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Saudi Arabia and Russia close to freezing oil production

Joint Russian – Saudi statement on oil production and prices suggests despite vague language movement towards a temporary oil production freeze, though impact on oil prices likely to be small.

Alexander Mercouris

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Talks between the Russians and the Saudis at the G20 summit in Hangzhou once again raised hopes throughout the oil industry of a Russian – Saudi agreement for an oil production freeze.

Russia, Saudi Arabia and the US are the three big oil producers, producing roughly similar quantities of oil in any given year.  Of these three countries Saudi Arabia, since it is not a significant oil consumer, has the single biggest role in the oil market, a position further consolidated by its de facto leadership of OPEC – the international oil producers’ cartel – and the oil producing Gulf States.

In 2014 as oil prices began to slide, to the surprise and disappointment of many in the oil industry, Saudi Arabia refused to cut its output to create an artificial shortage in the oil market to support prices.  On the contrary the trend throughout 2015 was for Saudi oil production to rise.  The Saudis instead insisted that the market would eventually rebalance itself as more expensive output was shelved because of low prices.

Contrary to the expectations – and hopes – of many in the oil industry, the Saudis have stuck to this position ever since.

One particular phantom that has flickered with tedious regularity throughout this affair is the hope that if the Saudis will not cut production themselves, they will at least come to some sort of arrangement with the other big oil exporter – Russia (the US despite the size of its production being a net importer of oil) – to rebalance the market. 

The original grounds for this hope were comments by the Saudis at the time of the OPEC summit in November 2014 that they would not cut production because they could not rely on the other big producers – first and foremost Russia – also doing so.

The Russians for their part have consistently said they will not cut production to rebalance the market, and that that is something for Saudi Arabia to do.  They have also said that it would be technically impossible for them to cut production during the winter months since the cold weather in Russia would cause their Siberian wells to freeze.  This explanation is widely ridiculed, though it is in fact perfectly plausible given the harsh conditions of the Siberian winter.

Whilst the Russians have consistently ruled out an oil production cut, they have been open to the idea of an oil production freeze, and in the first few weeks of this year talks between them and the Saudis to achieve this seemed for a time to be going well. 

The background to those talks was a temporary crash in oil prices, which briefly fell to low of $25 a barrel.  What however seems to have prompted these talks was a tour of oil producers in the first few weeks of 2016 by the Oil Minister of Venezuela who was furiously lobbying for an output cut on behalf of his severely cash-strapped government. 

Whilst neither the Saudis nor the Russians were in the mood to talk about a production cut, the Venezuelan Oil Minister’s lobbying does seem to have prompted them to talk to each other about the possibility of a freeze.

In the event talks between the Russians and the Saudis and other oil producers appeared in April 2016 to have come to the brink of reaching agreement on an oil production freeze, with the text of an agreement prepared and ready for signature at an oil producers’ summit in Doha. 

Then to everyone surprise, at the very last moment, the Saudi Deputy Crown Prince, Prince Mohammad bin Salman Al Saud, suddenly reversed Saudi Arabia’s position, and abruptly ordered the Saudi delegation – which was about to sign the agreement – home

The Deputy Crown Prince’s reason was that Iran, whose oil industry had just been freed from the effect of UN sanctions which had previously limited its production and ability to sell oil, was in the process of bringing more oil onto the market, allowing Iran to benefit from a Russian – Saudi production freeze by capturing part of Saudi Arabia’s market share. 

Underlying this of course is the ongoing geopolitical duel between Iran and the Saudis in the Middle East, which makes any agreement between Saudi Arabia and Iran on any subject, including oil prices and production, extremely difficult.

The meeting between Russian President Putin and the Saudi Deputy Crown Prince during the G20 summit in Hangzhou seems to have raised hopes amongst oil industry insiders that this time – with the Deputy Crown Prince directly involved in the talks – an agreement between Russia and Saudi Arabia for an oil production freeze to rebalance the oil market would finally be reached. 

In the days that followed the meeting in Hangzhou comments by certain Russian and Saudi oil industry officials did appear to hold out the promise of an agreement for an oil production freeze.  Thus Russian Energy Minister Aleksandr Novak after meeting Saudi officials in Hangzhou was reported to have said

“We have agreed with the Saudi Arabia energy minister on joint action aimed at stabilizing the situation in the oil market. We consider a production freeze the most efficient tool, concrete parameters are being discussed at the moment.”

Novak is also reported to have said that Saudi Arabia was considering freezing production for one to three months at the levels of July, August or September.

Saudi Oil Minister Khalid Al-Falih for his part is reported to have said

“I have to say all other producers are expressing interest in coordinating… with Saudi Arabia and other like-minded countries to reach a consensus.  We are optimistic the Algiers meeting will provide a forum, and pre-Algiers consultations taking place bilaterally and in groups will bring us to Algiers with some sort of coordinated decisions. But the two countries agree that even if there is no consensus, we will be willing to take joint action when necessary.”

The reference to the meeting in Algiers is to a meeting of the International Energy Forum, which is due to take place later in September in that city.

In the event the joint Russian – Saudi statement on oil production and prices which appeared after the talks proved to be something of a damp squib.  It contained no reference to an oil production freeze.  The closest it came to discussing that possibility was in the following paragraph

“The Ministers recognizer the current challenges in the supply side of the global oil market, including major contraction of capital investments in oil extraction on a global scale, particularly in exploration, as well as mass deferrals of investment projects, which made the market, as a whole, more volatile and therefore unsustainable to both producers and consumers in the long term. There is an imperative to mitigate excessive volatility harmful to global economic stability and growth. In this regard, the Ministers noted that constructive dialogue and close cooperation among major oil producing countries is crucial to oil market stability to ensure sustainable levels of investment for the long term. Therefore, the Ministers agreed to act jointly or with other producers. In addition, the Ministers agreed to continue consultations on market conditions by establishing a joint monitoring task force to continuously review the oil market fundamentals and recommend measures and joint actions aimed at securing oil market stability and predictability.”

This is not an agreement for an oil production freeze.  It is simply a statement of platitudes amounting to nothing more than a wish-list.  Not a single concrete proposal appears anywhere in it, with some oil industry analysts not surprisingly calling it “all talk and no action”.

The likelihood nonetheless remains that some sort of oil production freeze – lasting however no more than a few weeks – will be agreed in Algiers, especially as comments from the Iranian Oil Minister suggest that Iran might now also be willing to join in.

No one should however expect a brief production freeze lasting no more than 3 months at most to have any significant impact on oil prices. 

As I have said many times, the two factors that determine the level of oil prices are (1) monetary policy in the US, which has a direct impact on the oil price because oil is traded in US dollars; and (2) supply and demand. 

An oil production freeze of a few weeks might have some marginal impact on supply.  It cannot influence the effect on oil price movements caused by US monetary policy.  This is key since it was the tightening of US monetary policy in the summer of 2014 with the ending of QE, leading eventually to the rise in interest rates in December 2015, which was the single biggest factor causing oil prices to fall.

Why then, if the effect of an oil production freeze on oil prices can only be minimal, are the Russians and the Saudis even talking about one? 

The answer has been provided by Omar Al-Ubaydli, who is a programme director at the Bahrain Center for Strategic, International and Energy Studies as well as an affiliated senior research fellow at the Mercatus Center at George Mason University

“In the case of Saudi Arabia and Russia, both countries are seeking closer relations, and they want to project a good relationship to the rest of the world.  They both know that there’s no chance of effective cooperation in oil markets due to market forces, but there’s no harm in having an extra meeting, and issuing mutually supportive statements.”

In other words, at a time when Russia and Saudi Arabia are intent on improving their relations with each other, it is in their joint interests to appear to be cooperating on oil production and prices, even if in reality that cooperation does not amount to very much.

By at least going through the motions of talking to and agreeing with each other, they send out a strong signal – first and foremost to the US and Iran – that despite their differences over the conflict in Syria they remain friends.

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Photos of swastika on Ukrainian mall stairway creates a stir [Video]

Ukrainian nationalist press in damage-control mode to explain away the Nazi sign, but they forgot the name of the street the mall is on.

Seraphim Hanisch

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One of the aspects of news about Ukraine that does not make it past the gatekeepers of the American and Western news media is how a significant contingent of Ukrainian nationalists have espoused a sense of reverence for Nazis. The idea that this could even happen anywhere in the world in an open manner makes the claim seem too absurd to be taken seriously. Gone are the days when the Nazi swastika adorned streets and buildings in Europe. Right?

Well, maybe, wrong.

This was seen in Kyiv’s Gorodok (or Horodok, if you insist) Gallery, a shopping center in that city, located on Bandera Avenue.

The pro-nationalist news service UNIAN wasted no time going to press with their explanation of this incident, which admittedly may be accurate:

Children and teenagers who participated in the All-Ukrainian break dance festival held in the Kyiv-based Gorodok Gallery shopping mall were shocked to see a swastika image projected onto an LED staircase.

The mall administration apologized to visitors, explaining saying that their computer system had apparently been hacked.

“The administration and staff have no relation to whatever was projected onto the LED-staircase, and in no way does it support such [an] act. Now we are actively searching for those involved in the attack,” it said in a statement.

According to Gorodok Gallery’s administrative office, it was not the first time a cyber breach took place.

As reported earlier, Ukraine is believed to be a testing ground for cyberattacks, many of which are launched from Russia. Hackers have earlier targeted critical energy infrastructure, state institutions, banks, and large businesses.

This time, it appears, hackers aimed to feed the Kremlin’s narrative of “Nazis in power in Ukraine” and create a relevant hype-driving viral story for Russian media to spread it worldwide.

The Gorodok Gallery also apologized on its Facebook page and said that this was a result of hacking.

But what about the street that the mall is on? From the self-same Facebook page, this is what we see:


To translate, for those who do not read Ukrainian or Russian, the address says the following:

23 Steven Bandera Prospekt, Kyiv, Ukraine 04073

This street was formerly called “Moscow Avenue.” Big change, as we shall see.

Steven Bandera got his birthday designated as a national holiday in Ukraine last December. He is known in Ukraine’s history for one thing. According to the Jerusalem Post:

The street where the shopping mall is located is named for Stepan Bandera, a Ukrainian nationalist who briefly collaborated with Nazi Germany in its fight against Russia.

His troops are believed to have killed thousands of Jews.

Several Israeli papers picked this bit of news up, and of course, the reasons are understandable. However, for the West, it appears possible that this news event will largely go unnoticed, even by that great nation that is often called “Israel’s proxy”, the United States.

This is probably because for certain people in the US, there is a sense of desperation to mask the nature of events that are happening in Ukraine.

The usual fare of mainstream news for the West probably consists of things like “Putin’s military seizes innocent Ukrainian sailors in Kerch incident” or, “Ukraine’s Orthodox Church declared fully independent by Patriarch of Constantinople” (not that too many Americans know what a Constantinople even is, anyway), but the overriding narrative for the American people about this country is “Ukraine are the good guys, and Russia are the bad guys,” and this will not be pushed aside, even to accommodate the logical grievance of Israel to this incident.

If this article gets to Western papers at all, it will be the UNIAN line they adhere to, that evil pro-Russia hackers caused this stairway to have a swastika to provoke the idea that Ukraine somehow supports Naziism.

But UNIAN neglected to mention that the street name was recently changed to Stephan Bandera (in 2016), and no one appears to have hacked this. Nor does UNIAN talk about the Azov fighters that openly espoused much of the Nazi ideology. For nationalist Ukrainians, this is all for the greater good of getting rid of all things Russia.

A further sad fact about this is the near impossibility of getting assuredly honest and neutral information about this and other similar happenings. Both Ukrainian nationalists and Russian media agencies have dogs in the race, so to speak. They are both personally connected to these events. However, the Russian media cannot be discounted here, because they do offer a witness and perspective, probably the closest to any objective look at what is going on in Ukraine. We include a video of a “torchlight march” that took place in 2017 that featured such hypernationalist activity, which is not reported in the West.

More such reports are available, but this one seemed the best one to summarize the character of what is going on in the country.

While we do not know the motive and identities of whoever programmed the swastika, it cannot really be stated that this was just a random publicity stunt in a country that has no relationship with Nazi veneration.

The street the mall is on bears witness to that.

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It’s Back to the Iran-Contra Days Under Trump

Abrams and his cronies will not stop with Venezuela.

Strategic Culture Foundation

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Authored by Wayne Madsen, via The Strategic Culture Foundation:


Showing that he is adopting the neoconservative playbook every day he remains in office, Donald Trump handed the neocons a major win when he appointed Iran-contra scandal felon Elliott Abrams as his special envoy on Venezuela. Abrams pleaded guilty in 1991 to two counts of withholding information on the secret sale of US weapons for cash to help illegally supply weapons to the Nicaraguan right-wing contras, who were battling against the government of President Daniel Ortega. Abrams would have headed to a federal prison, but President George H. W. Bush, an unindicted co-conspirator in the scandal, issued pardons to Abrams and his five fellow conspirators – former Secretary of Defense Caspar Weinberger, former National Security Adviser Robert McFarlane, and former Central Intelligence Agency officials Alan Fiers, Duane “Dewey” Clarridge, and Clair George – on Christmas Eve 1991, during the final weeks of Bush’s lame duck administration.

Abrams escaped being charged with more serious crimes by Independent Counsel Lawrence Walsh because he cut a last-minute deal with federal prosecutors. Trump, who has made no secret of his disdain for cooperating federal witnesses, would have normally called Abrams a “rat,” a gangster term meaning informant. The man who helped engineer the pardons for Abrams and his five convicted friends was none other than Bush’s Attorney General, William Barr, who has just been sworn in as Trump’s Attorney General. Trump, who is always decrying the presence of the “deep state” that thwarts his very move, has become the chief guardian of that entity.

During a recent hearing of the US House of Representatives Foreign Affairs Committee, newly-minted congresswoman Ilhan Omar, Democrat of Minnesota, reminded her colleagues and the world about the sordid background of Abrams.

Omar zeroed in on Abrams’s criminal history:

“Mr. Abrams, in 1991 you pleaded guilty to two counts of withholding information from Congress regarding the Iran-Contra affair, for which you were later pardoned by President George H.W. Bush. I fail to understand why members of this committee or the American people should find any testimony you give today to be truthful.”

Abrams, as is the nature of neocons, refused to respond to Omar and cited her comments as “personal attacks.”

Abrams’s and his fellow criminals’ use of mercenaries and “death squads” to conduct secret wars in Nicaragua, Honduras, El Salvador, and Guatemala during the Ronald Reagan administration in the 1980s has made a re-entrance under Trump. Abrams was brought on board by neocons like National Security Adviser John Bolton, Vice President Mike Pence, and Secretary of State Mike Pompeo to oversee a US military build-up in Colombia, said to be 5000 US troops, to support Venezuelan paramilitary and military efforts to topple President Nicolas Maduro. Abrams and Bolton are also believed to have retained the services of another unindicted conspirator in the Iran-contra affair, Michael Ledeen, a colleague of the disgraced and convicted former Trump National Security Adviser, retired Lieutenant General Michael Flynn. Ledeen and Flynn co-authored a book titled, “The Field of Fight: How We Can Win the Global War Against Radical Islam and its Allies.” The book contains nothing more than the standard neocon tripe one might expect from the likes of Ledeen.

An official investigation of the Iran-contra scandal by the late Republican Senator John Tower of Texas concluded that Abrams’s and Ledeen’s friend, Iranian-Jewish middleman Manucher Ghorbanifar, a long-time Mossad asset and well-known prevaricator, was extremely instrumental in establishing the back-channel arms deals with Iran. Ghorbanifar has long been on the CIA “burn list” as an untrustworthy charlatan, along with others in the Middle East of similar sketchy credentials, including the Iraq’s Ahmad Chalabi, Syria’s Farid “Frank” Ghadry, and Lebanon’s Samir “Sami” Geagea. These individuals, however, were warmly embraced by neocons like Abrams and his associates.

Abrams, whose links with Israeli intelligence has always been a point of consternation with US counter-intelligence officials, is part of an old cabal of right-wing anti-Soviet Democrats who coalesced around Senator Henry Jackson in the 1970s. Along with Abrams, this group of war hawks included Richard Perle, Frank Gaffney, William Kristol, Douglas Feith, Lewis “Scooter” Libby, Abram Shulsky, and Paul Wolfowitz. Later, this group would have its fingerprints on major US foreign policy debacles, ranging from Nicaragua and Grenada to Lebanon, Iraq, and Libya. Later, in December 2000, these neocons managed to convince president-elect George W. Bush of the need to “democratize” the Middle East. That policy would later bring not democracy but disaster to the Arab Middle East and North Africa.

Abrams and his cronies will not stop with Venezuela. They have old scores to settle with Nicaraguan President Ortega. The initiation of “regime change” operations in Nicaragua, supported by the CIA and the US Southern Command (SOUTHCOM) in Miami, have been ongoing for more than a year.

The Trump administration has already achieved a regime change victory of sorts in El Salvador. Nayib Bukele, the former mayor of San Salvador, who was expelled from the formerly-ruling left-wing Farabundo Marti National Liberation (FMLN) party and joined the right-wing GANA party, was recently elected president of El Salvador. Bukele has quickly re-aligned his country’s policies with those of the Trump administration. Bukele has referred to President Maduro of Venezuela as a “dictator.” He has also criticized the former FMLN government’s recognition of China and severance of diplomatic ties with Taiwan. It will be interesting to see how a sycophant like Bukele will politically survive as Trump continues to call hapless asylum-seeking migrants from his country, who seek residency in the United States, “rapists, gang monsters, murderers, and drug smugglers.”

Another country heading for a US-installed “banana republic” dictator is Haiti. President Jovenal Moise has seen rioting in the streets of Port-au-Prince as the US State Department removed all “non-essential” personnel from the country. Moise, whose country has received $2 billion in oil relief from Venezuela, to help offset rising fuel prices, has continued to support the Maduro government. However, at the US-run and neo-colonial artifice, the Organization of American States (OAS), Moise’s envoys have been under tremendous pressure to cut ties with Venezuela and recognize the US puppet Juan Guaido as Venezuelan president. Moise’s refusal to do so resulted in armed gangs hitting the streets of Port-au-Prince demanding Moise’s resignation. It is the same neocon “regime change” playbook being used in Venezuela and Nicaragua.

There will be similar attempts to replace pro-Maduro governments in his remaining allies in the region. These include Suriname, Antigua and Barbuda, Dominica, and Saint Vincent and the Grenadines.

Abrams was also brought in as an adviser on Middle East policy in the George W. Bush administration. The carnage of Iraq is a stark testament to his record. In 2005, it was reported that two key Bush White House officials – Deputy Chief of Staff Karl Rove and Deputy National Security Adviser Elliot Abrams – gave a “wink and a nod” for the assassinations by Israeli-paid operatives of three key Lebanese political figures seeking a rapprochement with Syria and Lebanese Hezbollah – Member of Parliament Elie Hobeika, former Lebanese Communist Party chief George Hawi, and former Prime Minister Rafik Hariri.

In 2008, a United Nations panel headed by former Canadian prosecutor Daniel Bellemare later concluded Hariri was assassinated by a “criminal network” and not by either Syrian and Lebanese intelligence or Lebanese Hezbollah as proffered by Abrams and his friends in Washington.

Representative Omar was spot on in questioning why Abrams, whose name is as disgraced as his two fellow conspirators – Oliver North and John Poindexter – whose criminal convictions were overturned on appeal, is working for the Trump administration on Venezuela. The answer is that the neocons, who can sense, like raptors, Trump’s political weakness, have filled the vacuum left by top-level vacancies in the administration.

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Putin: If mid-range missiles deployed in Europe, Russia will station arms to strike decision centers

Putin: If US deploys mid-range missiles in Europe, Russia will be forced to respond.

RT

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Via RT…


If the US deploys intermediate-range missiles in Europe, Moscow will respond by stationing weapons aimed not only against missiles themselves, but also at command and control centers, from which a launch order would come.

The warning came from President Vladimir Putin, who announced Russia’s planned actions after the US withdraws from the INF Treaty – a Cold War-era agreement between Washington and Moscow which banned both sides form having ground-based cruise and ballistic missiles and developing relevant technology.

The US is set to unilaterally withdraw from the treaty in six months, which opens the possibility of once again deploying these missiles in Europe. Russia would see that as a major threat and respond with its own deployments, Putin said.

Intermediate-range missiles were banned and removed from Europe because they would leave a very short window of opportunity for the other side to decide whether to fire in retaliation after detecting a launch – mere minutes. This poses the threat of an accidental nuclear exchange triggered by a false launch warning, with the officer in charge having no time to double check.

“Russia will be forced to create and deploy weapon systems, which can be used not only against the territories from which this direct threat would be projected, but also against those territories where decision centers are located, from which an order to use those weapons against us may come.” The Russian president, who was delivering a keynote address to the Russian parliament on Wednesday, did not elaborate on whether any counter-deployment would only target US command-and-control sites in Europe or would also include targets on American soil.

He did say the Russian weapon system in terms of flight times and other specifications would “correspond” to those targeting Russia.

“We know how to do it and we will implement those plans without a delay once the relevant threats against us materialize,”he said.

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