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The Impact of OPEC on Climate Change

December 18, 2018

It is accepted that the Organization of the Petroleum Exporting Countries (OPEC) is a cartel that restrains oil production and keeps prices higher than they would otherwise be. Indeed, this is the premise behind the “OPEC Accountability Act of 2018” in the US Senate. This bill would address high and rising oil prices by trying to break OPEC. US pressure on OPEC — particularly on friendly governments such as Saudi Arabia that are seen as leaders in the organization — to “open the spigots” is not new. Nor is the control of oil exports by producing countries for political purposes. However, the environmental impact of high oil prices is only lightly considered.

There is little debate that motor vehicle industry changes to increase fuel efficiency were a historic and significant environmental advance. When OPEC action has led to increased prices, the quantity of oil in demand has fallen. This was starkly demonstrated when the Organization of Arab Petroleum Exporting Countries (OAPEC) — founded in 1968 — flexed its price-making muscles in the 1970s. Production cuts and an embargo against sale of oil to several countries raised the spot price of West Texas Intermediate (WTI) crude from $3.56 per barrel in mid-1973 to $4.31 later in the year to $10.11 in January. By the time President Jimmy Carter famously suggested we all turn down our thermostats, the price of WTI crude had reached $14.85 per barrel. The price finally peaked in mid-1980 at $39.50 — a 1000 percent increase in seven years. The price of gasoline more than tripled. In response, we got the Department of Energy, the Chevy Citation, and more fuel-efficient Japanese and German automobile imports.

More recently, the total vehicle miles traveled in the US fell in 2007 amid high oil prices and the Great Recession, and did not increase again until gas prices fell over the second half of 2014 ― from $3.69 per gallon to $2.12.

…click on the above link to read the rest of the article…

The real reason Western media & CIA turned against Saudi MBS

December 15, 2018

The real reason Western media & CIA turned against Saudi MBS

Forces are aligning against Saudi Arabia’s Crown Prince, lead by elements within the CIA and strong players in the mainstream media. But what is really behind this deterioration in relationship, and what are its implications?

Following the brutal murder of Washington Post columnist Jamal Khashoggi, western media and various entities, including the CIA, appear to have turned their back on Saudi Crown Prince Mohammad Bin Salman (MBS). In response to the scandal, the Guardian released a video which its celebutante, Owen Jones, captioned“Saudi Arabia is one of the biggest threats on Earth. Time to stop propping up its repulsive regime.”

The Guardian was not alone in its condemnation. “It’s high time to end Saudi impunity,” wrote Hana Al-Khamri in Al-Jazeera. “It’s time for Saudi Arabia to tell the truth on Jamal Khashoggi,” the Washington Post’s Editorial Board argued. Politico called it “the tragedy of Jamal Khashoggi.”

Even shadowy think-tanks like the Council on Foreign Relations (CFR) and the Atlantic Council released articles criticising Saudi Arabia in the wake of Khashoggi’s death.

A number of companies began backing away from Saudi money after the journalist’s death, including the world’s largest media companies such as the New York Times, the Economist’s editor-in-chief Zanny Minton Beddoes, Arianna Huffington, CNN, CNBC, the Financial Times, Bloomberg, Google Cloud CEO, just to name a few.

The CIA concluded that MBS personally ordered Khashoggi’s death, and was reportedly quite open in its provision of this assessment. Antonio Guterres, secretary-general of the UN, also took time out of his schedule to express concern over Saudi Arabia’s confirmation of the killing.

…click on the above link to read the rest of the article…

Imagine If Saudi Arabia Was Not A US Ally

December 15, 2018

Imagine If Saudi Arabia Was Not A US Ally

The US Senate has voted 56 to 41 to sorta-kinda eventually end America’s part in the Saudi-led war in Yemen, one step out of a great many that will need to happen in order to end the worst humanitarian crisis on the face of the earth.

The joint resolution still allows US drones to patrol Yemeni airspace and rain death from above in its “war on terror” against Al Qaeda, and it is unable to pass in the House this year due to an unbelievably sleazy rider that House Republicans attached to the unrelated Farm Bill. The resolution isn’t expected to change much in terms of actual US participation in the war besides some intelligence and reconnaissance assistance to Saudi Arabia and the United Arab Emirates against the Houthi rebels, since the US has already ended its assistance in refueling Saudi jets on their bombing campaigns as of last month. Trump is expected to veto any Yemen resolutions, and the Senate resolution was not passed with a veto-proof supermajority.

Still, it’s a step. A step in the right direction, both toward congress imposing some checks and balances on the Executive Branch’s heretofore obscenely unchallenged war powers, and toward the US government moving into opposition to the brazen war crimes being inflicted upon the Yemeni people by America’s close ally Saudi Arabia. And I think that last bit is worth taking a moment to think about.

The Senate vote to end U.S. involvement in the #Saudi #Yemen War is a big step forward, and the House should do the same in early 2019. But to actually force an end the Saudi war, Congress must cut off the Saudi Air Force’s spare parts, without which it can’t fly..

…click on the above link to read the rest of the article…

“It Tells People: Don’t Worry” – Saudi Stock Market Plunge Protection Team Exposed

December 14, 2018

“It Tells People: Don’t Worry” – Saudi Stock Market Plunge Protection Team Exposed

In politics, “when it gets serious, you have to lie.”

In the increasingly intermingled worlds of geopolitics and financials markets, when it get serious, you have to rescue your nation’s stocks…

America’s Plunge Protection Team has been a long-standing feature behind the scenes since Greenspan (some even think it has been around since 1944), ready as equity market buyer of last resort (and even getting subsidies for doing so from the exchanges).

See any number of magical and sudden reversals from 2008/9 and 2014…USA Today finally realizes, fundamentals don’t matter anymore…

2015… The rescue bid arrives…

in dramatic size!!

But America’s lessons have spread.

China’s National Team is more erratic, sporadic, and definitely less successful.

But is nevertheless conspicuous in its sudden panic-buying sprees when Shanghai Composite nears critical levels (or economic strength needs to be projected domestically or otherwise).

For instance, this week…as China begins to fold on its strong-man trade war tactics…

And now, amid the current crisis of confidence in The Kingdom, The Wall Street Journal has exposed Saudi Arabia’s stock market rescue squad…

The Journal pulls no punches in turning the conspiracy theory into conspiracy fact, noting that the government of Crown Prince Mohammed bin Salman has spent billions to counter selloffs in recent months.

According to a Wall Street Journal analysis of trading data and interviews with multiple people with direct knowledge of government intervention efforts, the Saudi government has placed huge buy orders, often in the closing minutes of negative trading days, to boost the market.

…click on the above link to read the rest of the article…

Saudis Reportedly Target US Inventories By Slashing Oil Exports

December 13, 2018

Saudis Reportedly Target US Inventories By Slashing Oil Exports

WTI prices briefly popped above $52 before fading quickly after Bloomberg reported that after flooding the US market in recent months, Saudi Arabia plans to slash exports starting in January in an effort to dampen visible build-ups in crude inventories.

Bloomberg reports that, according to people briefed on the plans of state oil company Saudi Aramco, American-based oil refiners have been told to expect much lower shipments from the kingdom in January than in recent months following the OPEC agreement to reduce production.

Oil traders were not that impressed…

And while the plan to slash Saudi exports to America may ultimately convince a skeptical oil market about the kingdom’s resolution to bring supply and demand incline, it may anger President Trump, who has used social media to ask the Saudis and OPEC to keep the taps open.

✔

Hopefully OPEC will be keeping oil flows as is, not restricted. The World does nott want to see, or need, higher oil prices!

Countries that Blocked ‘Welcoming’ of Major Climate Science Report at UN Talks have Dozens of Delegates with Ties to Oil, Gas, and Mining

December 13, 2018

Countries that Blocked ‘Welcoming’ of Major Climate Science Report at UN Talks have Dozens of Delegates with Ties to Oil, Gas, and Mining

At least 35 delegates from Saudi Arabia, Kuwait, Russia and the US are either currently employed or used to work for companies and organisations involved in the petrochemical and mining industries or lobbying on behalf of those industries.

On Saturday, the United Nations Framework Convention on Climate Change (UNFCCC) “noted” the findings of the Intergovernmental Panel on Climate Change’s (IPCC) landmark 1.5 degrees report at the annual talks in Katowice, Poland. Poor and undeveloped countries, small island states, Europeans and many others called to change the wording to “welcome” the study, Climate Home reported.

The IPCC’s report, released in October 2018, warned that the world has 12 years to radically cut emissions to avoid catastrophic climate change. The report was commissioned by countries at the annual climate talks in Paris in 2015.

Of the 35 delegates DeSmog UK has identified with ties to the fossil fuel and mining industries, 12 are representing Saudi Arabia, and nine are representing Russia. NGO Climate Tracker previously identified 13 delegates representing Kuwait that worked for the fossil fuel industry.

Most of the Saudi Arabian delegates currently work for state oil and gas producer Saudi Aramco – reportedly the most profitable company in the world – including Khalid Al-Falih, Saudi Arabia’s Minister Energy, Industry and Natural Resources and chairman of Saudi Aramco. The company is estimated to be worth around $2 trillion.

Two of the Russian delegates at this year’s annual talks work for natural gas producer Gazprom, in which the Russian government holds the majority stake. Six delegates work for aluminium producer, Rusal.

…click on the above link to read the rest of the article…

Blain: “Are We Backing The Wrong Country In The Saudi-Iran Race”

December 5, 2018

Blain: “Are We Backing The Wrong Country In The Saudi-Iran Race”

As excerpted from Blain’s Morning Porridge, submitted by Bill Blain

Where do we go from here?

I’ve said it a few times already – 2019 is likely to see the start of the New Market Reality. Although some pundits claim yesterday’s sell-off was due to automated algo’s triggering a crash because they misread the US yield curve inversion – bad programming they claim – the reality is markets are extremely nervous: of the recessionary signals the inversion shows, slowing economic numbers, the prospects for trade war accelerating recession, etc. The US economy may be a full employment and growing, but where does it go from here as the rest of the globe falters, housing collapses, Auto sales plummet and everyone worries just how they are going to pay off student loans, mortgages and credit cards?

Markets have reversed polarity on Trump.

Peak Trump Bullshit means we just switched from positive to negative. Don’t think about what can go right as Trump forces through trade deals, tax cuts, a compliant Fed, etc. Think about Trump negatives – forget the FED put. Forget overly-optimistic valuations based on rosy global growth projections, and the belief very smart people will make bright shinny things brighter and shinier. Next year is going to be about real stuff, like how you going to sell this commodity (be it an electric car, swanky mobile phone with a fruit logo, or avacados. Why avocados…? because.. just because.) Consumption vs recession. Ouch.

Markets are being roiled by politics, soiling themselves on trade war panics, scared witless by mounting populism and its pay-off:

…click on the above link to read the rest of the article…

Putin Confirms No New Oil Production Cuts; Hopes For US, UK Detente

December 1, 2018

Putin Confirms No New Oil Production Cuts; Hopes For US, UK Detente

Russian President Vladimir Putin praised Trump, pummeled Poroshenko, and poured cold water on oil market bulls’ hopes in a statement following the G-20 meetings.

Putin began by confirming what White House Press Secretary Sanders noted earlier – he and Trump had spoken broefly on the sidelines of the G-20 and discussed the Ukraine incident. Putin added that “Trump is not afraid of [him]” and expressed “pity that he could not have a full format meeting with President Trump” pointing out that “Russian needs to maintain dialog with US,” and “hopes to meet [Trump] when US is ready.”

Putin also mentioned Russia’s relationship with the United Kingdom, noting that “UK is an important partner for Russia” adding that he “hopes to overcome differences, to normalize relations with UK in the near future.”

But perhaps the most important aspect of Putin’s comments – related to markets – was his statement on crude production cuts.

Russian news service RIA noted earlier that Putin and Saudi Arabian Crown Prince Mohammed bin Salman (MbS) discussed oil, haven’t taken concrete decisions yet, including production cuts, Kremlin’s foreign police aide Yuri Ushakov said.

And Putin just confirmed that there are no additional cuts over and above the OPEC+ Vienna Accord levels currently in place:

*PUTIN SAYS THEY AGREED TO EXTEND OPEC+ AGREEMENT
*PUTIN SAYS RUSSIA, SAUDI AGREES TO CONTINUE AGREEMENT
*PUTIN: EXACT VOLUME TO BE AGREED W SAUDI ARABIA BASED ON MARKET

Confirming Lavrov’s comments earlier in the week that there was no need for additional deals or cuts. The two producers will monitor market to adjust policy accordingly.

Finally Putin raised the topic of the Kerch Strait crisis, explaining that “Poroshenko was dividing Ukraine through the use of mertial law,” adding that it “was much too early to talk about the release/swap of Ukraine sailors.”

…click on the above link to read the rest of the article…

Oil Prices Set To Book Worst Month In A Decade

December 1, 2018

Oil Prices Set To Book Worst Month In A Decade

Oil prices dropped early on Friday, on course to finish their worst month since 2008, as fears of oversupply and slowing demand growth dragged oil down into a bear market in November with prices off by some 30 percent from four-year highs in early October.

At 07:10 a.m. EDT on Friday, WTI Crude was down 1.81 percent at $50.52, and Brent Crudetraded down 1.47 percent at $59.03.

On Thursday, oil prices jumped on reports that Russia had conceded that it needs to reduce oil production and join a new Saudi-led OPEC cut to balance the market.

The rise didn’t last long—prices headed down again on Friday, pressured by rising U.S. oil production and comments by Russia’s Energy Minister Alexander Novak, who said in an interview with the TASS news agency that “To me, the current price range is comfortable for producers and consumers.”

Earlier this week, Russian President Vladimir Putin also signaled that Moscow is okay with oil prices at their current levels.

Russia is comfortable with oil at around $60, Putin said, a week ahead of the OPEC+ meeting in Vienna and just two days before the G-20 summit in Buenos Aires.

In his interview with TASS published on Friday, Novak, as usual, was elusive about Russia’s position about a new production cut, and said that Moscow will have its stance ready by the December 6-7 meeting.

Before the OPEC/non-OPEC meeting, the oil market will be looking for clues about global economy and trade at this weekend’s G-20 summit. U.S. President Donald Trump and Chinese President Xi Jinping are expected to meet on the sidelines of the event to discuss the trade war. Putin, for his part, is expected to meet with Saudi Crown Prince Mohammed bin Salman and the two may discuss the OPEC-Russia oil cooperation, days ahead of the OPEC+ meeting.

The next few days could provide some major catalyst for oil prices.

Pompeo: US/Saudi Partnership ‘Vital’ – American Taxpayers May Disagree!

November 30, 2018

Pompeo: US/Saudi Partnership ‘Vital’ – American Taxpayers May Disagree!

Secretary of State Mike Pompeo has published a bizarre op-ed in the Wall Street Journal claiming that Saudi Arabia has been a guarantor of stability in the Middle East and a bulwark against “expansionist” Iran. Perhaps he forgot about Saudi support for jihadists in Syria and the Saudi destruction of Yemen? Is carrying water for the murderous Saudi kingdom in the Middle East really the best way to demonstrate “American values,” as Pompeo claims? We break down Pompeo’s neocon screed in today’s Liberty Report:

What’s Behind the US-Saudi Nuclear Mega-Deal?

November 28, 2018

What’s Behind the US-Saudi Nuclear Mega-Deal?

Up to 16 nuclear power plants for civilian purposes? Really?

Last week, the NY Times ran a front-page story on Saudi Arabia’s efforts to purchase nuclear fuel enrichment capabilities and as many as 16 nuclear power generating plants from the US. The principal concern expressed here was the Saudi’s insistence on ownership of nuclear fuel-enrichment technologies.

Typically, when the US has exported its reactor technology, it is accompanied by a fuel purchase agreement. We sell the fuel more or less as finished product. In the past, reluctance to export fuel-processing technology stemmed from concerns regarding proliferation of nuclear weapons. Saudi Arabia does have domestic sources of uranium they could mine but they have also expressed the need to respond to a potential nuclear arms rivalry with Iran.

But this article omitted the most important point. The key question is what are the Saudi’s motives regarding construction of a vast number of nuclear power plants for supposedly civilian purposes? The answer is obvious. There is no earthly commercial or economic reason for them to produce those quantities of electricity in the proposed nuclear fashion.

We should also point out that the seemingly large number cited for these nuclear power plants, $80 billion, is understated by a factor of almost five. Sixteen Westinghouse-designed nuclear stations with two reactors apiece would cost roughly $30 billion apiece! And 16 such plants would cost $480 billion – not $80 billion.

This sounds to us more like a bribe. Sell us nuclear fuel-processing technology (which it appears they really want), and we promise to purchase a large number of extremely expensive power plants from the US (the need for which is presently unclear).

…click on the above link to read the rest of the article…

Black Sea Provocation… Vintage Putin or Poroshenko Dregs?

November 28, 2018

Black Sea Provocation… Vintage Putin or Poroshenko Dregs?

The latest potentially disastrous flare-up in violence between the Kiev regime and Russia near the Black Sea’s Kerch Strait is clearly a blatant provocation aimed at strengthening the autocratic regime under President Petro Poroshenko.

It’s also a reckless gambit to push Kiev’s madcap agenda for joining NATO and the European Union. No matter, it seems, if that gambit risks igniting a full-scale war between Russia and NATO.

The US-led NATO military alliance and the European Union appeared to back Kiev’s claims of aggression by Moscow following the latest escalation in the Black Sea. That response fits Poroshenko’s long-held narrative of casting Russia as an aggressor and to mobilize support from NATO and the EU.

Ironically, Western news media featured pro-NATO pundits who have claimed that the weekend confrontation was “vintage Putin”. It is speculated that the Russian president was taking advantage of several political distractions for Western governments – Trump’s public relations problems with Saudi Arabia over the murder of Jamal Khashoggi, the Brexit debacle and so on – to strike a heavy hand at Kiev.

That typically cynical anti-Russian view completely overlooks the glaring facts that the naval clash between Ukrainian and Russian forces in the Black Sea plays conveniently for the Kiev regime and Poroshenko. It’s less a case of “vintage Putin” and more the dregs of Poroshenko’s intrigue.

The prompt declaration by Poroshenko’s national security council for imposing martial law in Ukraine – within hours of the naval confrontation on Sunday – effectively strives to give Poroshenko and his Kiev regime dictatorial powers. Potentially, a state of emergency could permit Poroshenko to call off presidential elections due in March next year.

…click on the above link to read the rest of the article…

How Much Oil Production Will The Saudis Cut?

November 28, 2018

How Much Oil Production Will The Saudis Cut?

Donald Trump continues to take credit for lowering oil prices.

Donald J. Trump
✔@realDonaldTrump

So great that oil prices are falling (thank you President T). Add that, which is like a big Tax Cut, to our other good Economic news. Inflation down (are you listening Fed)!

Trump’s tweetstorm complicates the OPEC+ meeting in Vienna next week. Trump is very much leaning on Saudi Arabia, pressuring them not to cut output. And he has gone out of his way to protect the Saudis even though the CIA has concluded that crown prince Mohammed bin Salman likely ordered the murder of journalist Jamal Khashoggi. He clearly expects the Saudis to return the favor by not cutting production.

This puts Riyadh in a bind. Saudi Arabia needs to patch up its relationship with the West, but it also can ill-afford oil prices at current levels. Saudi Arabia needs Brent to trade north of $80 per barrel for its budget to breakeven. Massive budget deficits during the 2014-2016 downturn help explain Riyadh’s about-face in late 2016 – they had tried to force high-cost drillers out of the market by crashing oil prices, but ultimately caved and engineered an OPEC+ production cut to push prices back up.

Little has changed since then. Saudi Arabia’s spending commitments are still large, and that is before we even take into account MbS’ overly-hyped economic reform proposals. Saudi Aramco is also trying to figure out how to transform itself for the long haul. There was the much-ballyhooed Aramco IPO that has since been shelved. There were the plans for Aramco to issue one of the largest corporate bond offerings ever in order to finance a major stake in Sabic, the state-owned Saudi chemical firm. That initiative was also recently abandoned.

…click on the above link to read the rest of the article…

Trump And OPEC Face Off Over Production Cuts

November 26, 2018

Trump And OPEC Face Off Over Production Cuts

“Oil prices getting lower. Great! Like a big Tax Cut for America and the World. Enjoy! $54, was just $82. Thank you to Saudi Arabia, but let’s go lower!” President Trump tweeted a few days ago.

Trump is a bit confused on the specific figures – perhaps he was mixing up Brent and WTI – but the message to Riyadh was clear. The American president is pleased with the collapse in oil prices and wants them to go even lower, although he’s light on specifics. “It would probably be incorrect to think that Trump has any particular oil price target other than ‘lower’, or a view on what would be a sustainable or even ‘fair’ oil price,” Standard Chartered wrote in a note on Wednesday. “The aim is simply to maximise the gain to consumers.”

The recent meltdown in oil prices is indeed impressive, but for prices to fall even more, OPEC+ would need to take a pass on a production cut. The problem is that the lower prices go, the more likely the group will agree to curb output.

Russia has been coy in recent weeks about where they stand on a production cut. The thinking in Moscow is a bit more cautious than in Riyadh – engineering a price increase, while good for the budget, also risks sparking more production from U.S. shale.

Moreover, Russia’s currency tends to weaken when oil prices fall, cushioning the blow to Russian oil producers and to the Russian economy. Russian firms can pay expenses in weaker rubles, while making oil sales in stronger dollars. Saudi Arabia, with its fixed exchange rate, doesn’t have this luxury. That makes the Saudis a bit more squeamish on lower prices.

However, Brent crude dipped below $60 per barrel on Friday, a level that starts to make even the Russians uncomfortable. As a result, the pressure is on OPEC+ to cut production.

…click on the above link to read the rest of the article…

Oil Crashes To One Year Low, Brent Below $60 As Saudis Pump Record Crude

November 23, 2018

Oil Crashes To One Year Low, Brent Below $60 As Saudis Pump Record Crude

Update:

U.S. CRUDE EXTENDS LOSSES, TRADES DOWN MORE THAN $4 A BARREL TO SESSION LOW OF $50.63 A BARREL
BRENT FALLS BELOW $60/BBL FOR FIRST TIME SINCE OCT. 2017

* * *

The first time oil tumbled two weeks ago when it crashed by 7%, Goldman – which has been telling its clients to keep buying crude all the way down from $80 – blamed it on “negative convexity” and other arcane reasons because the far simpler explanation, more supply, less demand, would be just too obvious for its brilliant strategists not to notice.

There was no “negative convexity” – Wall Street’s catch phrase to “”explain anything that can not be otherwise explained -overnight, when oil resumed its plunge, sliding to the lowest in a year and dropping below $51 after Saudi Arabia signaled its output reached a record high, while growing U.S. inventories stoked fresh concerns over a global supply glut.

WTI futures dropped as much as 5.4% from the Wednesday settlement (there was no Thanksgiving settlement price) and were set for a seventh weekly decline, dropping as low as $51.62/barrel the lowest price in one year.

Brent dropped below $60/barrel for the first time since October 2017.

And with Iranian export restrictions lifted after Trump provided most of its clients oil import waivers, traders are now focused on growing risks of a new glut of crude: Saudi Arabia’s oil minister said Thursday production from the world’s largest exporter climbed further this month after a surge in October, and U.S. stockpiles have risen for nine straight weeks.

Saudi Arabia is producing oil in excess of 10.7 million barrels a day, more than in recent years, Energy Minister Khalid Al-Falih said, giving the strongest indication yet that the kingdom has boosted output to record levels.

…click on the above link to read the rest of the article…

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