling the idea that the U.S. was no longer great but, like Putin’s Russia, would have to be made great again. Donald Trump, as I wrote during that campaign season, was the first presidential candidate to promote the idea that the United States was in decline at a moment when politicians generally felt obliged to affirm that the U.S. was the greatest, most exceptional, most indispensable place on the planet. And, of course, he won.

    Admittedly, despite a near collapse a decade earlier, the economy is seemingly soaring, while the stock market remains ebullient. In fact, it couldn’t look sunnier, could it? I mean, put aside the usual Trumpian tweets and the rest of the Washington sideshow, including those Chinese (and Canadian) tariffs and the bluster and bombast of the leakiest administration this side of the Titanic, and, as the president so often says, things couldn’t look rosier. The Dow Jones average has left past versions of the same in the dust. The unemployment rate is somewhere near the bottom of the barrel (if you don’t count the actual unemployed). The economy is just booming along.

    But tell me the truth: Can’t you just feel it? Honestly, can’t you?

    You know as well as I do that there’s something rotten in… well, let’s not blame Denmark… but you know perfectly well that something’s not right here. You know that it’s the wallets and pocketbooks of the 1% that are really booming, expanding, exploding at the moment; that the rich have inherited, if not the Earth, then at least American politics; that the wealth possessed by that 1% is now at levels not seen since the eve of the Great Depression of 1929. And, honestly, can you doubt that the next crash is somewhere just over the horizon?

    Meet the Empire Burners

    Donald Trump is in the White House exactly because, in these years, so many Americans felt instinctively that something was going off the tracks. (That shouldn’t be a surprise, given the striking lack of investment in, or upkeep of, the infrastructure of the greatest of all powers.) He’s there largely thanks to the crew that’s now proudly referred to — for supposedly keeping him in line — as “the adults in the room.” Let me suggest a small correction to that phrase to better reflect the 16 years in this not-so-new century before he entered the Oval Office. How about “the adolts in the room”?

    After all, from National Security Advisor John Bolton (the invasion of Iraq) and Secretary of State Mike Pompeo (a longtime regime-change advocate) to CIA Director Gina Haspel (black sites and torture), Secretary of Defense James “Mad Dog” Mattis (former Marine general and CENTCOM commander), and White House Chief of Staff John Kelly (former Marine general and a commander in Iraq), those adolts and so many like them remain deeply implicated in the path the country took in those years of geopolitical dreaming. They were especially responsible for the decision to invest in the U.S. military (and little else), as well as in endless wars, in the years before Donald Trump came to power. And worse yet, they seem to have learned absolutely nothing from the process.

    Take a recent example we know something about — Afghanistan — thanks to Fear: Trump in the White House, Bob Woodward’s bestselling new book. Only recently, an American sergeant major, an adviser to Afghan troops, was gunned down at a base near the Afghan capital, Kabul, in an “insider” or “green-on-blue” attack, a commonplace of that war. He was killed (and another American adviser wounded) by two allied Afghan police officers in the wake of an American air strike in the same area in which more than a dozen of their compatriots died. Forty-two years old and on the eve of retirement, the sergeant was on his seventh combat tour of duty of this century and, had he had an eighth, he might have served with an American born after the 9/11 attacks.

    In his book, Woodward describes a National Security Council meeting in August 2017, in which the adolts in the room saved the president from his worst impulses. He describes how an impatient Donald Trump “exploded, most particularly at his generals. You guys have created this situation. It’s been a disaster. You’re the architects of this mess in Afghanistan… You’re smart guys, but I have to tell you, you’re part of the problem. And you haven’t been able to fix it, and you’re making it worse… I was against this from the beginning. He folded his arms. ‘I want to get out… and you’re telling me the answer is to get deeper in.’”

    And indeed almost 16 years later that is exactly what Pompeo, Mattis, former National Security Advisor H.R. McMaster, and the rest of them were telling him. According to Woodward, Mattis, for instance, argued forcefully “that if they pulled out, they would create another ISIS-style upheaval… What happened in Iraq under Obama with the emergence of ISIS will happen under you, Mattis told Trump, in one of his sharpest declarations.”

    The reported presidential response: “‘You are all telling me that I have to do this,’ Trump said grudgingly, ‘and I guess that’s fine and we’ll do it, but I still think you’re wrong. I don’t know what this is for. It hasn’t gotten us anything. We’ve spent trillions,’ he exaggerated. ‘We’ve lost all these lives.’ Yet, he acknowledged, they probably could not cut and run and leave a vacuum for al-Qaeda, Iran, and other terrorists.”

    And so Donald Trump became the latest surge president, authorizing, however grudgingly, the dispatching of yet more American troops and air power to Afghanistan (just as he recently authorized an “indefinite military effort” in Syria in the wake of what we can only imagine was another such exchange). Of Mattis himself, in response to reports that he might be on the way out after the midterm elections, the president recently responded, “He’ll stay… we’re very happy with him, we’re having a lot of victories, we’re having victories that people don’t even know about.”

    Perhaps that should be considered definitional for the Trump presidency, which is likely to increasingly find itself in a world of “victories that people don’t even know about.” But don’t for a second think that The Donald was the one who brought us to this state, though someday he will undoubtedly be seen as the personification of it and of the decline that swept him into power. And for all that, for the victories that people won’t know about and the defeats that they will, he’ll have the adolts in the room to thank. They proved to be neither the empire builders of their dreams, nor even empire preservers, but a crew of potential empire burners.

    Believe me, folks, it’s going to be anything but pretty. Welcome to that most unpredictable and dangerous of entities, a dying empire.”

    http://www.unz.com/tengelhardt/in-the-heart-of-a-dying-empire/

  6. dissident on Sun, 7th Oct 2018 9:47 pm 

    The US does not have the export capacity to displace anybody from any market. It had 5 bcm of excess as of 2017. It imported 87 bcm from Canada in 2017. Russia supplies 150 bcm to the EU. Wake me up when America has real export capacity.

  7. makati1 on Sun, 7th Oct 2018 10:45 pm 

    dissident. you will never wake up is you wait for that time.

    2017 – WIKI
    US exports: $1.5 trillion ~10% of world total.
    EU exports” $1.9 trillion
    China exp.: $2.1 trillion
    Germany exp: $1.4 trillion

    2017
    US imports: $2.4 trillion $900 billion deficit and ~17% of world total.
    EU imports: $1.9 trillion Balanced trade
    China imp.: $1.7 trillion $400 billion surplus
    Germany imp: $1.1 trillion $300 billion surplus

    Remember, China has 4 times the population of the US, and the US claims to be “self sufficient”. LMAO

  8. Here we go again on Sun, 7th Oct 2018 11:08 pm 

    Yo, we got the Space Force…try not to use the God Almighty Dollar….ask Saddam Hussain what happens

  9. print baby print on Mon, 8th Oct 2018 12:59 am 

    https://www.chron.com/business/energy/article/Oil-discoveries-in-2017-hit-all-time-low-12447212.php
    We must very quickly print some new oil fields

  10. Anonymouse1 on Mon, 8th Oct 2018 1:25 am 

    The uS has no LNG to ‘export’. It is a net IMPORTER. This fact, is widely known. Except it seems, to just about everyone in the uS fossil-fuel cartel and their media mouthpieces. What the uS does have, is colonies and puppet states that actually DO have LNG they can export. Here is how this works. In the minds of the amerikan elites, and even many of its serfs, the resources of these ‘allies’, are de-facto, amerikan. Even in cases where the resource is on paper, nationalized. So, NG in, say, Bahrain, is considered, for all intents, as amerikan NG. Same with Canadian and Mexican resources. These too, are considered, ‘amerikan’ by yankee barrel and bean counters.

    This also extends to the entire South American continent as well. This helps explain why the uS is so upset with Venezuela atm. That gas actually IS the property of that nation and not the criminal regime in the uS, a situation the empire seeks to rectify, by whatever means necessary.

  11. THE ONE on Mon, 8th Oct 2018 1:54 am 

    ONE OF WORLD’S GREATEST MYSTERIES SOLVED

    Wow!!!!! Did you hear the breaking news????? The solution to one of the greatest mysteries of all time was announced today.

    For some time now, intense speculation has circulated as to the origin of Donald Trump’s unique hair-doo. The Weekly Star paid a source “in excess of $1 million” to produce close-up photos that show a pubic hair transplant from Trump’s scrotum sac, anus area, armpits, and upper back to his head. The process occurred over a six month period and involved multiple procedures. The article and photos will be published in the Thursday edition (correction from earlier date of Tuesday) of the weekly newspaper.

    I am required to disclose I am employed by the Star.

  12. Cloggie on Mon, 8th Oct 2018 3:05 am 

    New climate change tough talk:

    https://www.dailymail.co.uk/sciencetech/article-6250839/UN-study-says-eating-meat-throwing-gas-boiler-stop-Earth-overheating.html

    ‘Halve emissions or face catastrophe’: Landmark UN report warns the world has just 12 YEARS to halt global warming before the planet is plunged into extreme heat, drought, floods and poverty

  13. Cloggie on Mon, 8th Oct 2018 3:50 am 

    Conclusion: sell oil stocks, buy Vestas.

  14. Davy on Mon, 8th Oct 2018 4:40 am 

    “Pakistani Poker: Playing Saudi Arabia Against China”
    https://tinyurl.com/yd5zpzyb

    “Desperate for funding to fend off a financial crisis fuelled in part by mounting debt to China, Pakistan is playing a complicated game of poker that could hand Saudi Arabia a strategic victory in its bitter feud with Iran at the People’s Republic’s expense. The Pakistani moves threaten a key leg of the USD60 billion plus Chinese investment in the China Pakistan Economic Corridor (CPEC), a crown jewel of Chinese President Xi Jinping’s Belt and Road initiative. They also could jeopardize Chinese hopes to create a second overland route to Iran, a key node in China’s transportation links to Europe. Finally, they grant Saudi Arabia a prominent place in the Chinese-funded port of Gwadar that would significantly weaken Iran’s ability to compete with its Indian-backed seaport of Chabahar.”

    “In doing so, Pakistan implicitly targeted a key Chinese driver for CPEC: the pacification of Xinjiang’s Turkic Muslim population through a combination of economic development enhanced by trade and economic activity flowing through CPEC as well as brutal repression and mass re-education. The combination of Pakistani and Chinese delays “has virtually brought progress work on the Western route to a standstill,” a Western diplomat in the Pakistani capital of Islamabad said.”

    “The incumbent government is bringing Saudi Arabia closer to Gwadar. In other words, the hardline Sunni-Wahhabi state would be closer than ever to the Iranian border. This is likely to infuriate Tehran,” said Baloch politician and former Pakistani ports and shipping minister Mir Hasil Khan Bizenjo. Pakistan’s game of poker amounts to a risky gamble that serves Pakistani and Saudi purposes, puts China whose prestige and treasure are on the line in a difficult spot, could perilously spark tension along the Pakistan-Iran border, and is likely to provoke Iranian counter moves. It also risks putting Pakistan, Saudi Arabia and Iran, who depend on China economically in different ways, in an awkward position.”

    “Mr. Husseinbor suggested that Saudi support for a low-level Baloch insurgency in Iran could serve as a countermeasure. “Saudis could persuade Pakistan to soften its opposition to any potential Saudi support for the Iranian Baluch… The Arab-Baluch alliance is deeply rooted in the history of the Gulf region and their opposition to Persian domination,” Mr. Husseinbor said. Noting the vast expanses of Iran’s Sistan and Baluchestan Province, Mr. Husseinbor went on to say that “it would be a formidable challenge, if not impossible, for the Iranian government to protect such long distances and secure Chabahar in the face of widespread Baluch opposition, particularly if this opposition is supported by Iran’s regional adversaries and world powers.”

  15. Davy on Mon, 8th Oct 2018 5:06 am 

    “Chinese FX Reserves Drop The Most In 7 Months; Yuan Set To Plunge Below PBOC “Red Line”
    https://tinyurl.com/ya6d5hw8

    China’s reserve holdings, the world’s biggest, have so far exhibited modest fluctuations as capital controls remain in place and policy makers have taken measures to stabilize the falling currency. That said, amid a worsening trade-war outlook, negative sentiment around China’s economy and a surging U.S. dollar could yet test the nation’s defenses. “China’s foreign-exchange reserves should decline given a stronger dollar and increasing depreciation pressures on the yuan, which could prompt the PBOC to intervene,” said Mizuho FX strategist Ken Cheung. “Also, capital outflows should be increasing due to mounting risks on China-U.S. trade war risks.”

    “The CNH is once again dangerously close to the PBOC’s redline of 7.00, with 3-month USD/CNH points, which have reached their highest this year, suggesting that a breach of that level is increasingly probably and implying a CNH yield of around 2% above equivalent USD 3-month rates. At the same time, the 1-year forward is also flirting with 1,000 pips, another signal that traders see a weaker yuan. The rate of appreciation in the forward curve this month is the quickest since June, when the U.S.-China trade war crossed the Rubicon. As a reminder, the further the yuan drops the greater the offset to US import tariffs, and the more likely that the Trump administration will impose even greater sanctions in the future as it sees Chinese monetary policy as specifically targeted to undermine the impact of Trump’s trade war including manipulating its currency.”

  16. Davy on Mon, 8th Oct 2018 8:58 am 

    “Trader: Italy’s Situation Is Truly Unprecedented”
    https://tinyurl.com/yb68hz8n

    “Let’s be clear: no country in history that doesn’t control its own currency has ever had such a large debt pile. This situation is unprecedented. It’s also the debt-to- GDP ratio that makes it particularly dangerous. Some analysts have pointed to the fact that France has been running much larger budget deficits for years, but France is a far larger economy with a smaller debt burden. Its debt/GDP ratio is just below 100%; the equivalent metric for Italy is over 130%.”

    Graph: https://tinyurl.com/y7zxvq9w

  17. rockman on Tue, 9th Oct 2018 3:10 pm 

    Mak – The US currently exports about 707,000 million cubic feet of LNG annually. IOW the US exports 4.5% of the global LNG export market. Pray tell how is a country with such a small market share going to push any LNG importing country around? Algeria controls 4.2% of the export market: Who exactly is afraid of Algeria pushing them around? LOL.

    See page 9:

    https://peakoil.com/publicpolicy/is-the-u-s-using-force-to-sell-its-lng-to-the-world

    Of all people to sign on the President Trump’s bullshit I figured you would be one of the last.

  18. rockman on Tue, 9th Oct 2018 3:12 pm 

    Sorry…wrong link

    https://www.igu.org/sites/default/files/node-document-field_file/IGU_LNG_2018_0.pdf

  19. makati1 on Tue, 9th Oct 2018 7:30 pm 

    rockman, ever hear of Syria? Do you know what a pipeline is? What the US is trying to do, is to deny competitor NG to places it can sell its over priced LNG to, like Europe.

    The US has no market and never will as long as the rest of the world can get it cheaper and more local (ME/Russia). That is why Russia is in the news so much. Nordstream 2. It can supply Europe a lot cheaper than the US can. Without ‘desperate’ customers, the US LNG market is dead, as is the Us. So be it.

    The bully nation has the biggest military budget in history, but it needs desperate customers to sell its over priced exports to. If they do not exist, it will use its military to try to create them.

    I don’t have to read the article to know what is happening in the real world. I have no interest in oily subjects as I have no ‘investments’ to worry about. My investments are in real things of value, not pieces of paper or numbers on my PC screen, or the current market casino hype. I hope the market casino crashes, and soon, so the bully is made harmless. Today would be fine with me.

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