The oil wars

Despite the president’s Alzheimers or narcissism (or because of it? He is capable of saying things that are brutally true that others’ would dare.

Saudi Arabia can survive ‘2,000 years’ without US help & not face civil war like America – MBS

RT,

6 Octoer, 2018

Saudi society fully supports the royals and those few fringe extremist elements who stir trouble are being dealt with, believes crown prince Mohammed bin Salman, who claimed the kingdom can survive for 2,000 years on its own.

Trump told Saudi King he wouldn’t last ‘2 weeks’ without US support

Known in the West by his initials MBS, the crown prince may, as he said, ‘love’ working with the US and Trump but, when it comes to thinking of examples of successful managers of social change, he is decidedly ‘America last.’ Any drastic financial, political and legal reforms come with a hefty price tag, he emphasized, drawing parallels with the history of the United States.

“...if you look at the United States of America, when for example they wanted to free the slaves. What was the price? Civil war. It divided America for a few years. Thousands, tens of thousands of people died to win freedom for the slaves,” Bin Salman told Bloomberg, in a wide-ranging interview published Friday.

“Here we are trying to get rid of extremism and terrorism without civil war, without stopping the country from growing, with continuous progress in all elements,” the crown prince added. “So if there is a small price in that area, it’s better than paying a big debt to do that move.”

Two weeks? Try 2,000 years!

 

Bin Salman brushed off US President Donald Trump’s somewhat humiliating comments about Saudi Arabia perishing within two weeks without American support, saying that his kingdom existed decades before the US and will need “something like around 2,000 years to maybe face some dangers.”

 

“Actually, we will pay nothing for our security," the prince firmly stated, explaining that since Trump’s statements were clearly addressed to a domestic audience he did not find them offensive.

“We believe that all the armaments we have from the United States of America are paid for, it’s not free armament,” he reiterated. Explaining that, after Trump became US president, Saudi Arabia has already agreed to procure nearly 60 percent of its arms from Washington, he emphasized that Riyadh owes nothing extra because it always pays for weapons supplies in cash.

“I love working with him. I really like working with him,” bin Salman said of Trump, calling his comments a “one percent”disagreement between allies.

Saudis aren’t scared, only 1,500 ‘extremists’ arrested in 3 years

 

Bin Salman has been the public face of “reforms” that Riyadh has embarked on to diversify its economy and relax some of its laws – such as allowing women to drive, for example – since he became crown prince of Saudi Arabia in 2017.

Asked about discontent with the pace of those reforms and why some Saudis seem afraid to speak to journalists, bin Salman said they shouldn’t be and that only those “extremists” who organize street protests or cooperate with foreign “intelligence agencies” should fear imminent arrest. In the course of “fighting extremism, fighting terrorism” over the past three years, only “about 1,500” people have been arrested, he claimed, comparing it to 50,000 in Turkey after the attempted military coup there.

Anyone shown to have “links with intelligence against Saudi Arabia or extremism or terrorists” will face Saudi law, bin Salman stated. “We have do to this. We cannot fight extremists having 500 or 700 extremists on the streets recruiting people.” He named Iran and Qatar as the main suspects.

While the Salafist Saudi Kingdom has long been at odds with the predominantly Shia Islamic Republic on the other side of the Gulf, relations with Qatar have soured in recent years. Riyadh and its allies declared a blockade of the peninsular monarchy in June 2107, accusing Qatar, the owners of Al Jazeera, of secretly collaborating with Iran and of supporting Islamic State (IS, formerly ISIS/ISIL) and other terrorists. The tensions show no signs of ending anytime soon.

Saudi Arabia Tells Trump No More Oil

• This is a risk for Saudi Arabia, because Saudi Arabia has always depended a great deal on the United States
• the Trump administration has its answer--Saudi Arabia does not intend to deploy any more of its vaunted spare capacity to counter rising prices

Forbes,

5 October, 2018

Saudi Arabian Crown Prince Mohammad bin Salman responded publicly to President Donald Trump's recent spate of Tweets and statements concerning oil. While the President has been asking for Saudi Arabia to increase oil production to flood the market and keep prices down, the prince said no. This is a risk for Saudi Arabia, because Saudi Arabia has always depended a great deal on the United States --even its currency is pegged directly to the U.S. dollar--and the Trump administration has shown that it will take a hard stance on economic issues even with its closest allies.

President Donald Trump meets with Saudi Crown Prince Mohammed bin Salman in the Oval Office of the White House, Tuesday, March 20, 2018, in Washington. (AP Photo/Evan Vucci)

This week, oil prices reached highs not seen in four years. The international benchmark, Brent, hit $86 per barrel and the U.S. benchmark, WTI jumped to over $76 per barrel. U.S. President Donald Trump has been unrelenting in his public and private pressure on OPEC and Saudi Arabia to produce more oil and lower prices. After all, from his perspective, the increase in prices is a result of his new sanctions against Iran - which Saudi Arabia fully supports - and therefore, Saudi Arabia should deploy its spare capacity to ensure that American consumers don't face undue pain at the pump.

Saudi Arabian oil minister Khalid al Falih tried to reassure markets that Saudi Arabia would increase production but that the market is actually very well supplied. The 9% increase in oil prices over the past 3 months, he said, is the fault of financial speculators, not a lack of supply. He's right, but the market and the speculators didn't believe him.

That wasn't what the Trump administration wanted to hear, so the President ratcheted up his war of words during a rally in Mississippi. He delivered a low level threat to Saudi Arabia's King Salman when he said the following:

We protect Saudi Arabia. Would you say they're rich? And I love the King ... King Salman but I said 'King, we're protecting you. You might not be there for two weeks without us. You have to pay for your military.

Still, oil prices barely budged and the AAA reported that gasoline prices in the United States have reached their highest levels in 4 years.

Soon after, Saudi crown prince Mohammad bin Salman addressed global oil prices in an interview with Bloomberg where he said,

The request that America made to Saudi Arabia and other OPEC countries is to be sure that if there is any loss of supply from Iran, that we will supply that. And that happened....So we export as much as 2 barrels for any barrel that disappeared from Iran recently. So we did our job and more. We believe the higher price that we have in the last month, it’s not because of Iran. It’s mostly because of things happening in Canada, and Mexico, Libya, Venezuela and other countries that moved the price a little bit higher.

Now the Trump administration has its answer--Saudi Arabia does not intend to deploy any more of its vaunted spare capacity to counter rising prices . There is still the opportunity for more oil to come on to the market from other places - the neutral zone between Saudi Arabia and Kuwait, the United States, Canada, Iraq, Kazakhstan, Azerbaijan, Libya and Nigeria. But all of those will take some time and investment. Saudi Arabia could put another 500,000 barrels per day on the market tomorrow - if it wanted to. But according to the crown prince, it does not.

Now the ball is in President Trump's court.

Ellen R. Wald, Ph.D. is a historian and consultant on energy and geopolitics. She is the author of Saudi, Inc., president of Transversal Consulting & a Senior Fellow at the Atlantic Council

Kuwait Oil to U.S. Stops for 1st Time Since 1990-91 Gulf War

• Kuwait is selling oil into Asia where it fetches higher prices
• U.S. net imports of foreign oil have dropped to a 45-year low

Bloomberg

2 October, 2018

Kuwait has all but stopped shipping crude to the U.S. for the first time since the aftermath of Saddam Hussein’s invasion in 1990, eroding an economic link between Washington and the Arab petro-monarchy.

The halt is the latest sign that booming demand for oil in Asia, particularly as the U.S. re-imposes sanctions on Iran, and rising supplies from America on the back of the shale revolution are re-drawing petroleum trade routes.

U.S. imports of Kuwaiti crude fell to zero over four weeks through late September, the first time that shipments have completely stopped since weekly data became available in June 2010, according to the U.S. Energy Information Administration. Based on monthly data, Kuwaiti shipments to the U.S. haven’t stopped since May 1992, when the OPEC producer was still recovering from oil-field fires ignited by retreating Iraqi troops in the first Gulf War.

Kuwait is diverting its barrels instead into the more lucrative Asian market, where prices are higher for the type of high-sulfur crude the small Middle Eastern nation pumps, according to a person familiar with the matter, who asked not to be identified because the matter isn’t public.

Kuwaiti oil fetches about $80 a barrel in Asia compared with about $79 in the U.S., according to Bloomberg calculations based on benchmark prices and the country’s official selling prices. Kuwaiti crude sells at about $76 a barrel in Europe.

“Iranian sanctions are providing a chance for others to sell more into Asia where prices are better than for sales into the U.S.,” Andy Lipow, president of consultant Lipow Oil Associates LLC, said in Houston.

While its shipments to the U.S. have plunged, Kuwait faces limits on its production due to a dispute with Saudi Arabia over shared oil fields along their border where both nations in the past pumped as much as 500,000 barrels a day. The shared fields in the so-called neutral zone halted production more than three years ago, though the two governments are in talks to reactivate them.

Kuwait Petroleum Corporation’s reduction of crude exports were "coordinated with U.S. and European clients," the company said in a statement on Kuwait News Agency (KUNA) website. The American market is "strategically important" and its supply contracts are "functional", the state-owned oil producer said.

Kuwait has typically exported about 80 percent of its oil to Asia, and those shipments are increasing with the ramp-up of operations at the Nghi Son Refinery and Petrochemical Co. in Vietnam. KPC co-owns the plant, which can process 200,000 barrels a day.

INDIA TO BUY 9 MILLION BARRELS OF IRANIAN OIL IN NOVEMBER DESPITE US SANCTIONS: MEDIA

An Iranian crude oil supertanker anchored off Singapore. IMAGE: REUTERS

India will buy 9 million barrels of Iranian oil in November despite US sanctions, Reuters reported on October 5 citing “two industrial sources”.

“Refiners have placed November nominations to lift 1.25 million tonnes [about 9 million barrels] of oil from Iran,” Reuters quoted one of the sources as saying.

According to the report, Indian Oil Corp will lift 6 million barrels of Iranian oil and Mangalore Refinery and Petrochemicals Ltd 3 million barrels.

The US sanctions targeting Iran’s oil sector are set to be imposed on November 4. The Trump adminsitration claims that the move is designed to limit the Iranian economic capabilities and thus its involvement in conflicts in Syria and Iraq. Furthermore, Washington hopes that this will force Teheran to request negotiations to reach a new “pro-US” deal on its missile and nuclear programs.

It’s intersting to note that on October 5, India reached with Russia a contract on deliver of S-400 air defense systems. This move also came despite US threats to impose sanctions on any power buying Russian weapons and military equipment.

India buys 75% less US oil, loads up on Iran crude

India’s purchases of US crude oil have fallen by 75 percent over the past four months as the subcontinent stocks up on Iranian crude, Reuters has reported.