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Old December 19th, 2014 #61
Robbie Key
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US Provoked Oil Prices Fall to Attack Venezuela, Russia: Evo Morales

16:47 19.12.2014(updated 17:45 19.12.2014)

Nowadays it is impossible to remove presidents with military coups, so economic means and sanctions are considered, Bolivian President Evo Morales said, adding that the US has provoked the reduction in oil prices to 'attack' Russia's and Venezuela's economies.

MOSCOW, December 19 (Sputnik) — The US has provoked the decrease in oil prices, to attack Venezuela and Russia, the President of Bolivia Evo Morales said to RT in an interview.

"The reduction in oil prices was provoked by the US as an attack on the economies of Venezuela, and Russia… In the face of such an economic and political attack, the countries have to be united," Morales said.

Oil markets were negatively affected by Saudi Arabia's decision to cut prices for January deliveries to US and Asian customers.

Nowadays it is impossible to remove presidents with military coups, so economic means and sanctions are considered, the president explained. Such aggressive US policies, he said, are aimed at dividing countries, dominate them politically and rob them economically.

"Whatever economic aggression with oil prices that comes from the US is not going to last. I am convinced of it," the president reassured. He explained that the US was not interested in oil prices, but in conducting economic attacks to topple certain presidents. However, "this escapade would not work. Our people are conscious. We are anti-imperialists," he said.

Venezuela's President Nicolas Maduro speaks during a rally to reject the sanctions that the U.S. government seeks to impose on officials accused of human rights violations, in Caracas December 15, 2014.

The US and the EU introduced several round of sanctions against Russia over its alleged role in the Ukrainian crisis. The sanctions targeted the banking, energy and defense sectors, as well as certain individuals. However, Russia repeatedly denied its involvement in Ukraine's internal affairs.

US President Barack Obama signed a sanctions bill against Venezuela Thursday. The sanctions target individuals who are allegedly responsible for human rights violations during February protests against President Nicolas Maduro's government.
Old December 19th, 2014 #62
Sam Emerson
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Originally Posted by Joe_Smith View Post
To all the oil company fans here:

How does it make sense to simultaneously export large quantities of oil while importing it as well?
We don't. Comrade!
Old December 25th, 2014 #63
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Default Did the Saudis and the U.S. Collude in Dropping Oil Prices?

The oil price drop that has dominated the headlines in recent weeks has been framed almost exclusively in terms of oil market economics, with most media outlets blaming Saudi Arabia, through its OPEC Trojan horse, for driving down the price, thus causing serious damage to the world's major oil exporters – most notably Russia.

While the market explanation is partially true, it is simplistic, and fails to address key geopolitical pressure points in the Middle East. looked beyond the headlines for the reason behind the oil price drop, and found that the explanation, while difficult to prove, may revolve around control of oil and gas in the Middle East and the weakening of Russia, Iran and Syria by flooding the market with cheap oil.

The oil weapon

We don't have to look too far back in history to see Saudi Arabia, the world's largest oil exporter and producer, using the oil price to achieve its foreign policy objectives. In 1973, Egyptian President Anwar Sadat convinced Saudi King Faisal to cut production and raise prices, then to go as far as embargoing oil exports, all with the goal of punishing the United States for supporting Israel against the Arab states. It worked. The “oil price shock” quadrupled prices.

It happened again in 1986, when Saudi Arabia-led OPEC allowed prices to drop precipitously, and then in 1990, when the Saudis sent prices plummeting as a way of taking out Russia, which was seen as a threat to their oil supremacy. In 1998, they succeeded. When the oil price was halved from $25 to $12, Russia defaulted on its debt.

The Saudis and other OPEC members have, of course, used the oil price for the obverse effect, that is, suppressing production to keep prices artificially high and member states swimming in “petrodollars”. In 2008, oil peaked at $147 a barrel.

Related: OPEC Ministers Decry Price War Conspiracy Theories

Turning to the current price drop, the Saudis and OPEC have a vested interest in taking out higher-cost competitors, such as US shale oil producers, who will certainly be hurt by the lower price. Even before the price drop, the Saudis were selling their oil to China at a discount. OPEC's refusal on Nov. 27 to cut production seemed like the baldest evidence yet that the oil price drop was really an oil price war between Saudi Arabia and the US.

However, analysis shows the reasoning is complex, and may go beyond simply taking down the price to gain back lost marketshare.

“What is the reason for the United States and some U.S. allies wanting to drive down the price of oil?” Venezuelan President Nicolas Maduro asked rhetorically in October. “To harm Russia.”

Many believe the oil price plunge is the result of deliberate and well-planned collusion on the part of the United States and Saudi Arabia to punish Russia and Iran for supporting the murderous Assad regime in Syria.

Punishing Assad and friends

Proponents of this theory point to a Sept. 11 meeting between US Secretary of State John Kerry and Saudi King Abdullah at his palace on the Red Sea. According to an article in the Wall Street Journal, it was during that meeting that a deal was hammered out between Kerry and Abdullah. In it, the Saudis would support Syrian airstrikes against Islamic State (ISIS), in exchange for Washington backing the Saudis in toppling Assad.

If in fact a deal was struck, it would make sense, considering the long-simmering rivalry between Saudi Arabia and its chief rival in the region: Iran. By opposing Syria, Abdullah grabs the opportunity to strike a blow against Iran, which he sees as a powerful regional rival due to its nuclear ambitions, its support for militant groups Hamas and Hezbollah, and its alliance with Syria, which it provides with weapons and funding. The two nations are also divided by religion, with the majority of Saudis following the Sunni version of Islam, and most Iranians considering themselves Shi’ites.

“The conflict is now a full-blown proxy war between Iran and Saudi Arabia, which is playing out across the region,” Reuters reported on Dec. 15. “Both sides increasingly see their rivalry as a winner-take-all conflict: if the Shi’ite Hezbollah gains an upper hand in Lebanon, then the Sunnis of Lebanon—and by extension, their Saudi patrons—lose a round to Iran. If a Shi’ite-led government solidifies its control of Iraq, then Iran will have won another round.”

The Saudis know the Iranians are vulnerable on the oil price. Experts say the country needs $140 a barrel oil to balance its budget; at sub-$60 prices, the Saudis succeed in pressuring Iran's supreme leader, Ayatollah Ali Khamanei, possibly containing its nuclear ambitions and making the country more pliable to the West, which has the power to reduce or lift sanctions if Iran cooperates.

Adding credence to this theory, Iranian President Hassan Rouhani told a Cabinet meeting earlier this month that the fall in oil prices was “politically motivated” and a “conspiracy against the interests of the region, the Muslim people and the Muslim world.”

Pipeline conspiracy

Some commentators have offered a more conspiratorial theory for the Saudis wanting to get rid of Assad. They point to a 2011 agreement between Syria, Iran and Iraq that would see a pipeline running from the Iranian Port Assalouyeh to Damascus via Iraq. The $10-billion project would take three years to complete and would be fed gas from the South Pars gas field, which Iran shares with Qatar. Iranian officials have said they plan to extend the pipeline to the Mediterranean to supply gas to Europe – in competition with Qatar, the world's largest LNG exporter.

“The Iran-Iraq-Syria pipeline – if it’s ever built – would solidify a predominantly Shi’ite axis through an economic, steel umbilical cord,” wrote Asia Times correspondent Pepe Escobar.

Global Research, a Canada-based think tank, goes further to suggest that Assad's refusal in 2009 to allow Qatar to construct a gas pipeline from its North Field through Syria and on to Turkey and the EU, combined with the 2011 pipeline deal, “ignited the full-scale Saudi and Qatari assault on Assad’s power.”

“Today the US-backed wars in Ukraine and in Syria are but two fronts in the same strategic war to cripple Russia and China and to rupture any Eurasian counter-pole to a US-controlled New World Order. In each, control of energy pipelines, this time primarily of natural gas pipelines—from Russia to the EU via Ukraine and from Iran and Syria to the EU via Syria—is the strategic goal,” Global Research wrote in an Oct. 26 post.

Poking the Russian bear

How does Russia play into the oil price drop? As a key ally of Syria, supplying Assad with billions in weaponry, President Vladimir Putin has, along with Iran, found himself targeted by the House of Saud. Putin's territorial ambitions in the Ukraine have also put him at odds with US President Barack Obama and leaders of the EU, which in May of this year imposed a set of sanctions on Russia.

As has been noted, Saudi Arabia's manipulation of the oil price has twice targeted Russia. This time, the effects of a low price have hit Moscow especially hard due to sanctions already in place combined with the low ruble. Last week, in an effort to defend its currency, the Bank of Russia raised interest rates to 17 percent. The measure failed, with the ruble dropping another 20 percent, leading to speculation the country could impose capital controls. Meanwhile, Putin took the opportunity in his annual televised address to announce that while the economy is likely to suffer for the next two years and that Russians should brace for a recession, “Our economy will get diversified and oil prices will go back up.”

He may be right, but what will the effect be on Russia of a sustained period of low oil prices? Eric Reguly, writing in The Globe and Mail last Saturday, points out that with foreign exchange reserves at around $400 billion, the Russian state is “in no danger of collapse” even in the event of a deep recession. Reguly predicts the greater threat is to the Russian private sector, which has a debt overhang of some $700 billion.

“This month alone, $30-billion of that amount must be repaid, with another $100-billion coming due next year. The problem is made worse by the economic sanctions, which have made it all but impossible for Russian companies to finance themselves in Western markets,” he writes.

Will it work?

Whether one is a conspiracy theorist or a market theorist, in explaining the oil price drop, it really matters little, for the effect is surely more important than the cause. Putin has already shown himself to be a master player in the chess game of energy politics, so the suggestion that sub-$60 oil will crush the Russian leader has to be met with a healthy degree of skepticism.

Related: OPEC Calls For Widespread Production Cuts

Moscow's decision on Dec. 1 to drop the $45-billion South Stream natural gas pipeline project in favor of a new pipeline deal with Turkey shows Putin's willingness to circumvent European partners to continue deliveries of natural gas to European countries that depend heavily on Russia for its energy requirements. The deal also puts Turkey squarely in the Russian energy camp at a time when Russia has been alienated by the West.

Of course, the Russian dalliance with China is a key part of Putin's great Eastern pivot that will keep stoking demand for Russian gas even as the Saudis and OPEC, perhaps with US collusion, keep pumping to hold down the price. The November agreement, that would see Gazprom supply Chinese state oil company CNPC with 30 billion cubic meters of gas per year, builds on an earlier deal to sell China 38 bcm annually in an agreement valued at $400 billion.

As commented on Sunday, “ongoing projects are soldiering on and Russian oil output is projected to remain unchanged into 2015.”

“Russia will go down with the ship before ceding market share – especially in Asia, where Putin reaffirmed the pivot is real. Saudi Arabia and North America will have to keep pumping as Putin plans to uphold his end in this game of brinksmanship.”
By Andrew Topf of
Old January 10th, 2015 #64
Robbie Key
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Common enemies use oil as political tool: Leader to Maduro

Sat Jan 10, 2015 4:36PM

Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei says enemies are using oil as a political tool to exert pressure on oil exporting countries.

In a meeting with visiting Venezuelan President Nicolas Maduro on Saturday, the Leader noted that the steep fall in global oil prices in a very short period of time is “politically motivated” and “is not economic.”
“Our common enemies are using oil as political tool and definitely play a role in this sharp fall in oil prices,” Ayatollah Khamenei added.
The Leader also praised Venezuela’s efforts against the Israeli regime, and described such efforts as the reason for the hegemonic powers’ hostility toward the Latin American country.
“The Islamic Republic of Iran’s definite decision is to continue and increase all-out cooperation with Venezuela,” the Leader noted.
Ayatollah Khamenei also described the late Venezuelan president, Hugo Chavez, as “Iran’s good friend” and further appreciated Maduro’s continued resistance against the plots hatched by the enemies.

Maduro, for his part, thanked the Islamic Republic of Iran for its assistance to and support for Venezuela, saying that the two countries should continue expanding relations by using the existing capacities.

Touching upon the issue of oil, he said his government is making efforts to bring about a consensus among member states of the Organization of the Petroleum Exporting Countries (OPEC) as well as other oil-exporting states to return crude prices to an acceptable level.
Old January 10th, 2015 #65
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Originally Posted by Sam Emerson View Post
We don't. Comrade!

Looks to me like they do.

Last edited by Crowe; January 10th, 2015 at 08:56 PM.
Old January 15th, 2015 #66
Robbie Key
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Crude Contango: Oil markets dance to beat of global traders

Thu Jan 15, 2015 6:28AM


The traders have preserved a remarkable level of anonymity despite such a crucial role in the daily supply of energy and food.”

—Javier Blas

As global oil markets continue their downward slide, we are reminded of the slump in oil prices that preceded the global financial crisis of 2008.

As oil plummeted from over $140 a barrel to under $40 and the world economy teetered on the brink of collapse, some commodities traders saw an opportunity to make huge profits by simply buying the cheap oil and storing it until prices recovered. The strategy proved so profitable that five firms–Vitol, Glencore, Trafigura, Mercuria and Gunvor– now control enough oil each day to supply the U.S., China and Japan.

Vitol, the world’s largest independent oil trader with over $300 billion in revenues and 200 ships at sea at any one time, handles over 5 million barrels of crude oil and oil products each day. Glencore, a major producer and marketer of more than 90 commodities with a global network of more than 90 offices in over 50 countries, boasts on their website, “We handle the physical supply of around 3% of the world’s daily oil consumption.” Trafigura, the world’s third-largest oil trader, transacts business involving about 2.5 million barrels of oil a day through its offices in 36 countries on six continents. Mercuria, also one of the largest oil traders, has a global network of 38 trading offices in 27 countries and 40 million barrels of storage worldwide. Only founded in 2004, Mercuria recently acquired the commodities business of J.P. Morgan Chase. Gunvor, another top oil trader, handles over 1 million barrels of oil daily and claims access to over 10 million barrels of storage capacity. In addition, the firm owns two refineries and maintains its own in-house intelligence capabilities.

How big are these oil traders? When Russian oil giant Rosneft wanted to acquire TNK-BP back in May 2013, chairman Igor Sechin turned to Ian Taylor and Ivan Glasenberg, the chief executives of Vitol and Glencore for a $10 billion loan, which was collateralized by future supplies of oil. The deal, one of the largest in the history of the industry, not only made Rosneft the largest oil producer in the world with a capacity of 200 million barrels per day along with 28 billion barrels of oil reserves, but also illustrates how these obscure, sometimes unlisted and almost unknown oil traders pack a potent financial punch.

Although it sounds like a dance, contango is a term used by commodities traders to refer to market conditions where futures contract prices for a given commodity exceed anticipated future spot prices. The current crude oil market is said to be “in contango” since projected spot prices are running lower than the futures contract prices. For example, crude oil for January 2016 delivery is quoted at about $56 per bbl. while projected spot prices are around $50. The opposite of contango is backwardation, which occurs when futures contract prices are lower than anticipated future spot prices and is considered a normal condition for commodities markets.

When current crude oil spot prices dip below contract prices for future delivery, traders buy oil at current spot prices and look for some place to store it, in storage tanks and even in oil tankers. Oil storage became extremely profitable during the global financial crisis of 2008 and 2009 with many investment firms—including Wall Street giants Morgan Stanley, Goldman Sachs and Citicorp—earning substantial profits by storing crude oil.

One such place for storing crude is Cushing, Oklahoma in the central western U.S., an oil town with a population of 8,500 and massive oil storage tank farms covering 23 sq. kilometers (9 sq. miles). While its oil wells ran dry in the 1940s, Cushing became the global crossroads for crude when the New York Mercantile Exchange selected the town as the designated delivery point in futures contracts for light, sweet crude oil, the grade preferred by refiners for making gasoline.

Up to ten percent of U.S. crude oil stocks are stored at Cushing, whose inventory levels are watched carefully by the oil traders for clues as to what is happening on world oil markets. Back in July 2008 when oil was $143 a bbl. at the peak of the global financial crisis, Cushing had about 15 million barrels of oil in storage. By the time oil prices dropped to almost $30 a bbl. in December some 30 million barrels–double the amount just six months earlier–were in storage at Cushing, illustrating how traders amassed oil in hopes of higher future prices.

By the end of July 2014, Cushing inventories had dropped to below 18 million barrels with spot prices over $100 a barrel. By January 2015, oil had dipped below $50 a barrel and Cushing was once again storing over 30 million barrels for speculators hoping for higher prices. The inverse relationship between crude oil spot prices and inventories at Cushing, while not in strict lock step, can at least be seen from these figures.

With worldwide demand for crude oil down, oil tankers are idled and thus become attractive as storage facilities. Shell Oil itself has rented two tankers while oil traders Trafigura and Vitol have followed suit renting crude oil tankers for twelve-month periods for storage. Vitol, the world’s largest energy trader, has leased the TI Oceania Ultra Large Crude Carrier, one of the largest supertankers in the world with a three million barrel capacity. So far, only about 15 million barrels of storage capacity has been rented. In comparison, in 2009 when oil markets were in contango, traders then had over 100 million barrels in storage in tankers. With so-called Very Large Crude Carrier (VLCC) tankers commanding less than $40,000 per day rents, a quick calculation shows that for a 3 million barrel capacity tanker, the added cost for storage is less than $5 per barrel.

There has been much discussion over the issue of whether oil traders pose a “systemic risk” to the financial system, that is, whether these firms pose risks to the world’s financial system analogous to banks, and therefore should be subject to regulation. According to former Federal Reserve chairman Ben Bernanke, “Systemic risks are developments that threaten the stability of the financial system as a whole and consequently the broader economy, not just that of one or two institutions.” While Trafigura downplays the potential threat, an examination of the widespread influence exercised by these firms over global energy distribution should be enough to convince most anyone that regulatory oversight is desperately needed.

These oil trading behemoths, along with their partners in crime, namely Royal Dutch Shell, BP and Statoil, have already been accused by traders on the New York Mercantile Exchange of collusion to fix the Brent crude oil price benchmarks, which is used in about two-thirds of all international oil transactions and, of course, would influence profits on oil futures contracts. The accusations were of sufficient gravity to prompt investigations by the European Commission, the Japanese Fair Trade Commission, the Korean Fair Trade Commission, the U.S. Commodity Futures Trading Commission, and U.S. Federal Trade Commission, but to date nothing substantial has occurred except that the U.S. Federal Trade Commission called off its inquiry last October, which should come as no surprise.

One oil trader, Halis Bektas, has admitted that the manipulation of oil price benchmarks is quite easy since the traders are not required to report their transactions. If a trader has a contract to buy a hundred thousand barrels of oil pegged at the Brent crude oil benchmark price, he can sell a small amount of his oil assets, say one thousand barrels, at a price lower than the current benchmark and report that transaction. The reporting services will use the lower price of the sale in recalculating their benchmark price, resulting in a lower Brent benchmark and thus a lower purchase price for the hundred thousand barrels. The reverse of this process could be used to obtain an increased benchmark price for higher profits on a sale.

While it is true that commodity traders can provide a useful role in distributing scarce resources and alleviating shortages, the industry has become heavily financialized, thus shifting the focus from a human endeavor benefiting the masses to maximizing profits for the select few. Unfortunately, oil trading has become the domain of unscrupulous hedge fund managers, blood-sucking leaches like Andrew J. Hall, who in 2009 earned $100 million from Citigroup, which received U.S. government bailout money as millions of his fellow citizens lost their homes.
Old October 25th, 2015 #67
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Saudi Arabia generates 90 per cent of its income from oil - a commodity which has recently plummeted in valu

Saudi Arabia’s cash reserves are in free-fall and the country could have only five years of financial assets remaining due in large part to the fall in oil prices, according to a report by the International

Monetary Fund (IMF).

In its World Economic and Financial Surveys, released every October, the IMF said that the kingdom will suffer a negative 21.6 per cent “General Government Overall Fiscal Balance” in 2015 and a 19.4

per cent negative balance in 2016, a massive increase from only -3.4 per cent in 2014.

Saudi Arabia currently has $654.5 billion in foreign reserves, but the cash is disappearing quickly.

The Saudi Arabian Monetary Agency has withdrawn $70 billion in funds managed by overseas financial institutions, and has lost almost $73 billion since oil prices slumped, according to Al-Jazeera.

Saudi Arabia generates 90 per cent of its income from oil.
Saudi Arabia could be bankrupt within five years, IMF predicts | Middle East | News | The Independent
Old November 9th, 2015 #68
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The price of oil is crashing because it was over valued by speculation to begin with.
Old January 19th, 2016 #69
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Oil price falls below $28 a barrel, or less than the cost of an actual barrel

Not everyone agreed with the RAC when it said that petrol could become cheaper than bottled water.

RAC wagered that if the price of oil slid below $20 barrel, it could push petrol prices to 90p a litre - while a fall to $10 a barrel or less could see petrol sold at 86p a litre, or cheaper than a bottle of water.
Old February 18th, 2016 #70
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Oil is now so cheap even pirates aren’t stealing it any more

Stealing the oil from a ship is no mean feat.

Oil tankers are enormous, and ships that carry expensive cargo are designed to be difficult to board. Stealing can mean hijacking the original tanker, disabling its tracking devices, taking it to a location where it can’t be spotted, and transferring thousands of heavy barrels to a different vessel that can then be sailed away. Stealing crude also means finding a buyer for it, or else getting involved in the messy and dangerous business of illegal refining.


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