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Oil price war started after shouting match between Putin and MbS (Video)

The Duran Quick Take: Episode 537.

The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss the shouting match phone call between Saudi Crown Prince MbS and Russian President Vladimir Putin that eventually launched a devastating oil price war.

Reports claim that the Saudi crown prince threatened Russian president over production cuts prior to flooding market. A source for the Middle East Eye reports that ‘the call ended badly.’


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Via Middle East Eye…

A telephone call last month between Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman degenerated into a shouting match just before Riyadh decided to flood the market with oil in a move which sent prices spiralling.

Saudi officials with knowledge of the disastrous call told Middle East Eye that the row threatened to undo months of detente between the two countries, in which a significant arms trade was also agreed.

The call took place just before an Opec+ meeting on 6 March, in which major oil producers failed to agree a deal on cutting production despite falling global demand as a consequence of the coronavirus pandemic.

“Just before that meeting there was a call between Putin and MBS. MBS was very aggressive and gave an ultimatum. He threatened that if there is no agreement, Saudi would start a price war.

“The conversation was very personal. They shouted at each other. Putin refused the ultimatum and the call ended badly,” the Saudi official said, speaking on condition of anonymity.

Before getting aggressive with Putin, bin Salman checked in with Jared Kushner, President Donald Trump’s son-in-law and senior advisor, who has been described as “the prince’s most important defender inside the White House”, according to a second source who also spoke on condition of anonymity.

“The call [to Putin] had Trump’s blessing through Kushner. Kushner did not ask MBS to do it, but Kushner knew about it and did not veto it. Bin Salman drew his own conclusions,” the source said.

Oil prices plummeted after the meeting in which Opec, Russia and other countries failed to agree on proposed cuts of 1.5m barrels a day. Reports of the meeting suggested that Saudi Arabia had tried to “strong arm” Russia, with one industry analyst commenting: “We have just witnessed the perils of backing Putin into a corner.”

The collapsing oil price was initially hailed by Trump, who initially presented it as an opportunity to fill up the US’s own reserves with cheap oil.

“We’re going to fill it right up to the top, saving the American taxpayer billions and billions of dollars, helping our oil industry [and furthering] that wonderful goal – which we’ve achieved, which nobody thought was possible – of energy independence,” he said.

But the White House subsequently reversed course after protests from US oil producers, many of whom have invested in more costly shale oil extraction and require significantly higher prices in order to break even.

Quiet diplomacy

The Saudi row with Putin over oil production undid months of quiet diplomacy between Moscow and Riyadh. This began when Putin seized on Trump’s non-reaction to strikes on two Saudi Aramco gas separation plants by Iranian drones and cruise missiles last September.

Speaking in Ankara in September last year after a meeting with Turkish and Iranian leaders, Putin offered to sell Saudi its own air-defence systems.

“We are ready to provide respective assistance to Saudi Arabia, and it would be enough for the political leadership of Saudi Arabia to make a wise government decision – as the leaders of Iran did in their time by purchasing S-300 and as President Erdogan did by purchasing the latest S-400 ‘Triumph’ air defence systems from Russia,” Putin said.

In mid-January, Saudi Arabia decided in principle to buy the Russian Pantsir S1M SPAAGM air defence system, MEE sources revealed.

“They did not sign any contracts. They decided to buy the system, but they put some conditions. The Saudis wanted part of the Russian system to be manufactured at home. They were serious about the system. This was three months after the attack on Aramco,” the official revealed.

The Russian missile system is relatively new. It was unveiled at a Russian Ministry of Defence show early last year. The Russian MoD describes it as being designed to protect small military and military-industrial infrastructures, engaging aerial targets flying at low altitudes.

Putin’s link man

The link man in these negotiations was a Putin insider called Kirill Dmitriev, the head of Russia’s $10bn state investment vehicle RDIF. Dmitriev told CNBC in October last year that Russia was not trying to fill the void left by the United States in the Middle East.

“Really we are not talking about, you know, the strategic partnerships that Saudi has with the US, and what we are doing is not against the US. It’s actually building something that is very positive,” Dmitriev said.

“And building something that helps the Saudi economy, the Russian economy – and builds the friendship between our nations.”

He added: “We had lots of differences during Soviet times. We had lots of differences in many politics in the Middle East. But now I can report to you that we made really breakthrough and this is a breakthrough because President Putin and King Salman and now Crown Prince Mohammed bin Salman really believed that it’s possible to bring Russia and Saudi Arabia closer together.”

RDIF has investment partnerships with two Saudi sovereign wealth funds, the Public Investment Fund (PIF), which is chaired by Mohammed bin Salman, and the Saudi Arabian General Investment Authority (SAGIA). Saudi Aramco has also invested in Russian oil firm Novomet. Other mutual investment announcements were planned before the atmosphere turned sour over the oil row.

By October last year Saudi Arabia had invested $2.5bn of a $10bn investment pledge in Russian energy, infrastructure and technology.

Seychelles meeting

Dmitriev was introduced to bin Salman by the Crown Prince of Abu Dhabi, Mohammed bin Zayed. Dmitriev also attended a meeting in the Seychelles which attracted the attention of Robert Mueller, the Special Counsel investigating allegations of Russian interference in the 2016 US election.

Dmitriev has been named as the Russian whom Erik Prince had met “for a drink” in the Four Seasons hotel on the Indian Ocean archipelago in January 2017. Prince, who founded the American private military contractor firm Blackwater (now called Academi), is now based in the UAE and has close ties and business contracts with the Emirati government.

Prince admitted meeting Dmitriev in testimony to the US Congress but denied it was official. Prince said he met Dmitriev on the recommendation of UAE officials, but mostly discussed private investments.

“They said, ‘Oh, there’s this Russian guy that’s also here to see us. Might be useful for you to meet him,'” Prince stated to Congress.

However Prince’s account of the meeting was undermined by the Mueller Report.

Mueller revealed that George Nader, a fixer for MBZ and convicted paedophile who is currently in custody in the US facing new child pornography charges, had arranged for them to meet after Dmitriev sought an introduction to a Trump transition team member in order to begin improving US-Russia ties.

The report described Dmitriev as reporting directly to Putin who, it said, he often referred to as his “boss”.

By the time Saudi Arabia sought a new partner in Russia, Dmitriev had key credentials to conduct negotiations with Saudi Arabia and bin Salman personally.

These were cemented in a bizarre ceremony in which Dmitriev was awarded the Order of King Abdulaziz, the highest civilian honour in the kingdom.

Dmitriev later played a key role in securing a Russian-Saudi agreement on oil, announced on 12 April, when OPEC+ finally agreed to reduce global production by about 10 percent. By then, the oil price had already slipped to about half of what it was at the time of the rupture.

The deal was agreed amid a series of phone calls between leaders in Moscow, Riyadh and Washington.

On 10 April, the Kremlin announced that Putin had spoken to bin Salman and that the “two had agreed on further Russian-Saudi contacts” in the context of cutting oil production.

On 12 April, Putin had a telephone conversation with Trump and Saudi Arabia’s King Salman to confirm the OPEC+ agreement. Trump subsequently congratulated Putin and King Salman on agreeing the deal in a tweet.

But the deal was not enough to prevent oil markets sliding to historic lows on Monday, with oil prices in US crude oil futures plunging into negative territory and ending the day trading at -$37.63, with oil storage facilities unable to cope with the surplus supply.

Asked whether he would consider halting US imports of Saudi oil to support the domestic industry, Trump said: “We’ll look into it.”

From yacht to not

Dmitriev met bin Salman on 22 February, when the Saudi crown prince began to become concerned at the fall in oil prices, according to MEE’s sources.

“By then, the virus became obvious and the oil price started to come down. He came as an envoy from Putin and discussed these issues. That meeting was not bad, but MBS expressed concern that our budget cannot tolerate the fall in prices,” an official told MEE.

Dmitriev asked bin Salman whether he could moor his yacht off the shores of Saudi Arabia. “Relations at that time were good,” the source said.

MEE contacted the Saudi and Russian governments, and RDIF, but none had responded to requests for comment at the time of publication.

This article is available in French on Middle East Eye French edition.

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Brokenspine66
Brokenspine66
April 25, 2020

It will be a fun + glorious day when the rotten degenerated corrupt cleptocratic genocidal savage Saud Mafia-Clan has finally enough of loose cannon, war-criminal + psychopath MbS’s reckless erratic destructive actions and remove him for good, with or without AmeriCunt assistance doesn’t really matter but sooner or later it will happen. I guess his enemies among his own Clan are legion and it maybe tares the rotten KSA apart and this subhuman cesspit goes up in flames it would be more than well deserved because they are the origin [wahhabi based] and source of all jihadi salafist takfiri ideology… Read more »

SteveK9
SteveK9
Reply to  Brokenspine66
April 26, 2020

It’s hard to see anything other than a cataclysm eventually in Saudi Arabia. Population is still going up. They have no industries to speak outside oil and petrochemicals (at least they have that). The population is basically handed money from oil sales. Oil prices are going to stay low for a long time to come, and eventually nuclear will be begin to displace oil. That may take a while, but it won’t take many EV’s to take the price of oil down permanently. So, what then? War will probably be the outcome, first Civil War, then ?

Doofuses R US
Doofuses R US
April 25, 2020

“The call [to Putin] had Trump’s blessing through Kushner. Kushner did not ask MBS to do it, but Kushner knew about it and did not veto it. Bin Salman drew his own conclusions,” the source said.

Sounds like another par for the course in MachiavelliLand. (or is it LaLaLand?)

In a now famous interview with the Iraqi leader, U.S. Ambassador April Glaspie told Saddam, ‘We have no opinion on the Arab-Arab conflicts, like your border disagreement with Kuwait. … ‘ The United States may not have intended to give Iraq a green light, but that is effectively what it did.”

Marcus
Marcus
April 25, 2020

There is no question in my mind that MBS is an idiot at the very least. If MBS did lose it with Putin, it only proves his unwillingness to face reality. My guess is that Putin told him that world consumption of oil was going to drop by a possible 20 to 30 million barrels of oil per day. Putin would have stated the obvious that even if Saudi and Russia cut out all their exports (physically impossible if you want to preserve the fields capacities long term), it still wouldn’t be enough. If MBS couldn’t handle the facts because… Read more »

TravelAbout
TravelAbout
Reply to  Marcus
April 26, 2020

And Putin will no doubt wash that popcorn down with lemonade! LOL

AMHants
AMHants
Reply to  TravelAbout
April 26, 2020

Homemade lemonade, of course.

American Graffiti
American Graffiti
Reply to  Marcus
April 26, 2020

Putin probably told MrBoneSaw that without US cuts and without him cutting his puppet strings from the US, further cuts are meaningless.

BobValdez
BobValdez
April 26, 2020

“Before getting aggressive with Putin, bin Salman checked in with Jared Kushner, President Donald Trump’s son-in-law and senior advisor, who has been described as “the prince’s most important defender inside the White House”, according to a second source who also spoke on condition of anonymity.” Saudi Arabia and the white shithouse are working in concert here in a second failing attempt to collapse the Russian economy, never forget that. IF the KSA was in any way responsible for “9/11”, the KSA would be a sheet of glass and the seppos would be in charge of the oil fields. KSA NEEDS… Read more »

AMHants
AMHants
Reply to  BobValdez
April 26, 2020

I remember, back in 2013/2014, the US and Saudi teaming up to take Russia out of the energy market. Around the time Saudi was saying if Russia did not do as Saudi demanded, they would send the Saudi organ eating, head choppers to Russia. President Putin ignored their threats. Saudi and Obama, then tried manipulating the oil markets, against Russia. Believing Russian GDP was 50% reliant on the energy market. Only, they miscalculated, as Russian GDP Debt, only accounted for 16% from the energy industry. How many oil companies were bankrupted, back in 2014 as Russia laughed. Russia, who could… Read more »

Deadly Parlor Tricks
Deadly Parlor Tricks
Reply to  AMHants
April 27, 2020

Yeah, they said they could guarantee a terror free Olympics IF Russia played along. If that isn’t an admission of state-sponsored terrorism then don’t know what is.

Anyway, It was probably a CIA-ordered distraction from Parubiy’s pending sniper terror on Maidan. Wasn’t that collusional Brennan love fest with the Saudis peaking about then?

Thomas Busse
April 26, 2020

This has GOT to be about China.

Sesame Street Media
Sesame Street Media
Reply to  Thomas Busse
April 26, 2020

When it’s not about Russia, it’s about China.

Olivia Kroth
April 26, 2020

The Kremlin denied there was a shouting match.
https://tass.com/world/1148483

Speak Softly & Carry a Big Palka
Speak Softly & Carry a Big Palka
Reply to  Olivia Kroth
April 26, 2020

Bone Saws make lots of noise & chatter. I assume it was a one sided shout and no match at all.

Olivia Kroth
Reply to  Speak Softly & Carry a Big Palka
April 26, 2020

We do not really know what happened. It could have been a “shouting match” or just a normal conversation. President Putin is a very level-headed person, he is not emotional at all. Usually, he does not shout. What about the Saudi Prince? Maybe he shouted. In some cultures, people get more emotional than in others, and shouting is nothing unusual there. It all has to be taken with a grain of salt. The mainstream media like to tell us lies.

Brokenspine66
Brokenspine66
Reply to  Olivia Kroth
April 26, 2020

Sure it wasn’t a ‘Shouting Match’ [literally] because I guess psycho MbS lost it and Putin was, as usually, calm and cool he would never go down on that low level.

SteveK9
SteveK9
April 26, 2020

The price war quickly became irrelevant. The ongoing suicide of the West has destroyed oil demand far beyond the oversupply that existed before the West decided to jump off a cliff. It’s hard to imagine any way the price can be supported for at least the next year.

Sean
Sean
May 3, 2020

So this shouting match is on the say-so of our old friends, the anonymous officials. Yeah, right. I believe you. No sign of fake news here. Nothing to see, move on, please.

gwynn oneill
May 4, 2020

The photograph of Putin shows him as a younger man. The one of the prince shows him at his present age, probably since he has come to power only recently. (His pouting face is that of a man who never grew up, my personal comment.) I think this story is not true, but if it is, that is how children should be disciplined.

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