Saudi Arabia Insurgency... What is his future?

PM:02:48:14/03/2020


Translation Unit
Academic Board of the Center

Maybe the Saudi prince, Mohammed bin Salman, will become an enemy of the West, as is the Russian President, Vladimir Putin, but will the kingdom endure a confrontation with the West?

The exited of The Kingdom of Saudi Arabia from the International Oil Exchange (OPEC + agreement) is almost like the end of the world and oil prices decreased by almost a quarter following this decision. 

As usual, a portion of the Western press saw this as a conspiracy by Putin against the American shale oil industry, blaming him for the initiative that led to the collapse of oil prices, although Russia has always called, as we remember, to keep market shares at the previous low level, so as not to drop prices.

As for the dumbest part of the Western and Arab press grow a theory that this is the Saudi-Russian war and each side sought to bankrupt the other.

However, let's think calmly. 

The Kingdom of Saudi Arabia, Russia, and OPEC countries lost their market share by reducing the level of production, which made American shale oil occupy this share, and the lower the level of production of the two countries of oil, the higher the level of production of the United States of shale oil, and occupy that share of the market . In other words, Saudi Arabia and Russia are losing anyway, and any new production cuts will only delay this loss a little. That is, the Saudi proposals to reduce production in the long run were a dead end, and the Saudis were aware of that.

This situation is not profitable at all for Saudi, the financial situation in the Kingdom is very bad, and when the oil price was 60-65 dollars a barrel, the budget deficit reached about 1/5 or 6.4% of the entire domestic product. But within the price of $30 a barrel, a catastrophe will occur in Saudi Arabia, which may be postponed its reserves, but not for a long time. And Riyadh cannot openly oppose the United States.

For this reason, the Kingdom of Saudi Arabia decided to reduce world oil production not through quotas, but rather through the bankruptcy of two other producers. Of course, Russia will not go bankrupt first. It has huge financial reserves and low production costs, but it is the US shale oil industry that may suffer from such a move. Therefore, the Saudi strike is not against Russia, but rather to all countries that suffer from high costs of production, including the United States of America and here Riyadh used the Russian dispute as an excuse, and as a cover for its war against American shale oil, and with all this it is not that important.

Let us now discuss the important: 

In the modern world, who determines the price of oil and gold is the largest global banks, especially the United States of America and Great Britain.

More than 90 per cent of the oil speculation in the world does not end with real supplies of oil. More than 90 per cent of the "offers" of oil are for "virtual paper oil", which are options and futures contracts, and other tools, through which the masters of the global financial system in the world can manipulate the prices of oil, gold and other commodities.

Behind this background, the Saudi prince, Mohammed bin Salman, suddenly announces that he has the right to set oil prices for Saudi Arabia, and not for the masters of the world. He started with OPEC + agreement with Russia, and is now fighting a guerrilla war.

Today, when the US shale oil industry becomes a victim of low prices, this will explain an open challenge to the United States of America. As for seeking to play a role in determining oil prices, this is a sin that the West will never forgive. This is heresy at the highest levels.

I would like to recall here that the West's problem with Russia is its challenge to the prevailing world order. Now Russia is no longer alone, and here he is, Mohammed bin Salman joins Putin in the "bad guys" camp, even if he himself does not realize that yet.

My only fear is that Saudi Arabia does not have enough resources to confront the West, and I do not think this insurgency will last long.

In any case, I believe that this will accelerate the strategic transformation of Saudi Arabia towards China.



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