So far, the House of Saud’s whole
energy strategy has boiled down to shaving off
its oil production no matter what it takes, even
issuing bonds to cover its massive deficits.
strategy has been moved one step ahead via a
flagrant provocation: the execution of Shiite
cleric Nimr al-Nimr.
House of Saud believes that by stoking the
flames of a Riyadh-Tehran confrontation it may
raise the fear factor in the oil supply sphere,
leading to higher oil prices (which it needs),
while maintaining the Holy Wahhabi Grail of
keeping imminent Iranian oil off the market.
the beginning, Riyadh bet on the possibility of
extra energy-related sanctions on Iran in case
Tehran forcefully responded to its beheading
provocation. Yet Iranians are too sophisticated
to fall for such a crude tap.
Gulf traders have confirmed the 2016 Saudi
budget is based on an average crude oil price of
$29 per barrel, as first reported by Jadwa
Investment in Riyadh.
the House of Saud’s budget dilemma perspective,
this is absolutely unsustainable. The House of
Saud is the biggest OPEC oil exporter. Yet their
supreme hubris is to deny Iran any leeway in
exports, which will be inevitable especially in
the second half of 2016. Moreover, the low oil
price strategy doesn’t apply solely to Iran:
it’s still part of the oil war against Russia.
Somebody though is not doing the math right in
Riyadh. The Saudi low oil price strategy has
been punishing Russia – the number two global
oil producer - badly. The Saudis cannot possibly
expect that their beheading provocation will
simultaneously scotch an OPEC-Russia deal on
cutting production and also lead to higher oil
prices, which would mostly benefit – guess what
- Iran and Russia.
can be made that the House of Saud’s low oil
price strategy has been a slow motion Wahhabi
hara-kiri from the start (which, by the way, is
hardly a bad thing.)
House of Saud budget has collapsed. Riyadh is
financing an unwinnable, mightily expensive war
on Yemen, financing and weaponizing all manner
of Salafi-jihadists in Syria, and is spending
fortunes to prop up al-Sisi in Egypt against any
possible Daesh (Islamic State) and/or Muslim
Brotherhood offensive. As if this were not
enough, internally the succession is a royal
mess, with King Salman's 30-year-old
warrior-in-chief, Mohammad bin Salman, stamping
his toxic mix of arrogance and incompetence on a
Predictably, Riyadh once again is following
United States government is frantically trying
to hold the oil price down to destroy the
Russian economy, using their proxy Persian Gulf
producers who are pumping all out. That amounts
to no less than seven million barrels a day over
the OPEC quota, according to Persian Gulf
traders. The US government believes it can
destroy the Russian economy - again - as if the
clock had been turned back to 1985, when the
global glut was 20 percent of the oil supply and
the Soviet Union was bogged down in Afghanistan
and internally bleeding to death.
went down to $7.00 a barrel in 1985, and that
low figure is where the US government is now
trying to drive the price down. Yet today the
global glut is less than three percent of the
oil supply, not 20 percent as in 1985.
surplus today is only 2.2 million barrels a day,
according to Petroleum Intelligence Weekly. Iran
will bring on initially around 600,000 barrels a
day of new oil in 2016. That means later this
year we will have a 2.8-million potential
problem is, according to Persian Gulf traders,
an annual oil depletion of seven million barrels
a day, and that cannot be replaced with the
collapse in drilling. What this means is that
all surplus oil could be wiped out in the first
or second quarters of 2016. By mid-2016, oil
prices should start surging dramatically, even
with additional oil from Iran.
US government strategy has now metastasized into
trying to destroy the Russian economy before the
oil price inevitably recovers. That would give
the US government a window of opportunity
spanning only the next six months.
this could have been pulled off so far is a
testament, once again, to the irresistible force
of Wall Street manipulators using cash
settlement; they are able to create a crash
where there is hardly any surplus oil at all.
Yet even as the Empire of Chaos frantically
manipulates the oil price down, it may not go
down fast enough to destroy the Russian economy.
Reuters was forced to admit briefly the oil
surplus was less than two million barrels a day,
and may even be alarmingly
less than a million barrels a day before returning
to the usual oil-at-an-all-time-low story. This
information on the real oil surplus so far had
been completely censored. It confronts head on
the hegemonic US narrative of surpluses lasting
forever and the imminent collapse of the Russian
Saudi Arabia, it’s just a mere pawn in a much
nastier game. Common sense now rules that it’s
essentially a matter of Black Daesh (the fake
“Caliphate”) and White Daesh (the House of
Saud). After all, the ideological matrix is the
same, beheadings included. It’s the next stage
of the oil war that may well decide which Daesh
will be the first to fall.