Saudis threaten $200 barrel oil in response to threats by Trump

The media is treating this as if if is only a political or geopolitical situation that "only" affects Saudi Arabia..

Usually collapse depends on some major event.

Could it be that this is it?

We will have to wait and see how this dovetails into what is already happening in the markets

Oil could hit $200 'or even double that figure': Saudis threaten to retaliate against any sanctions over Khashoggi disappearance

The Saudi stock market lost $33 billion of its value on Sunday

Financial Post,

14 October, 2018

DUBAI (Reuters) – Saudi Arabia on Sunday warned against threats to punish it over the disappearance of journalist Jamal Khashoggi last week, saying it would retaliate against any sanctions with tougher measures, as international criticism increased.

Khashoggi, a U.S. resident and Washington Post columnist critical of Saudi Arabia, disappeared on Oct. 2 after entering the Saudi consulate in Istanbul. Turkey’s government believes he was murdered inside the building and his body removed. Saudi Arabia has denied that.

U.S. President Donald Trump has threatened “severe punishment” if it turned out Khashoggi was killed in the consulate, though he said Washington would be “punishing” itself if it halted military sales to Riyadh, a key ally.

“The Kingdom affirms its total rejection of any threats and attempts to undermine it, whether by threatening to impose economic sanctions, using political pressures, or repeating false accusations…” the official Saudi Press Agency (SPA)quoted an unnamed government source as saying.

“The Kingdom also affirms that if it receives any action, it will respond with greater action, and that the Kingdom’s economy has an influential and vital role in the global economy,” the source added, without elaborating.

Britain, France and Germany told Saudi Arabia they were treating the case with “the utmost seriousness”.

“There needs to be a credible investigation to establish the truth about what happened, and – if relevant – to identify those bearing responsibility for the disappearance of Jamal Khashoggi, and ensure that they are held to account,” the foreign ministers from the three countries said in a joint statement.

“We encourage joint Saudi-Turkish efforts in that regard, and expect the Saudi Government to provide a complete and detailed response. We have conveyed this message directly to the Saudi authorities.”

The statement, by British foreign minister Jeremy Hunt, France’s Jean-Yves Le Drian and Germany’s Heiko Maas, made no mention of potential actions the countries might take.

The Saudi stock market lost $33 billion of its value on Sunday amid investor worries about deteriorating international relations, one of the first signs of the economic pain that Riyadh could suffer over the affair.

In a column published just after the SPA statement, Saudi-owned Al Arabiya channel’s General Manager Turki Aldakhil warned that imposing sanctions on the world’s largest oil exporter could spark global economic disaster.

“It would lead to Saudi Arabia’s failure to commit to producing 7.5 million barrels. If the price of oil reaching $80 angered President Trump, no one should rule out the price jumping to $100, or $200, or even double that figure,” he wrote.

U.S. senators have triggered a provision of the Global Magnitsky Human Rights Accountability Act requiring the president to determine whether a foreign person is responsible for a gross human rights violation. The act has in the past imposed visa bans and asset freezes on Russian officials.

Anti-Saudi sentiment in the U.S. Congress could conceivably raise pressure to pass the so-called No Oil Producing and Exporting Cartels Act, which would end sovereign immunity shielding OPEC members from U.S. legal action.

A senior member of Saudi Arabia’s ruling family, Prince Khaled al-Faisal, has met Turkey’s President Tayyip Erdogan to discuss Khashoggi’s disappearance, two sources with knowledge of the matter told Reuters without providing details of the talks.

On Friday, a source with links to the prince’s family said Prince Khaled, the governor of Mecca, had been sent to Turkey in his capacity as special adviser to King Salman.

A Turkish official told Reuters on Sunday that the Saudis had said they would allow the consulate to be searched, and that this would happen by the end of the weekend, though he had conceded to “flexibility on this date.”

“But Turkey is determined on the subject of entering the consulate and carrying out a criminal inspection. There is no alternative to carrying out this inspection. Time is important in terms of evidence,” the official said.

Trump Warns of "Severe Consequences" If Saudi's Murdered Journalist; Saudis Reply: $200+ a Barrel Oil in Retaliation

HalTurner,

13 October, 2018

Twenty-two U.S. senators last Wednesday forced a U.S. investigation of whether human rights sanctions should be imposed over the disappearance of journalist Jamal Khashoggi.

Saudi Arabia said on Sunday it would retaliate to possible economic sanctions taken by other states over the case of Khashoggi, the state news agency SPA reported quoting an official source.

The kingdom will respond to any measure against it with bigger measures, the source said, adding: "The Saudi economy has vital and influential roles for the global economy."

Saudi Arabia has been under pressure since Jamal Khashoggi, a prominent critic of Riyadh and a U.S. resident, disappeared on October 2 after visiting the Saudi consulate in Istanbul.

On Sunday, Riyadh vowed to hit back against any action. “The kingdom affirms its total rejection of any threats and attempts to undermine it, whether through economic sanctions, political pressure or repeating false accusations,” it said.

“The kingdom also affirms that if it is [targeted by] any action, it will respond with greater action.” The statement also pointed out that the oil-rich kingdom “plays an effective and vital role in the world economy”.

The Saudi response came after the Tadawul exchange in Riyadh dropped by 7% at one point on Sunday, the week’s first day of trading in Saudi Arabia, with 182 of its 186 listed stocks showing losses by early afternoon. The market pulled back some of the losses, later trading down 4%.

Business leaders as well as media companies including Bloomberg and CNN have pulled out of an investment conference next week in Riyadh, dubbed “Davos in the desert”.

The belligerence of the statement is likely to anger those US senators already pressing for the Trump administration to take tough economic action against Riyadh, including sanctions.

"The kingdom confirms its categorical rejection of any threats and attempts to harm it by threatening to impose economic sanctions or the exercise of political pressure," the official added without elaborating.

Twenty-two U.S. senators last Wednesday forced a U.S. investigation of whether human rights sanctions should be imposed over the disappearance of Khashoggi.

In a letter, the senators said they had triggered a provision of the Global Magnitsky Human Rights Accountability Act requiring the president to determine whether a foreign person is responsible for a gross human rights violation.

The Global Magnitsky Act requires a report within 120 days of the letter with a decision on the imposition of sanctions on anyone deemed responsible for a serious rights violation such as torture, prolonged detention without trial or extrajudicial killing of someone exercising freedom of expression.

President Donald Trump said in a CBS interview on Saturday that there would be "severe punishment" for Saudi Arabia if it turns out that missing Saudi journalist Khashoggi was killed in the Saudi consulate in Istanbul. 

Asked whether Saudi Crown Prince Mohammed bin Salman gave an order to kill him, Trump said "nobody knows yet, but we'll probably be able to find out." Trump added in excerpts of the "60 Minutes" interview that will air on Sunday "we would be very upset and angry if that were the case".

"We're going to get to the bottom of it and there will be severe punishment," Trump said. 

Trump has not described what punishment Saudi Arabia might face. He has indicated Washington does not want to harm close defense ties, saying the United States would be punishing itself if it halted sales of military equipment to Riyadh.

SAUDI ARABIA POTENTIAL RESPONSE

 

The information circulating within decision-making circles within the kingdom have gone beyond the rosy language used in the statement and discuss more than 30 potential measures to be taken against the imposition of sanctions on Riyadh. They present catastrophic scenarios that would hit the US economy much harder than Saudi Arabia’s economic climate.

If US sanctions are imposed on Saudi Arabia, the Saudis believe they will be facing an economic disaster that would rock the entire world. Riyadh is the capital of worldwide oil, and touching Saudi would affect oil production before any other vital commodity. It would lead to Saudi Arabia's failure to commit to producing 7.5 million barrels.

Said one official "If the price of oil reaching $80 angered President Trump, no one should rule out the price jumping to $100, or $200, or even double that figure."

Stunningly, other Saudi Officials actually said "An oil barrel may be priced in a different currency, Chinese yuan, perhaps, instead of the dollar. And oil is the most important commodity traded by the dollar today."

All of this will throw the Middle East, the entire Muslim world, into the arms of Iran, which will become closer to Riyadh than Washington.

One Saudi pointed out that imposing any type of sanctions on Saudi Arabia by the West will cause the kingdom to resort to other options, as US President Donald Trump had said a few days ago, and that Russia and China are ready to fulfill Riyadh’s military needs among others.

He went on to say that no one can deny that repercussions of these sanctions will include a Russian military base in Tabuk, northwest of Saudi Arabia, in the heated four corners of Syria, Israel, Lebanon and Iraq.

At a time where Hamas and Hezbollah have turned from enemies into friends, getting this close to Russia will lead to a closeness to Iran and maybe even a reconciliation with it.

Another Saudi official said "It will not be strange that Riyadh would stop buying weapons from the US. Riyadh is the most important customer of US companies, as Saudi Arabia buys 10 percent of the total weapons that these US companies produce, and buys 85 percent from the US army which means what’s left for the rest of the world is only five percent; in addition to the end of Riyadh’s investments in the US government which reaches $800 billion."

The US will also be deprived of the Saudi market which is considered one of the top 20 economies in the world.

These are simple procedures that are part of over 30 others that Riyadh will implement directly, without flinching an eye if sanctions are imposed on it, according to Saudi sources who are close to the decision-makers.

The truth is that if Washington imposes sanctions on Riyadh, it will stab its own economy to death, even though it thinks that it is stabbing only Riyadh.

So **IF** the Saudi government actually did order the murder of a Journalist, it seems they intend to flex their oil and economic muscle to try to get away with it. The US and the world may face a severe conundrum.