Saudi Shift Brings Uncertainty on Oil
. . . they will lose their shirts on these trades, there is no support for the price of oil, demand is weak, supply strong, and no evidence anything will change that for a long time. "'In the Southern Persian Gulf, oil is becoming a political commodity, more than an economic commodity,” he said, though he lamented that shift. “OPEC is in a difficult situation.” In his first remarks as minister, Mr. Falih on Sunday said in a news release that the country would “remain committed to maintaining our role in international energy markets and strengthening our position as the world’s most reliable supplier of energy.'" Right, like we have been saying, oil is a political tool being used by both Iran, and the House of Saud in the existential war between the Shia, and the Sunni. Saudi cannot stop or slow production to support price unless it can verify Iran and the Shia oil producers will as well. This is desperation selling to keep the price low, and limit Iran's income, while making desperate changes to the Saudi economy in an attempt to create gold from straw. Good luck on that. The oil traders are as yet unwilling to believe that the House of Saud is actually willing to let the price tank. And so they continue to bid up the price on any minor problem, or supply bauble. But the metrics do not support pricing in this range without the House of Saud restricting the supply. Something the House of Saud has specifically said it will not do. Someone is going to get burned. Heh!
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“OPEC is Dead”
. . . the House of Saud must pump oil, or it will die. Of course, OPEC is dead. "Times have changed, though, and the country’s new man-behind-the-throne—the 31 year old deputy crown prince Mohammed bin Salman—has little interest in ceding Saudi market share in pursuit of higher prices while the rest of OPEC gets a free ride." Exactly. The House of Saud cannot afford to build Iran's coffers by cutting revenue. With Iran sans sanctions, The House of Saud is in dire straits for Iran already has an integrated economy, while Saud has an economy limited to oil alone. If allowed, Iran will use its oil revenue to build its integrated economy. This is the reason we are only now seeing the House of Saud pay attention to its non-oil economy, intent on selling off a portion of ARAMCO to fund a $2 trillion attempt to see if it can get the Arabs to actually go to work. Good luck with that. The reason they did not do it before? They do not think it is possible; they are desperate! The Islamic Reformation is coming, Iran will anchor the Shia, The House of Saud will Anchor the Sunni, the outcome should be the sublimation of Salafism/Wahhabism into a reformed Islam more in tune with the Enlightened West. And optimistically, this will trigger an Islamic Enlightenment. To do this the House of Saud, and its alliance with Wahhabism must fall. It's Game of Thrones with consequences! The Arab Implosion Continues
. . . the Arabs will have to find some way to assimilate to this or be destroyed in the process. The mere fact that this way exists and is obvious to all is sufficiently corrosive to destroy non-conforming cultures. Expect this to continue, to grow, and to gain speed. "What we are seeing is not so much a clash between civilizations as a crisis of Arab civilization: the failure of the Arab world to master modernity—to find a way to be economically and politically successful under modern conditions without losing the core cultural and social values. This is comparable to what happened in China in the 19th century, when China failed to find a way to adapt Western methods and ideas to Chinese conditions—which led to decades of state failure, weakness, and immense suffering for the Chinese people." All we can do now is lay pressure to move them onto the path we know works -- republican governance, free markets, limited government power, and reformed religions. Understanding the Saudi, Chinese “Economic Nuclear War” Threat; Saudi 911 Round-Up | MishTalk
. . . and the fact that the House is the enemy of America, not an ally. This seems to be unfathomable to Congress, the President, and most Americans, but it is true. We need a serious come to Jesus on this issue. We need to reduce to near zero visas for Saudis, and we need to actively begin to undermine the House of Saud. While we should stay out of the pending Islamic reformation, our policies should be designed to maximized the damage to the House of Saud, while maximizing the benefit to Iran. While this runs contrary to the accepted Cold War stance of the Neocons, the Republican party, and nearly everyone in our political establishment, until we do so, the security of Americans, and the stability of the world is at risk. Saud is the enemy, not Iran. Go read the entire piece, and please click on and read the supporting documentation. This issue is important, and just beginning. We will hear more about this in the future. Why It's Too Late to Scrap the Iran Deal
. . . including the Republican Presidential candidates. More below the fold! Saudis threaten to sell $750 billion US assets if Congress passes bill that would let 9/11 victims sue Saudi Arabia
Cut the House of Saud loose, and let them swing. They are the enemy within Islam, and the real sponsors of Islamic fundamentalism/terrorism. Let the victims of 9/1 sue the House of Saud directly, nay, build a superhighway to help the victims sue the House of Saud. Only Obama can screw this up, and with his track record, I suspect that there is a better than 50/50 chance he will. The House of Saud needs the security of US assets more than the US needs their money. We will be fine regardless of what Saud does. They, however, are in a world of hurt, fighting a losing battle with Iran, and faced with an economy nearly completely dependent upon oil, which is ready to plumb new lows. Now that we have the threat in hand, we should summarily cut off any further military assistance, and access to any further military hardware, including supplies for repairs, and any US training. On the State Department side we should highly limit and any further visas both in duration (no more than 2 weeks) and in number (a few hundred per year max). The House of Saud is a cancerous evil, and massive human rights violator, we need to deal with them seriously. The hegemon must address threats quickly, and forcefully. Erdogan, enters the game of thrones in the Middle East, in the pending Islamic Reformation . . .4/16/2016 Erdogan urges Muslims to overcome splits, fight terror
. . . however, siding with the House of Saud is a mistake. Does Erdogan think he is fooling anyone? Besides fooling Obama, that is! Opec’s days as economic force are ‘over’ - FT.com
. . . but the Yergin seems to misunderstand why. UPDATE AT END "Opec’s economic power is broken, says the unofficial historian of the oil industry, who has argued that the association of oil exporting countries has become irretrievably divided and is unable to reverse the current slump in crude prices. Daniel Yergin, whose Pulitzer-prize winning book The Prize provides a comprehensive history of oil and power, said he believes the association’s economic prowess has been undone by its inability to agree on how to stop the oil crisis. In an interview with the Financial Times, Mr Yergin, who is also vice-chairman of data provider IHS, said the recent disagreements among Opec members have revealed how weak the organization now is. Mr Yergin said: “The era of Opec as a decisive force in the world economy is over. It is clearly a very divided organization.” Mr Bergen’s book, first published in 1990, dedicates several chapters to the rise and domination of Opec, the 13-member organisation that has caused sharp swings in the oil price by restricting or raising supplies since it was set up in 1960. But the 69-year-old argues the current oil slump has exposed the organization’s inability to act in a unified way." Ok, correct as far as it goes, but it does not go anywhere near far enough. The reason for the lack of unity is the existential war between the Shia, represented by Iran, and the Sunni, represented by the House of Saud. "Mohammed bin Salman, Saudi Arabia’s powerful deputy crown prince, said earlier this month a deal would only happen if Iran also signed up. But Iran wants to increase its output after sanctions were lifted in January as part of a nuclear deal with world powers. Mr Yergin said he did not think a freeze was possible until Iran clarified how much it could export. As for Saudi Arabia, Mr Yergin said it was thinking differently about oil. “I remember when the operating code was: save the oil for our grandchildren. Now the grandchildren are in charge and they are looking at it in a very different way,” he said. “They are not looking at it as precious resource . . . but rather asking how do you monetize it?'" Right Saudi wants to tie up Iran so it has no money to fight this existential war. Iran will have none of it, and so will pump oil, in order to build its more integrated economy back from the recent sanctions, and seek to fight proxy wars in the meantime. Saudi has very little economy outside of oil, and what it has, is nearly completely reliant on oil money transfers from the House of Saud. It is not that the House of Saud is thinking differently about oil, it is thinking about an existential war, and it needs as much oil money as possible to ward off economic unrest from its people, and fight expensive proxy wars. Remember in this fight the House of Saud is the banker to the Sunni proxy wars, while the Iranians are not, they train, and provide some arms assistance but do not do the majority of the bankrolling. The reason the House of Saud recently left Yemen, is to cut the costs of the proxy war there. The House of Saud is deeply concerned, and panic is just setting in. OPEC's days as oil hegemon are over. Not because "Kids these days!" But because Iran wishes to reduce the kingdom. Optimistically, this will be the warfare at the beginning of the Islamic Reformation, which will lead to an Islamic Enlightenment. But lets not get ahead of ourselves. Al-Saud is our enemy. The Shia, represented by Iran are the only real hope today for an Islamic Reformation. We need to make this work. We need to trade with Iran, and promote the full reintegration of Iran with the world economy. This will allow Iran to pressure the House of Saud, and allow Iranian businesses, and the people of Iran to build relations with America, and the West. Only this will result in the diminishment of the Iranian hardliners, and the ultimate democratization, and free marketization of Iran. Something the world needs dearly. UPDATE Oil Guru Says OPEC’s Era Is Over "What use is OPEC? For decades, the oil cartel has leveraged the large percentage of the world’s oil supply its members produce to try and keep prices up, and during previous price slides would (led by Saudi Arabia) lower its collective output to help induce a rebound. But five months after oil prices started their tumble from a June 2014 high of more than $110 per barrel, OPEC members meeting in Vienna decided to not to do anything. Riyadh pushed this strategy of inaction, preferring to fight for a share of a market that had quickly become crowded, thanks to the rapid rise of U.S. shale. Now, nearly two years after prices began their tumble, OPEC members are preparing to meet delegates from other petrostates in Doha next week to moot a deal to freeze production at current levels. But while prices have been edging upwards in the lead-up to that meeting, that strategy isn’t likely to produce the kind of rebound OPEC would like to see, which again brings us back to the question: what good is OPEC?" This price rise is due solely to the oil bulls feverish delusions of $150 per bbl oil prices. They remember the heady day of making oodles of money, and can't quite understand what happened. Reality happened you sorry sods. "Thanks to hydraulic fracturing and horizontal well drilling, we’ve blown well past the days of peak oil prognostications, into an era characterized by problems of overabundance rather than scarcity. Crudely speaking (excuse the pun, please) this has been good for consumers and bad for producers, but while U.S. shale firms have been able to innovate their way into staying profitable in the bearish market, petrostates have been forced to start cutting national budgest and tapping sovereign wealth funds. Both sets of producers are being squeezed by $40 oil, but the former is actively working towards a solution as it refines techniques and boosts efficiencies, while the latter is merely treading water while talking loudly about setting an upper limit on production—cuts are out of the question. There are many reasons to be skeptical of this new freeze plan, but as we edge closer to that date prices are ticking upwards—Brent neared $43 in trading today for the first time in more than four months. But if that’s all OPEC can manage, Yergin might be proven right: OPEC’s era really could be over." Peak Oil!!! Hahahahahahahahahahahaha . . . The OPEC's days are over. The sooner the oil bulls understand this and move on the better it will be. Opec’s days as economic force are ‘over’ - FT.com
. . . but the Yergin seems to misunderstand why. "Opec’s economic power is broken, says the unofficial historian of the oil industry, who has argued that the association of oil exporting countries has become irretrievably divided and is unable to reverse the current slump in crude prices. Daniel Yergin, whose Pulitzer-prize winning book The Prize provides a comprehensive history of oil and power, said he believes the association’s economic prowess has been undone by its inability to agree on how to stop the oil crisis. In an interview with the Financial Times, Mr Yergin, who is also vice-chairman of data provider IHS, said the recent disagreements among Opec members have revealed how weak the organization now is. Mr Yergin said: “The era of Opec as a decisive force in the world economy is over. It is clearly a very divided organization.” Mr Bergen’s book, first published in 1990, dedicates several chapters to the rise and domination of Opec, the 13-member organisation that has caused sharp swings in the oil price by restricting or raising supplies since it was set up in 1960. But the 69-year-old argues the current oil slump has exposed the organization’s inability to act in a unified way." Ok, correct as far as it goes, but it does not go anywhere near far enough. The reason for the lack of unity is the existential war between the Shia, represented by Iran, and the Sunni, represented by the House of Saud. "Mohammed bin Salman, Saudi Arabia’s powerful deputy crown prince, said earlier this month a deal would only happen if Iran also signed up. But Iran wants to increase its output after sanctions were lifted in January as part of a nuclear deal with world powers. Mr Yergin said he did not think a freeze was possible until Iran clarified how much it could export. As for Saudi Arabia, Mr Yergin said it was thinking differently about oil. “I remember when the operating code was: save the oil for our grandchildren. Now the grandchildren are in charge and they are looking at it in a very different way,” he said. “They are not looking at it as precious resource . . . but rather asking how do you monetize it?'" Right Saudi wants to tie up Iran so it has no money to fight this existential war. Iran will have none of it, and so will pump oil, in order to build its more integrated economy back from the recent sanctions, and seek to fight proxy wars in the meantime. Saudi has very little economy outside of oil, and what it has, is nearly completely reliant on oil money transfers from the House of Saud. It is not that the House of Saud is thinking differently about oil, it is thinking about an existential war, and it needs as much oil money as possible to ward off economic unrest from its people, and fight expensive proxy wars. Remember in this fight the House of Saud is the banker to the Sunni proxy wars, while the Iranians are not, they train, and provide some arms assistance but do not do the majority of the bankrolling. The reason the House of Saud recently left Yemen, is to cut the costs of the proxy war there. The House of Saud is deeply concerned, and panic is just setting in. OPEC's days as oil hegemon are over. Not because "Kids these days!" But because Iran wishes to reduce the kingdom. Optimistically, this will be the warfare at the beginning of the Islamic Reformation, which will lead to an Islamic Enlightenment. But lets not get ahead of ourselves. Al-Saud is our enemy. The Shia, represented by Iran are the only real hope today for an Islamic Reformation. We need to make this work. We need to trade with Iran, and promote the full reintegration of Iran with the world economy. This will allow Iran to pressure the House of Saud, and allow Iranian businesses, and the people of Iran to build relations with America, and the West. Only this will result in the diminishment of the Iranian hardliners, and the ultimate democratization, and free marketization of Iran. Something the world needs dearly. Let's do it! |
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