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MSM propagated myth about Saudis defending market share

News Peak Cheap Energy and Oil Price Slump Recommended Links Energy Bookshelf Secular Stagnation Energy returned on energy invested (ERoEI) A note of ERoEI decline
MSM propagated myth about Saudis defending this market share Deflation of the USA shale oil bubble Oil glut fallacy Why Peak Oil Threatens the Casino Capitalism Russia oil production Iran return to western oil markets feamongering  
Energy Geopolitics Ukraine: From EuroMaidan to EuroAnschluss Russian Ukrainian Gas wars The fiasco of suburbia Fiat money, gold and petrodollar The Great Stagnation Big Fukushima Debate
Casino Capitalism Inflation, Deflation and Confiscation All wars are bankers wars Why Peak Oil Threatens the International Monetary System Financial Quotes Financial Humor Etc

First of all this is not defense. This is an offence, an economic war. But against whom?  This type of offence is known as predatory pricing or undercutting (Wikpedia) although in this particular case to establish that the  price are below the seller's cost in possible only indirectly, from the size of Saudis annual deficit of budget.  and in no way Saudis can replace other players as they control less then 10% of total world production:

Predatory pricing (also undercutting) is a pricing strategy where a product or service is set at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors. If competitors or potential competitors cannot sustain equal or lower prices without losing money, they go out of business or choose not to enter the business. The predatory merchant then has fewer competitors or is even a de facto monopoly.

The typical MSM coverage of Saudis behavior is typically along those lines:

“The Saudis took a huge gamble last November when they stopped supporting prices and opted instead to flood the market and drive out rivals, boosting their own output to 10.6m barrels a day (b/d) into the teeth of the downturn….

If the aim was to choke the US shale industry, the Saudis have misjudged badly, just as they misjudged the growing shale threat at every stage for eight years. “It is becoming apparent that non-OPEC producers are not as responsive to low oil prices as had been thought, at least in the short-run,” said the Saudi central bank in its latest stability report….

The word "flooding" used by MSM is a clear lie.  The reality is quite different from MSM tales. Saudis were clearly unable to flood market with oil in 2015, because they do not have enough oil to export for to achieve this goal.  The increase exports in 2015 was only around 0.2-0.3 Mb/d, if we believe official figures. Where is the flood of cheap oil, I would ask our MSM honchos? You have to realize that the US added a million barrels a day five years in a row... Five years --

One problem that Saudi faced is how to make room for Iran after sanctiones were lifted. Tensions between the governments in Tehran and Riyadh are much worse now than they were in the late 1990s, when both last cooperated in cutting supply.  Saudi Arabia believed that by lowing oil price via predatory pricing it can use US shale oil producers for swinging the volume of production, or at least a good deal of it. Because of its relatively high operating costs, capital intensity, financing needs, and steep decline rates, shale oil production was expected to react to price drop within months, instead of the years associated with traditional projects. Those hopes did not materialize. Instead Wall Street managed to drag Saudis into self-destructing spiral of oil prices decline. Oil price was down  to around $27 per barrel, the price level which is a death sentence for Saudis as they can't exist for more then five years at this level of prices.

Saudi’s “invitation” for US shale producers to be the swing producers by no means amounts to a “war on shale,” as it has been described by MSM. In a way it was invitation to became  a quasi-member of OPEC, a producer that has no choice but quickly adjust production in response to market imbalances. That means that Saudi Arabia’s attitude toward shale is more nuanced that MSM depict. They do not see shale only as a competitor but also as a welcome flexible source of supply. In a speech in Washington in March 2013, Saudi oil minister Naimi said:

The US energy scene is witnessing a remarkable evolution. Newly commercial reserves of shale oil or tight oil are transforming the energy industry in America. And that’s great news. It is helping to sustain the US economy and to create jobs at a difficult time. I would like to put on the record here today that I welcome these new supplies into the global oil market. I hope these additional resources will add depth and bring increased stability to global oil markets. I believe these reserves will lead the US into a much deeper engagement in world energy markets. And this is good news.

In March of 2015, he stressed, “Some speak of OPEC’s ‘war on shale’…they are all wrong,” adding that “new oil supply growth—much of it coming from the US—is a welcome development for world oil markets.” Saudi officials want shale oil to survive and thrive, in large part because it can adjust relatively quickly both up and down. Thus, when global oil oversupply developed in the late summer of 2014, Riyadh expected shale to help to stabilize prices as it had in recent years when it helped counter global supply losses, but this time by putting a floor under them with supply cuts. In September 2014, Saudi Arabia’s Oil Ministry spokesman Ibrahim al-Muhanna soothingly predicted “the high cost of producing shale oil has put a floor under oil prices…It means the price of oil will not go to less than $90, and even if it goes below that for whatever reasons, it would be for a short time before going back to the level of around $110.” They were very wrong.

But in a long run they were right. The current low oil price environment is not sustainable over the medium term (through the end of the decade). It will quickly (in two year or less most shale oil producers will be bankrupt).  Shale oil production was hit first, but even conventional oil companies are now canceling or delaying investment in other, longer lead time projects. In July, Wood Mackenzie reported oil and gas companies have delayed some $200 billion of investment in more than forty-five projects, exclusive of US shale, due to the price slump. More than half of affected reserves are in deep-water projects, and nearly 30 percent are in Canadian oil sands. In September, Wood Mackenzie predicted 140 of the 330 fields in the UK North Sea could close in the next five years, even if oil prices recover to $85 a barrel.

Saudi vice minister of oil Abdulaziz estimated some 5 million b/d of supply has been deferred or canceled.  This means supply that had previously been expected to become available in 2018 or 2019 will not be there. Project delays and cancelations will likely continue, and even accelerate, if oil prices fall more

Thus, barring a deep global recession, global oil demand growth will eventually whittle away the inventory surplus and then collide with meager, insufficient supply capacity growth. Should world GDP grow anywhere close to the IMF’s medium-term forecast in the high 3 percent range, oil supply soon will become insufficient. Moreover in low price environment world oil demand probably will rise by closer to 2 million b/d than 1 million b/d. 

The absence of an effective short-term price stabilizer will increase investor uncertainty about longer-term prices that factor into major consumption, investment, and government planning decisions. Prolonged oil price volatility will present new and significant challenges to industry, investors, consumers, and governments. As we see under neiliberalism oil, bond, and currency markets are prone to violent  price moves; oil is the tail that is wagging several macroeconomic and financial dogs.

OPEC wins no popularity contests in the West. But we may be about to learn that the only thing worse than OPEC managing the oil market is OPEC not managing the oil market. Energy companies and investors will have to adapt their business models, as will industries heavily exposed to oil price fluctuations. 

EIA data suggest that Saudi total petroleum liquids + other liquids production declined from 11.1 Mb/d in the 4th quarter of 2008 to 10.2 Mb/d bpd in 2nd quarter of 2009, a decline of almost a million bpd. From the 4th quarter of 2014 to the 2nd quarter of 2015, EIA data show that Saudi production increased from 11.6 million bpd to 12.0 million bpd, an increase of 0.4 million bpd. At the same time annual Saudi consumption for 2008 was around 2.2 Mb/d (EIA) which increased to 3.2 Mb/d in 2014. An increase around 1 Mb/d for six years. Or slightly less than 0.2 Mb/d per year. In other words Saudis are losing their export capacity with alarming speed.

Optimal conditions for oil extraction are now less commonly congruent in the fields that Aramco must now exploit to address the coming falls in production from the historic sources

The history of oil production from Saudi Arabia has largely come from individual wells that produced in the thousands of barrels a day. In order to sustain that production over decades, it has been necessary to ensure that

  1. The pressure differential between the well and the rock are sustained;
  2. That the rock has an adequate permeability to ensure that flow continues at a steady state;
  3. That the oil itself is of relatively low viscosity and is thus able to easily flow through the rock; and
  4. That there is a sufficient thickness and extent in the reservoir to allow such sustained production.

All of those factors came together in the giant fields that provided high levels of production over many decades, most particularly in the northern segments of Ghawar.

Yet those conditions are less commonly congruent in the fields that Aramco must now exploit to address the coming falls in production from the historic sources. These best of the rest (as the late Matt Simmons called them) must now increasingly carry the burden of sustaining Saudi production fail, individually, on differing grounds from meeting those earlier parameters.

Collectively and in the face of Ghawars decline, they will only be able to sustain production to their original targets and will not provide replacement production as the oldest and larger begin to fade. 

With total world consumption of around 95 Mb/d Saudi exports are  just 2-3% of total. In no way they are flooding world with oil. All they are doing is dumping  their oil at artificially, preselected predatory prices (putting explicit price with discount on each barrel) .

The only two countries which managed since 2008  significantly increase their production  are the USA and Iraq. That's it.  Even even this increase was happening on the background of civil war in Libya, unleashed by French which decimated production from this country and decline of production in North Sea and several other oil fields. Normal rate of decline of old fields is around 5% a year so unless there is additional findings and investment total production would decline around 5 Mb/y. Global offshore oil production in ageing fields will fall by 10% in 2016 as producers abandon field upgrades  due to low prices.

It is important to note that in 2014 (the first year of "oil glut" era) Saudi exports actually fell from the previous year (Bloomberg).  They recovered (and slightly exceeded 2013 level) only  in 2015.

Due to the percentage of revenue in the budget from oil sales Saudi Arabia needs oil price at or above $80per barrel. As oil price dropped to less then the half of that price  they have approximately 100 billion deficit in 2015.  So this is a pyrrhic victory for them, even if we assume that they somehow were trying to preserve their market share understanding this share not in dollar buy in volume metric. This way they are they exhausting their aging fields. why to do this just to show that they can. such action typically mean economic war -- they are equvalent to the declation of war. And there are two plausible targets -- Iran -- their archrival in the Gulf and Russia, which Obama administration trying to undermine economically for non-compliance with rule dictated by the US neoliberal empire (and Saudi, being a satellite state can be forced to support such policy as their existence depends on the US political and military support).

The most plausible hypothesis is that being the client state they operate in concert with the USA to achieve some geopolitical  goals for Obama administration. And  economic war has generally nothing to do with the defense of their market share -- this is offence of geopolitical rival.  We also need to remember that oil is not a typical commodity. It is definitely a geopolitically important commodity or geopolitical weapon, if you wish (see Carter Doctrine - Wikipedia, which is replica of  an old Imperial Britain strategy for this region). On the other hand those sheiks can't be that stupid. 

If we assume that this is an "all out" economic war against Iran after lifting sanctions with full support of Obama administration which has its own goal in decimating Russia economics and, if possible, replacing "resource nationalist" President Putin with some neoliberal stooge like former president Yeltsin. In this case the USA shale producers are just a collateral damage in a big geopolitical game. And  a lot of things that are happening in the USA shale patch (for example absence of difficulties with refinancing junk bonds for shale producers in 2015 and surprisingly accommodative behaviour of the USA banks toward indebted shale producers) became more logically explainable. The second part of this hypothesis is that the spear of this attack is directed against Russia (with Iran and Venezuela as two are desirable targets who got hit simultaneously) also correlates with explisti position of Obama administration with its compulsive desire to punish Russia for not following neoliberal dictate from Washington.  

At $30 per barrel and assuming Saudis export 7.5 Mb/d their total export revenue is just 82 billions. And even with cut of budget they need approximately $100 billion a year to balance their budget. As their foreign reserves are around $650 billions,  they might well be bankrupt in less then a decade.  So this is definitely bold,  war-style "all-in" move.

that also explains why they went "all out"  as from purely economic point of view the most logical strategy of defending their revenue stream  from oil exports (aka "market share") would be to shrink exports by 1 Mb/d  (with other 1 Mb/d of cuts coming from other, pretty eager to support such move,  OPEC members) and let the USA shale self-destruct as they were not that profitable even at $100 per barrel price.  In other words the US shale production was never a large problem for Saudis even when price was at or over $100 in 2010-2014. Why it suddenly became such a problem in July 2014 so that they resort to such drastic measures?

A modest 10% cut of their output  would increase the revenue from oil export to the budget and let them wait and see how quickly other player exhaust their "sweet spots"t. Cutting 2Mb/d from all OPEC, even taking into account cheating of individual members (which could make the cut 1.5 Mb/d instead of 2.0 Mb/d ;-) probably would instantly restore prices at $70-80 bbl range. They choose not to do that.

So in no way Saudis are fighting for their market share which would involve negotiation of long term contracts with major customers as only long term contracts protect parties from the  the market conditions.  They are engaged in economic war and do dumping of the same amount of oil,  in order to decimate spot prices with full support of Wall Street.  Please note that they were unable to raise exports even by 1Mb/d -- the size of their exports for last years oscillates in a narrow range between 7.1 and 7.54 Mb/d, so in best case they can only add to the market 0.4 Mb/d, which is insufficient even to to compensate for the US shale output drop due to low price which is estimated for 2016 between 0.6/Mb/d and 1Mb/d

Some people  attribute this "super-aggressive" behaviour  to "new Margaret Thatcher of Saudi Arabia" a 30 years old deputy crown prince Mohammad bin Salman  who became the right hand of the new king (yes this is an absolute monarchy, one of the few remaining on the Earth).  From Wikipedia:

On 23 January 2015, King Abdullah died, Salman took the throne and Prince Mohammad was appointed minister of defense.[18] He was also named as the secretary general of the Royal Court on the same date.[19] In addition he retained his post as the minister of the state.[20]

On 29 January 2015 Prince Mohammad was named the chair of the newly established Council for Economic and Development Affairs,[21] replacing the disbanded Supreme Economic Commission.[21]

The first major event in his tenure as defense minister was Operation Decisive Storm, part of the Saudi Arabian-led intervention in Yemen, an operation against Houthi rebels in Yemen, experiencing the 2015 Yemeni Civil War.[22]

Prince Mohammad

In April 2015 King Salman appointed one of his nephews, Mohammed bin Nayef, as Crown Prince. At the same time King Salman appointed his son Prince Mohammed as deputy crown prince.

On 4 January 2016, Prince Mohammad gave his first on-the-record interview, while talking to The Economist.[23]

In any case the last thing they are doing is defending their market share because in dollar revenue their market share shrunk dramatically. A very strange strategy of defense of market share if you lose 100 billions a year and know that both Russia and the USA will outlast you in this game as they have more diversified economies. Saudi oil fields are very old and instead of   exhausting them faster the proper strategy is saving as much oil as they can to leave some oil for future generation (at least one, a single generation) as without oil the reason for existence of this monarchy is very fuzzy (and without support of the USA it will be wiped out from the map pretty quickly, probably in less then a decade).

What is the mechanism of maintaining low oil prices in the world with diminishing supply of cheap oil

In reality low oil prices are probably result of interaction of three or more factors. Among them


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NEWS CONTENTS

Old News ;-)

[Dec 08, 2017] Trump Is Bashing The 'Salvator Saudi' - Why

Notable quotes:
"... Trump has just declared that the U.S. recognizes Jerusalem as the capital of Israel. Did the administration expect the applause of the Saudis for its breaking of international law with regards to Jerusalem? Does it lash out to the Saudis to get their agreement? ..."
"... If so the miscalculation is clearly on the U.S. side. It is impossible for the Saudis to concede the Haram al-Sharif, the mosque on the so called temple mount, to the Zionists. The Saudi King would no longer be the "custodian of the two holy mosques" in Mecca and Medina but the "seller of the third holy mosque" of Islam in Jerusalem. The people would kill him and his whole family. ..."
"... My pet hypothesis is Trump's recognizing Jerusalem was the bone he was willing to throw the Israelis after his generals told him attacking Iran would be catastrophic for the US military and world economy. The Saudis, who are as rabid about bombing Iran as the Zionists, were pissed as they probably had been led to believe the attack was a matter of time. ..."
"... That sacked FM - Is that the little fellow that Col Lang calls "The Chihuahua"? ..."
"... Saudi in all likelihood were not part of the Jerusalem declaration. Israeli sources spread a plan they said was agreed to by Saudi, trying to embarrass them. ..."
"... Jerusalem: The reaction is deeper than expected. Not in the way of street, easily contained, violence, but by a gut reaction of the whole ME..The religious aspect seems to have been totally ignored by the US. Removing one of the major symbols of about 1.2 billion people - is not going to go down well. ..."
"... wahabbi is a tavistock british demented fiendish virus injected into islam for gang counter gang pseudogang hagel control ..."
"... I do wonder...knowing that real or false-flag violence could ensue against Israeli or US targets, it could be a useful pretext for the US waging war in the ME against Hezbullah or anyone else we accuse. With our intelligence agencies providing the "evidence" and a compliant media to sell it, as usual a majority of Americans would support it. ..."
"... This Jerusalem declaration has me genuinely scared. Violence (real or false flag) could be the expected Reaction to this Problem, resulting in the long-planned Solution of finishing off MENA. If Russia is sincere in its alliance with Syria and Iran, and interest in a multi-polar world with self-determination for sovereign nations, this war could easily escalate to the End Timer's dreamt of Final Battle of Armageddon. ..."
"... Most of the MSM coverage of Reactions I've seen name Muslim/Arab countries as opposing, and others as "concerned," even though almost all official state responses have denounced President Trump's® declaration. This "Clash of Civilizations" type narrative is not encouraging. ..."
"... something stinks in trumptoon. really small world what are the chances A. whenever Donald Trump has left the White House and ventured anywhere, Dmitry Rybolovlev (aka the "Russian King of Fertilizer") has tended to show up in the same city. The latter possibility has long been bolstered by the fact that Trump sold Rybolovlev a mansion a few years ago that neither of them lived in nor cared about, suggesting the sale was mere cover for shifting money from Russia to Trump. ..."
"... Western media called Putin unpredictable, but that was because he could see moves that others didn't see. ..."
Dec 08, 2017 | www.moonofalabama.org

Just the day before the administration leaked to the WSJ about the art deal, President Trump had publicly scolded MbS about the situation in Yemen:

President Trump called on Saudi Arabia to lift its crushing blockade against its war-torn neighbor Yemen on Wednesday, hours after defying the kingdom and saying the U.S. would recognize Jerusalem as the capital of Israel .

In a statement Wednesday afternoon, Mr. Trump said he had directed members of his administration to reach out to the Saudi leadership "to request that they completely allow food, fuel, water, and medicine to reach the Yemeni people who desperately need it."

Today Secretary of State Tillerson again pushed that line :

Speaking in Paris on Friday, Rex Tillerson, US secretary of state, called on Saudi Arabia to be "measured" in its military operations in Yemen.
...
Tillerson urged Saudi restraint.

"With respect to Saudi Arabia's engagement with Qatar, how they're handling the Yemen war that they're engaged in, the Lebanon situation, we would encourage them to be a bit more measured and a bit more thoughtful in those actions to, I think, fully consider the consequences," he said.

He once again demanded a "complete end" to the Saudi-led blockade of Yemen so that humanitarian aid and commercial supplies could be delivered.

Embarrassing MbS about the art buy and publicly(!) scolding hm for the situation in Yemen, for which the U.S. is just as much responsible as the Saudis, is quite an assault. What has MbS done - or not done - to deserve such a punishment?

Trump has just declared that the U.S. recognizes Jerusalem as the capital of Israel. Did the administration expect the applause of the Saudis for its breaking of international law with regards to Jerusalem? Does it lash out to the Saudis to get their agreement?

If so the miscalculation is clearly on the U.S. side. It is impossible for the Saudis to concede the Haram al-Sharif, the mosque on the so called temple mount, to the Zionists. The Saudi King would no longer be the "custodian of the two holy mosques" in Mecca and Medina but the "seller of the third holy mosque" of Islam in Jerusalem. The people would kill him and his whole family.

If the issue of this public hustle it is not Jerusalem, what else might it be that the Trump administration wants and the Saudis can not, or are not willing to concede?

A few hours ago the Saudi King fired his ankle biting Foreign Minster Adel al-Jubair. A relative of the king, Khaled bin Salman, will take the job. Is this related to the spat with Trump?

arbetet , Dec 8, 2017 3:02:14 PM | 1

This came up:
Breaking: Saudi FM allegedly sacked by regime

The Saudi Foreign Minister, 'Adel Al-Jubeir, has been allegedly sacked by the Kingdom's regime, several prominent political activists reported this evening.

According to the claims, Jubeir was fired and replaced by a close confidant of Crown Prince Mohammad bin Salman.

The confidant that is allegedly replacing Jubeir is none other than Prince Khaled bin Salman, the Crown Prince's brother.

The Saudi regime has yet to confirm or deny these rumors.

https://www.almasdarnews.com/article/breaking-saudi-fm-allegedly-sacked-regime/

Madderhatter67 , Dec 8, 2017 3:14:21 PM | 2
It was Jerusalem. They were not willing to sacrifice Jerusalem.
Quentin , Dec 8, 2017 3:20:29 PM | 3
Where does MbS's interpretation of Salvator Mundi come from. The Saudi's have something with crystal orbs, like the one Trump so fondly stroked in Riyadh after giving a masterful interpretation of the sword dance.
BX , Dec 8, 2017 3:20:30 PM | 4
Yes. It is puzzling what is going on between MbS and the Trump administration. I was sure MbS, the reformer, secretly okayed the Jerusalem move. His negative statement might be just theater, I figured. But I am not so sure anymore. Yes, MbS wants a peace deal (any deal with "peace" written on it) between Palestinians and Israelis. But both he and Trump/Kushner are novices in politics and diplomacy (and that ain't the same as getting a deal for a new tower) and absolutely underestimated the effort. Totally.

Word is that Kushner made Trump delay delivering his campaign promise because he needed more time for his peace plan (and that would be 6 months???). This is the level they are at. And now, they placed an obvious obstacle in the path go their peace plan - out of folly. Complete folly. Because Trump wanted to deliver. I believe they are already backtracking as good as they can. But the damage is done. I think Palestinians were just waiting for a good opportunity/reason to get rid of the US in the process and found it now. Also, the single state solution is being talked about.

The source for the WSJ need not be the Trump administration in the narrow sense but some stray intelligence official ("U.S. intelligence reports") wanting to throw a wrench because that story is absolutely damaging. Absolutely, because it is embarrassing and I don't think MbS enjoys that. Note, the story began to become known around the time it became obvious Trump would not sign the waiver and reached its epitome (WSJ) just after that. Trump set himself up for this.

Don Wiscacho , Dec 8, 2017 3:38:33 PM | 5
My pet hypothesis is Trump's recognizing Jerusalem was the bone he was willing to throw the Israelis after his generals told him attacking Iran would be catastrophic for the US military and world economy. The Saudis, who are as rabid about bombing Iran as the Zionists, were pissed as they probably had been led to believe the attack was a matter of time. In order to remind them of their position and get them on board with the "peace" deal Tillerson has been hinting about, they've been turning the screws on MBS as a taste of what's to come if he puts up stink about the wonderful Kushner- concocted "plan".
fx , Dec 8, 2017 3:42:39 PM | 6
$450 mil... MbS's Egyptian torturer-in-chief must have just torn a few princely nails and whip a few feet for that, just a few days' worth of "anti-corruption" "campaigning".

Wait, wasn't the Saudi populace all behind MbS because he was going to spend the money on them? If there is no bread, let them non-royals eat paint.

somebody , Dec 8, 2017 3:56:36 PM | 7
About the picture - after the shake down of Saudi Arabia's rich princes MBS must have a lot of enemies. Some of these princes might have been close to the Trump administration.
Bart Hansen , Dec 8, 2017 4:01:43 PM | 8
That sacked FM - Is that the little fellow that Col Lang calls "The Chihuahua"?
somebody , Dec 8, 2017 4:09:19 PM | 9
Good Patrick Cockburn article on the mess .

Gazan military groups are warming up to a rocket competition. I am sure the real stuff is not involved yet. What were they thinking? That people did not take the chance to unite on the only issue they all agree on?

4
I agree, Saudi in all likelihood were not part of the Jerusalem declaration. Israeli sources spread a plan they said was agreed to by Saudi, trying to embarrass them.

stonebird , Dec 8, 2017 4:54:47 PM | 10
MbS is in it for himself, no one else. Leave him aside for the moment.

However, Trump probably thought he had a marvellous peace plan for Palestine which he would show the world.... errr... tomorrow. This was supposed to have the backing of the Saudis and the Israelis and all the other ME "actors" would be lined up behind MbS.

ie. Saudis would provide the backing, which included the "Arab" states as per the recent gathering of them all (excluding Iran and Iraq). Abbas would be blackmailed to go along in order to keep his position (Moneywise), and the Palestinians as well - but by the withholding of funds. (New vote in Congress).

Leaks of the plan (unverified) suggest that the PA's would be held in walled-in isolated camps, with all contact subject to the harassement and nightly raids of the IDF, the land still open to theft by settlers (this has been "legalised" in Israel !) and so on. ie they get nothing except a tissue-paper "treaty" . They seem not to have even been consulted by Kushner and the Israelis. ie who possibly expected to be able to impose whatever Netanyahu and the Israeli Generals might allow.

BUT, when have either the US or Israel kept to an agreement - never. and the PA's and the rest of the ME know it.

Jerusalem: The reaction is deeper than expected. Not in the way of street, easily contained, violence, but by a gut reaction of the whole ME..The religious aspect seems to have been totally ignored by the US. Removing one of the major symbols of about 1.2 billion people - is not going to go down well.

Those countries with a large Palestinian refugee population, either fear them, or may be outnumbered if there are more arriving (Jordan), or will find that they now have a potential source of militants at their disposal.. (Syria?, Lebanon?). The Syrians and Lebanese have not let the Palestinians get more arms - yet, as they might have become targets themselves. But, there have been PA's in the Syrian counter-terrorist forces, even when Yarmouk camp was held by Daesh (or one of the others).

So I think that the "bit" players have got cold feet. They cannot go along with the eradication of the Palestinians or their confinement to concentrated internement camps such as Gaza, whose conditions are WORSE that prisons. Otherwise the whole "Rulers-People and the power-structures that keep them in place" would be in jeopardy.
......
The Leonardo ? .... acquiring "class" by buying expensive "cultural" artifacts. You can buy a lot of "class" with $450.3 million.

psychohistorian , Dec 8, 2017 5:06:51 PM | 11
I think that answer to b's question has a lot to do with trying to incite war in the ME

I think that SA does not want to be the global elite's proxy in a war with Iran....especially to start/incite the war.

It really is becoming a public spectacle and that plays into the desire of the masses to see such incompetence writ large.

I entreat everyone's spirits to keep these kooks away from the nukes.

Jef , Dec 8, 2017 5:17:11 PM | 12
Yo b or any of the commentariat - Any speculation as to the connection to the Russian Oilagarck....you know, follow the money?
Scotch Bingeington , Dec 8, 2017 5:18:55 PM | 13
Maybe that canvas Jesus is meant to be a hostage one day, potentially.
terry tibbs , Dec 8, 2017 5:26:21 PM | 14
a simple question who gets the 100s of millions? who is the seller? the fake painting is cover for a payoff or tribute yes no maybe friends of kushner own the painting maybe it is to help kushner and his 666 moloch tower block mortgage. the bank of gorge soros must need some fund back quick for a new hungary regime change operation.

wahabbi is a tavistock british demented fiendish virus injected into islam for gang counter gang pseudogang hagel control

uae and the house of saud are donmeh jews
satanist hate jesus.
simply google talmud quotes about jesus and all will become clear.

Kabobyak , Dec 8, 2017 5:27:13 PM | 15
As to how the Jerusalem actions play out, the posting here (MOA) a couple of days ago was informative as to reasons and timing (including info about Sheldon Adelson's hundred million to Trump campaign). I do wonder...knowing that real or false-flag violence could ensue against Israeli or US targets, it could be a useful pretext for the US waging war in the ME against Hezbullah or anyone else we accuse. With our intelligence agencies providing the "evidence" and a compliant media to sell it, as usual a majority of Americans would support it.
Daniel , Dec 8, 2017 5:37:14 PM | 16
Great stuff, b et al. This Jerusalem declaration has me genuinely scared. Violence (real or false flag) could be the expected Reaction to this Problem, resulting in the long-planned Solution of finishing off MENA. If Russia is sincere in its alliance with Syria and Iran, and interest in a multi-polar world with self-determination for sovereign nations, this war could easily escalate to the End Timer's dreamt of Final Battle of Armageddon.

Most of the MSM coverage of Reactions I've seen name Muslim/Arab countries as opposing, and others as "concerned," even though almost all official state responses have denounced President Trump's® declaration. This "Clash of Civilizations" type narrative is not encouraging.

Flatulus , Dec 8, 2017 6:09:23 PM | 17
Terry Tibbs 14 - The family trust of Rybolovlev is the seller of the painting. Rybolovlev was also a buyer of Trump estate in Florida previously.
psychohistorian , Dec 8, 2017 6:22:05 PM | 18
@ Daniel ending with "This "Clash of Civilizations" type narrative is not encouraging." That is exactly what they want you to focus on as a narrative rather than the simple truth about the demise of private banking. On the previous thread about the Republican: Ryan deficit BS there was a commenter ex-SA with a John H. Hotson link that I want to see go viral because it simply explains the history of the Gordian Knot we face as a species

The link to a 1996 article: Understanding Money by John H. Hotson. The take away quote

"Banking came into existence as a fraud. The fraud was legalized and we've been living with the consequences, both good and bad, ever since. Even so it is also a great invention-right up there with fire, the wheel, and the steam engine."

Clash of Civilizations is as vapid a meme as the common understanding of the Capitalism myth as that article so clearly states. Spread his word far and wide to wake up the zombies. It is time!

terry tibbs , Dec 8, 2017 6:45:52 PM | 19

17
something stinks in trumptoon. really small world what are the chances A. whenever Donald Trump has left the White House and ventured anywhere, Dmitry Rybolovlev (aka the "Russian King of Fertilizer") has tended to show up in the same city. The latter possibility has long been bolstered by the fact that Trump sold Rybolovlev a mansion a few years ago that neither of them lived in nor cared about, suggesting the sale was mere cover for shifting money from Russia to Trump.

Deutsche Bank in Germany busted for laundering more than ten billion dollars out of Russia and into places like New York. This stood out because Deutsche has also loaned more than a billion dollars to Donald Trump, who just happens to be based out of New York.

james , Dec 8, 2017 6:56:26 PM | 20
thanks b.. fascinating.. i wait for the next shoe to drop.. it's coming... hopefully we get the back story on this sooner then later..

i would think the timing of Foreign Minster Adel al-Jubair being fired has something to do with all this.. he revealed something that he wasn't supposed to? i would also imagine those heavies still hanging at the saudi ritz carlton might be pulling some strings from behind the scenes? meanwhile mbz is doing a hell of a fine apprentice with mbs, lol..

nice pic in the post btw!! clown prince as savior of ksa, lol...

jezabeel , Dec 8, 2017 7:02:46 PM | 21
Belief in Jerusalem as the Jew capital is the same as belief in the intrinsic value of fiat currency, or the exceptionalism of the US. It's just mental illness. The Kingdom of God is within you, not in temples of stone and wood. We'd be better just cultivating our own personal relationship with our higher selves and leave the deluded to scrap it out over ash and sand. That said, if someone with a big nose came to my door and said my house was going to get knocked down because Shalom etc, that would be the day I would have to really figure out how to proceed without becoming the necessary victim in another's persecutor drama complex. I guess that's what Palestinians have to deal with every day. Horrible situation.

I heard a story once that when the British were throwing the Aborigines of Australia off cliffs en masse in their Australian version of the Middle East story of dispossession and demonization, the Aborigines would look up calmly at the officers as they fell and in their own language say: "You have a problem, bro". Sometimes death is better than becoming a victim. And as a worshiper of Lord Shiva the Destroyer, I wish you all completely liberating and renewing deaths from yourselves.

terry tibbs , Dec 8, 2017 7:08:16 PM | 22
probably nothing kosher burger. Russian Oligarch Rybolovlev Saved Trump Financially.
https://new.euro-med.dk/20170314-russian-oligarch-rybolovlev-saved-trump-financially-courier-of-the-tsar-putin-to-president-trump.php

Confirmed: Rybolovlev's Jet & Yacht were in Dubrovnik the same time as Ivanka and Jared Kushner

https://www.dailykos.com/stories/2017/3/17/1644558/-Confirmed-Rybolovlev-s-Jet-Yacht-were-in-Dubrovnik-the-same-time-as-Ivanka-and-Jarred-Kushner

elsi , Dec 8, 2017 7:20:02 PM | 23
But, has not The Donald declared that this media NYT, Bloomberg , etc...were all "fake news"? Then why is anybody going to trust them when publishing whatever?
Sounds quite clumsy, or simply, demential ( as every move of this administration ) to try to leak something through those media you have widely discredited during all your election campaign and beyond....

I, by a norm, do not trust any move coming from Trump could be for any good. This is, simply, "smoke and mirrors" and an intent of whitewashing a bit the already deplorable image of this admnistration in front of the world wide reaction in rejection of his bold and clumsy declaration of Jerusalem as capital of the Zionist regime.
The same for the clearly hypocritical call for to alleviate the suffering of the Yemeni people, just another intent of whitewashing when they are main puppet-masters in that war torn country, as it happens with every conflict in the world.

What it is beyond me is that the Russians, are always amongst those who swallow this theater plays....I wonder why....

In front of the demential way this administration makes fun of every event, people, country... in the world, in spite of the suffering they could inflict on them, I concur with Terry in that this just could be some esotheric issue more proper of unoccupied people with too much money to waste. Most probably something involving "Damian" Kushner, his 666,Madison Avenue penthouse and an occult message from The Messiah in the reverse of the canvas of that Jesus paint with a codified message on the results of the coming final battle of Armaggedon amongst the forces of evil and those of good, when Russia will be santified as the real Promised Land and The Saker will be ( finally! ) crowned as the saint he always claimed to be along with Saint Nicolas Romanov, and they will all eat sardinas together with the Trumps, the Kushners and the Netanyahus in Mar a Lago or in the super-yatch of Abramovich during the summer, but in winter they will go together to Sochi´s Putin dacha, since they love to meet super-intelligent, well educated, cool people....well, the elite of everything...

The surviving Arabs and the rest of us, plebeian ignorant clumsy sinners not so white as them, ( what they call "the sheeple", vaya )we will continue working from sunrise to sunset for crumbs, but, who cares? We will continue having good times with our peers and loved ones and laughing as usual with the little things of real life...Do not despair....

elsi , Dec 8, 2017 7:25:15 PM | 24
This is the real Christmas spirit of The Donald, alias Orange Agent Dotard : https://www.rebelion.org/imagenes/p_08_12_2017.jpg
elsi , Dec 8, 2017 7:44:26 PM | 25
The poster above was drawn by Basque artist Josetxo Ezcurra
Peter AU 1 , Dec 8, 2017 7:46:42 PM | 26
Western media called Putin unpredictable, but that was because he could see moves that others didn't see. Erdogan looked unpredictable and irrational while moving from the hedgemon to the multi-polar world. Trump? Like Erdogan, trying to move US to the multi polar world? Too many moves he makes puts sand in the hedgemon's gears.
elsi , Dec 8, 2017 8:15:30 PM | 27
For you to see that all this is not but theater, look what worries them most, meanwhile, in The Vatican: Pope Francis supports the idea of changing a phrase in the Lord's Prayer

[Nov 16, 2017] MoA - Revealed - Saudis Plan To Give Up Palestine - For War On Iran

Notable quotes:
"... The document, which is being unveiled for the first time, proves all that has been leaked since President Trump's visit to Saudi Arabia last May on the launch of US efforts to sign a peace treaty between Saudi Arabia and Israel. This was followed by information on the exchange of visits between Riyadh and Tel Aviv, the most important being the visit of the Saudi Crown Prince to the Zionist entity. ..."
"... The document reveals the size of concessions that Riyadh intends to present in the context of the liquidation of the Palestinian issue, and its concern to get in return the elements of power against Iran and the resistance, led by Hezbollah. ..."
Nov 16, 2017 | www.moonofalabama.org

Revealed - Saudis Plan To Give Up Palestine - For War On Iran

The tyrants of Saudi Arabia developed a plan that sells away Palestine. They see this as necessary to get U.S. support for their fanatic campaign against their perceived enemy Iran.

An internal Saudi memorandum, leaked to the Lebanese paper Al-Akhbar , reveals its major elements. (Note: The genuineness of the memo has not been confirmed. In theory it could be a "plant" by some other party. But Al-Akhbar has so far an excellent record of publishing genuine leaks and I trust its editors' judgement.)

According to the memo the Saudis are ready to give up on the Palestinian right of return. They forfeit Palestinian sovereignty over Jerusalem and no longer insist of the status of a full state for the Palestinians. In return they ask for a U.S.-Saudi-Israeli (military) alliance against their perceived enemy on the eastern side of the Persian Gulf.

Negotiations on the issue were held between the Saudis and the Zionist under the aegis of the United States. Netanyahu and Trump's "shared personal assistant, wunderkind Jared Kushner", is the point men in these negotiations. He made at least three trips to Saudi Arabia this year, the last one very recently.

The Saudi operations over the last month, against the internal opposition to the Salman clan as well as against Hizbullah in Lebanon, have to be seen in the context and as preparation of the larger plan. To recap:

Since the warnings, which could threaten the new Palestinian unity agreement signed by Fatah and the Iranian-backed Hamas in the Gaza Strip, Palestinian media displayed a rare degree of unity in recent days by coming out against Iran.
Donald J. Trump‏ @realDonaldTrump - 3:03 PM - 6 Nov 2017
I have great confidence in King Salman and the Crown Prince of Saudi Arabia, they know exactly what they are doing....

(The tweet was heavily promoted by Saudi Twitter bots .)

The left-wing Lebanese paper Al-Akhbar has obtained a copy of the plan (Arabic) in form of a memorandum by the Saudi Foreign Minister Adel Al-Jubeir to the Saudi clown prince Mohammed Bin Salman ( English machine translation ):

The document, which is being unveiled for the first time, proves all that has been leaked since President Trump's visit to Saudi Arabia last May on the launch of US efforts to sign a peace treaty between Saudi Arabia and Israel. This was followed by information on the exchange of visits between Riyadh and Tel Aviv, the most important being the visit of the Saudi Crown Prince to the Zionist entity.

The document reveals the size of concessions that Riyadh intends to present in the context of the liquidation of the Palestinian issue, and its concern to get in return the elements of power against Iran and the resistance, led by Hezbollah.

The Saudi foreign ministry memo starts by laying out its strategic perspective:

To face Iran by increasing sanctions on ballistic missiles and reconsidering the nuclear deal, the Kingdom has pledged in the strategic partnership agreement with US President Donald Trump that any US-Saudi effort is the key to success.
...
Saudi Arabia's rapprochement with Israel involves a risk to the Muslim peoples of the Kingdom, because the Palestinian cause represents a spiritual and historical and religious heritage. The Kingdom will not take this risk unless it feels the United States' sincere approach to Iran, which is destabilizing the region by sponsoring terrorism, its sectarian policies and interfering in the affairs of others.

The Saudi paper describes the issues and process steps towards a deal in five points:

First : The Saudis demand a " parity of the relationship " between Israel and Saudi Arabia. On the military level they demand that either Israel gives up on its nuclear weapons or Saudi Arabia is itself allowed to acquire such

Second : In exchange Saudi Arabia will use its diplomatic and economic power to push through a 'peace plan' between Israel, the Palestinians and Arab countries along the lines that the U.S. will lay out. Within such a peace plan the Saudis, according to the memo, are willing to make extraordinary concessions:

Third : After reaching an agreement of the "main principles of the final solution" for Palestine between Saudi Arabia and the U.S. (Israel), a meeting of all foreign ministers of the region would be convened to back these up. Final negotiations would follow.

Fourth : In coordination and cooperation with Israel Saudi Arabia would use its economic power to convince the Arab public of the plan. The point correctly notes "At the beginning of normalizing relations with Israel, normalization will not be acceptable to public opinion in the Arab world ." The plan is thus to essentially bribe the Arab public into accepting it.

Fifth : The Palestinian conflict distracts from the real issue the Saudi rulers have in the region which is Iran: "Therefore, the Saudi and Israeli sides agree on the following:

  1. Contribute to counter any activities that serve Iran's aggressive policies in the Middle East. Saudi Arabia's affinity with Israel must be matched by a sincere American approach against Iran.
  2. Increase US and international sanctions related to Iranian ballistic missiles.
  3. Increase sanctions on Iran's sponsorship of terrorism around the world.
  4. Re-examination of the group (five + 1) in the nuclear agreement with Iran to ensure the implementation of its terms literally and strictly.
  5. Limiting Iran's access to its frozen assets and exploiting Iran's deteriorating economic situation and marketing it to increase pressure on the Iranian regime from within.
  6. Intensive intelligence cooperation in the fight against organized crime and drug trafficking supported by Iran and Hezbollah."

The memo is signed by Adel al-Jubeir. (But who were the 'advisors' who dictated it to him?)

The U.S. plan for peace in Palestine is to press the Palestinians and Arabs into anything Israel demands. The Saudis will agree to that, with minor conditions, if only the U.S. and Israel help them to get rid of their nemesis Iran. But that is impossible. Neither Israel nor the U.S. will agree to a "parity of relationship" for Saudi Arabia. Saudi Arabia lacks all elements to become a supreme state in the Arab Middle East. Iran can not be defeated.

Iran is the at the core of the Shia constituency and at the core of resistance to "western" imperialism. Shia and Sunni aligned populations in the Middle East (ex Egypt) are of roughly equal size. Iran has about four times the number of citizens the Saudis have. It is much older and cultured than Saudi Arabia. It has an educated population and well developed industrial capabilities. Iran is a nation, not a conglomerate of desert tribes like the desert peninsula under al-Saud. Its geographic position and resources make it unconquerable.

To defeat Iran the Saudis started proxy-wars in Iraq, Syria, Yemen and now Lebanon. They needed foot soldiers to win these wars. The Saudis hired and sent the only significant infantry they ever had at their disposal. Their hordes of al-Qaeda and ISIS fanatics were defeated. Tens of thousands of them have been killed on the battle fields in Iraq, Syria and Yemen. Despite a global mobilization campaign nearly all the potentially available forces have been defeated by the local resistances on the ground. Neither the colonial settler state nor the U.S. are willing to send their soldiers into battle for Saudi supremacy.

The grant plan of the Trump administration to achieve peace in the Middle East is high on hopes but lacks all the necessary details. The Saudi's promise to support the U.S. plan if the Trump administration is willing to fight their nemesis Iran. Both leaderships are hapless and impulsive and both of their plans have little chance of final success. They will be pursued anyway and will continue to create an enormous amount of collateral damage. The Zionist entity feels no real pressure to make peace. It is already dragging its feet on these plans and will try to use them to its sole advantage.

Posted by b on November 14, 2017 at 05:42 AM | Permalink

x | Nov 14, 2017 5:59:54 AM | 1

"... I have great confidence in King Salman and the Crown Prince of Saudi Arabia, they know exactly what they are doing...."

Yes, exactly what they are told to do by the usual suspects. Stay on script, ... or else!

arbetet | Nov 14, 2017 6:02:31 AM | 2
Donald Trump on Twitter (5 h ago):


Donald J. Trump‏
@realDonaldTrump

I will be making a major statement from the @WhiteHouse upon my return to D.C. Time and date to be set.

https://twitter.com/realDonaldTrump/status/930320191699017730

Lea | Nov 14, 2017 6:13:23 AM | 3
This reeks of despair. How long should one give to the clown prince MBS before he achieves the final collapse of Saudi Arabia is the only question I have.
somebody | Nov 14, 2017 6:29:53 AM | 4
This did not need a leak, it was clear. The "leak" might as well have been invented from what has transpired anyway.

There is an Arab peace plan from 2002 which Israelis find unacceptable.

Israelis will find this new peace plan unacceptable, too, as it would mean a one state solution - Palestinian struggle for a state would be changed to an equal rights campaign Israelis would find very difficult to counter.

The 'new' plan is too late anyway, Israel cannot directly engage in any war without being existentially threatened themselves, last time proved in Gaza. Hamas might have been forced to allow the Palestinian authority back but they did not give up their weapons.

And neither the US nor Israel can politically afford to lose many soldiers in a ground war. So if Saudi wants to fight against Iran, they have to do it themselves.

Eugene | Nov 14, 2017 7:29:28 AM | 5
Never ceases to amaze the repeated rhetoric about how Iran is the bogyman, when Saudi Arabia financed the destruction in Syria. Israel fermenting discourse, has been going on for so long, to where the world looks upon it as being the "boy who cried wolf". Israel give up its Nukes? Parity, if you believe in the tooth fairy. Exactly who meddles in others foreign affairs there in the MENA?
stonebird | Nov 14, 2017 7:45:36 AM | 6
Seems like this could be a "deliberate pre-emptive leak" - to see what the reactions will be.

The alternative is a potential turn of Saudi Arabia - towards China and Russia. https://www.peakprosperity.com/blog/113426/if-saudi-arabia-situation-doesnt-worry-youre-not-paying-attention

Either way, the new "owner" of Saudi Arabia will have to make several choices if he wants to do anything at all without running out of cash. Wars are expensive (particulrly if you have to pay mercenaries) and the recent asset seizures will only go so far.


...The actual "plot" mentioned by b seems to have included too many "wish-list" items for the Israelis, for it to be accurate. Although there is definitely a possibility of Saudi and Israeli collusion, Israel for one would prefer the US AND the Saudis to attack Iran. Note that overflying by Israel to attack Iran would probably be over Saudi which makes it into a direct target. The "other" route via Greece would be used on the return (or outward first). Which is why the inclusion of foreign airforces in familiarisation drills in Soutern Israel, actually lends credence to the leak - in spite of what I said earlier.

Mina | Nov 14, 2017 7:50:31 AM | 7
On RT Arabic, article saying that Aoun's aid has been informed that they indeed a war on Lebanon is coming.
In exchange for letting humanitarian business-help reach the Yemenis, they need to kill ppl elsewhere?
But what if the 350,OOO Lebanese leave KSA (and why don't they already do it?)
I believe KSA will suffer of that much more than Lebanon.
Mina | Nov 14, 2017 7:51:54 AM | 8
Ppl can get organized from now on: "not in my name"
Withdraw all money from banks, stop consuming. That's the only war they know.
somebody | Nov 14, 2017 7:55:05 AM | 9
4) To clarify the situation Israel is in - from tiny Gaza strip -
The incident increased tensions along the southern sector and threatened to disturb the calm that has prevailed there since the end of the traumatic summer of 2014, which left Gaza in ruins and Israel licking its wounds. As of the writing of this article, silence has been maintained. None of the parties are lashing out, despite the casualties from Islamic Jihad and Hamas.

Ever since the tunnel was destroyed, senior Egyptian intelligence officials have set off on a long round of mediation between the parties in an effort to prevent a conflagration from erupting. Both sides are well-aware that the previous round of violence, in 2014, was not planned. Rather, it was the result of a deteriorating situation and the loss of control on both sides. Neither of the parties needs another round of violence like that right now. The IDF has clarified that it did not know that there were excavators or fighters in the tunnel at the time, and that it did not plan to launch a "targeted killing." It simply wanted to destroy the tunnel.

I have been wondering about the Hamas-Fatah reconciliation. Saudi does not want it - if Hamas keeps contact with Iran .

So why it is happening? Israel?

There is no certainty Israel is not interested in a deal with Iran. It might be the safest bet.

virgile | Nov 14, 2017 8:05:33 AM | 10
I have been saying that for the last year.

As Obama will be remembered for the Iran nuclear deal, Trump wants to be remembered as the maker of the Arab-Israeli deal to end the state of wear.
Since Trump came to power he has been following a clear strategy of weakening all the parties involved, including Saudi Arabia and Israel!
Syria, Lebanon, Hamas, Fatah, Turkey and Iran are been thrown into deep crisis while Saudi Arabia and Israel are been brought to panic by agitating the "Iran and Shia threat'. Regional leaders reluctant to make concessions are coerced, bribed or quietly removed in all these countries. Local allies such as the Kurds and ISIS have been pampered to move against the reluctant leaders.
Jared is the architect of that strategy. He is in charge of manipulating the Saudis and Israel into a deal that will be then be imposed on the other countries.
Russia is NOT opposed to such a deal, provided it keeps its influence in the region. Therefore Trump is cozying up with Putin to get his collaboration in convincing his allies of the benefits of such a deal.
The hard to break Arabs are Bashar al Assad's Syrians, and the Moslem Brotherhood (Hamas) .
Qatar and Turkey are been blackmailed to put pressure on the Moslem Brotherhood and any opponent to a 'forced' peace deal.

The Saudis are the key to the deal as they will be asked to contribute to the financial compensation Palestinians will ask for to accept the deal. They are also the most eager to humiliate Iran and Turkey.
The train is on track, despite failure to tame Syria that remains a nut hard to crack.

Jackrabbit | Nov 14, 2017 8:07:28 AM | 11
I'm not convinced that this document is genuine because:
>> as b notes, 'parity' on nukes is a non-starter;

>> discussions with Israel about the Palestinians are unlikely to be phrased as a "final solution" with the severe negative historical connotations of that phrase;

>> this wording is also odd: "rapprochement with Israel involves a risk to the Muslim peoples of the Kingdom" because there is no need to make special reference to "Muslim peoples" when 99.9% of KSA is Muslim.

>> Does KSA really have the wherewithal to bribe the Muslim world?

>> The accusation that Iran engages in "organized crime and drug trafficking" seems planted. I haven't seen such a charge before. The standard accusation (in the US) has been that Iran supports terrorism (meaning Hezbollah) and "destabilizes the region" (meaning they don't bow to US-Israeli-Saudi masters).

somebody | Nov 14, 2017 8:13:57 AM | 12
10 There will be no deal without Iran.

Israel is not stupid. The outcome of the war in Syria is an Iranian base on its border .

Russian Foreign Minister Sergey Lavrov said Tuesday that a recently announced agreement on the terms of a ceasefire in Syria did not include a Russian commitment to ensure Iran-linked militias would be pulled out of the country.

Lavrov said Iran maintained a "legitimate" presence in Syria, according to the Interfax news agency.

virgile | Nov 14, 2017 8:26:56 AM | 13
Trump's Middle East peace initiative still on hold

"What will the initiative include? According to various sources, it will consist of regional negotiations along three channels: Israeli-Palestinian with American mediation, Israeli-regional and international (rehabilitation of the refugee camps and mobilization of the world for a regional agreement). It is possible that the initiative will redefine the concept of "sovereignty" in a way that allows the Israelis and Palestinians to share territory creatively. The initiative may even resuscitate the Palestinian-Jordanian confederation idea. Perhaps even a Palestinian-Jordanian-Israeli configuration is possible."

catface | Nov 14, 2017 8:29:52 AM | 14
Excellent article, thanks. yet I am left somewhat confused, Harir just talk on TV saying: He was running for a fear for his life (hezbollah wants him dead, like they did with his father), he added that Hezbollah is the danger to Lebanon, he added that he is not held by force and will return to Lebanon.

Something feels wrong, don't you have this feeling as well regarding this story?

somebody | Nov 14, 2017 8:36:31 AM | 15
13 Yes, that is the Israeli dream - Jordan to take over the rest of the West-Bank and Egypt take over Gaza.

Russia says US providing cover for ISIS - add to the BBC article.

nudge | Nov 14, 2017 8:48:55 AM | 16
@11...Jackrabbit:
How convenient that you forget the phrase, "...by deception thou shalt do war", when you rationalize Israeli motivations/sensibilities.
Yul | Nov 14, 2017 8:51:06 AM | 17
Interesting thread from the former US Amb to Israel under Obama:
https://twitter.com/DanielBShapiro/status/930425842555027457

and then we have this:

https://www.timesofisrael.com/us-delegation-headed-to-israel-to-discuss-syria-border-deal/

In addition to the Syria agreement, the officials are likely to discuss Iran's alleged construction of a military base less than 50 kilometers (30 miles) from Israel's Golan border.

and from Mattis:
https://www.reuters.com/article/us-mideast-crisis-usa-syria/u-s-to-fight-islamic-state-in-syria-as-long-as-they-want-to-fight-mattis-idUSKBN1DE037

"We're not just going to walk away right now before the Geneva process has traction," he added.


Jackrabbit | Nov 14, 2017 8:56:09 AM | 18
@11 follow-up

The leaking of a secret Israeli cable and publishing by an Israeli news organization also seems suspicious.

The past, such blatant Israeli support for an Arab State/Monarch would be the kiss of death, wouldn't it?

The best explanation I can muster for these leaks is this: to further the notion that an attack on Lebanon is imminent so as to distract from the real target of an attack: Qatar.

somebody | Nov 14, 2017 9:14:05 AM | 19
17
Yep. The last sentence of the Reuters article is ominous
One key aim for Washington is to limit Iranian influence in Syria and Iraq, which expanded during the war with Islamic State.

So the US military now works for Saudi?

Anonymous | Nov 14, 2017 9:24:45 AM | 20
So lets see:

Israel gets the Palestinians dumped.
Israel gets somebody else to attack Iran who will be destroyed in return.

Israel: +++ (Palestine, Iran, Saudi)
Saudi: +- (Iran, Saudi)

Only the Saudis could come up with a plan like this /sarc.

Anonymous | Nov 14, 2017 9:27:30 AM | 21
So lets see: (Updated as I forgot the Hezbollah angle)

Israel gets the Palestinians dumped.
Israel gets somebody else to attack Iran who will be destroyed in return.
Israel gets Hezbollah weakened, allowing takeover of Lebanese oil interests / access for its planned Israel-Cyprus energy route therough Lebanese territorial waters.

Israel: ++++ (Palestine, Iran, Saudi, Lebanon)
Saudi: +- (Iran, Saudi)

Only the Saudis could come up with a plan like this /sarc.

Don Bacon | Nov 14, 2017 9:43:39 AM | 22
Palestine is a dead duck anyhow, and there won't be any war on Iran because of the extensive US presence (missile targets) in the Gulf. So IMO the idea that Israel would give up its nukes might be the main issue here.
Meanwhile Iran will be working behind the scenes to weaken both Israel and Saudi Arabia, especially in the key KSA Eastern Province where Shi'as predominate and ARAMCO will have new owners. The Persians have been around for centuries and they know how to deal with these matters, as evidenced recently.
Yul | Nov 14, 2017 9:44:11 AM | 23
@ 19

Yep, get the Saudis to plonk down billions in weapons that they won't , can't use and take part of that cash to help the Israelis to bomb their Arab brethren.

virgile | Nov 14, 2017 10:00:17 AM | 24
The US politicians appear as dummies compared to Iranians, Russians and Chinese.
One may have serious doubts about these expensive and famous US universities that seem to breed political morons.
They all look like vicious children playing dirty and cruel games in a kindergarten
somebody | Nov 14, 2017 10:07:03 AM | 25
20/21

Israel will not attack Hezbollah (never mind Iran) without the US leading .

Saudi cannot get full support from the US for Yemen, never mind Iran .

Last/not least - whilst Trump has fully bought into Saudi and Israeli aims (they might not be the same), his presidency might end in three years. US (and Russian) interest is to balance the interests of Middle East actors not to become a proxy for one of them.

This here is James Mattis from 2013

"I paid a military security price every day as the commander of CentCom because the Americans were seen as biased in support of Israel, and that moderates all the moderate Arabs who want to be with us, because they can't come out publicly in support of people who don't show respect for the Arab Palestinians," he said Saturday at the Aspen Security Forum in Colorado in response to a question about the peace process.

....

He called the current situation in Israel "unsustainable" and blamed the settlements for harming prospects for peace. The chances for an accord between Israel and the Palestinians, said Mattis, "are starting to ebb because the settlements and where they're at are going to make it impossible to maintain the two state solution."

Mattis then described a hypothetical in which 500 Jewish settlers live among 10,000 Arabs, and the implications of where Israel draws the border. He called it a choice between giving up the idea of a Jewish state or becoming an apartheid state.

Saudi is desperate. Israel is not far behind. Whatever they did since 2006 worsened their strategic position.

never mind | Nov 14, 2017 10:11:56 AM | 26
The Zionist entity feels no real pressure to make peace.

Making peace, in any shape or form, with the palestinians is antithesis to the zionist mission. Israel's survival, as a jewish state, hinges on this.

The same could also be said about the first point; Israel would never accept a technologically advanced state in the region that could threaten its hegemony. A nuclear Saudi Arabia will never see the light of day.

Jack | Nov 14, 2017 10:29:12 AM | 27
Great article; well researched and documented.

I have a theory and I can't back it up but here goes...

I believe that The Donald gave Saudi two choices; go forward with his plan for the new Middle East or he throws his weight and support in with the 9/11 families in their lawsuit against Saud.

The Saudis have so seldom been out front on foreign policy and certainly never played on the front line solo prior to the past couple of years.

I believe that the Donald's plan is to emerge with the 3 strong actors of the US, Israel and SA and everyone else aligned with them and against Iran. It may actually work.

CarlD | Nov 14, 2017 10:33:23 AM | 28
26,

Of course Israel might appear to be in line with the Saudis
in order to weaken Iran and the pro palestinians.
Then after Iran were vanquished, it would take on the Saudis.

dh | Nov 14, 2017 10:49:15 AM | 29
Dear B,

Excellent reporting.

I view the agreement, not as a threat to Iran, but as an alliance agreement between three weak actors, Trump, bin Salman and Netanyahu, who need all the friends that they can get. The rhetoric against Iran looks like their traditional positions.

Both Trump and bin Salman are each already in a war for survival with the Globalists (the clique of global elitists, whose members include Soros, Clinton, Tony Blair, Bandar Bush, etc. and who own the U.S. Deep State, the European Union structures, and Western media). Both Trump and bin Salman came to power after the Globalists fight against Russia (for example via the orchestrated drop in oil prices) did serious harm to their respective countries. Both are undoing the Globalist policies. The Globalists will continue to do everything possible to remove them from power.

Netenyahu is also no friend of the Globalists after they tried to rehabilitate Iran with the nuclear deal in order to draw Iran away from Russia. He has also been weakened by the disastrous outcome, for him, in Syria. (Are the Globalists behind the allegations of corruption against him?)

In this context I have difficulty to see that any of these three are in a position, or would be willing to take the risks involved, to launch a war with Iran.

Grieved | Nov 14, 2017 10:59:15 AM | 30
It was on October 1st that Sayed Nasrallah made his attention-getting statement that the Zionist occupiers should go back to the countries they came from, because if the US-Israeli command launched a war on Lebanon there would be no time for the settlers to flee. It was a pretty dramatic escalation of warning, and almost seemed to come out of the blue, but perhaps not, if crazy ideas like the ones in this memorandum were swirling around the region. And they are crazy ideas, all highly dubious propositions.

Jackrabbit @18 makes a point if all this is smoke for the real attack, which is against Qatar. This seems much more plausible. Beirut-based Paul Cochrane laid out this possibility: Behind the Saudi Troublemaking

"... the global powers would vocally oppose such a move but likely not exercise military intervention a la 1991 when Iraq invaded Kuwait. The U.S. troops based in Qatar would just stay in their base; the Trump administration has signaled it has sided with Riyadh, even though the State Department has been more nuanced towards Doha. As for the Turks and the Iranians, they would not want to be brought into a conflagration with Riyadh and the ATQ. That really would tear the MENA apart.

Ultimately, there's not much to stop a Saudi gas grab. There's not much desire internationally for yet another Middle Eastern military "adventure" following the debacles in Iraq and Libya, while nobody's lifted a finger against Saudi Arabia for its war against Yemen. As long as Qatari gas exports remain uninterrupted, the global powers might readily accept a change of management.

Mercouris at the Duran picked this up too, and makes a decent case that Saudi could actually get away with this. It seems to make much more sense than the appalling logistics of trying to attack either Hezbollah or Iran. And by grabbing the Qatari half of the massive gas field shared with Iran, Saudi would have achieved an ironic taste of "parity" with its true enemy.

The question is, how possible is such a move for Saudi Arabia?

Fernando Arauxo | Nov 14, 2017 11:13:11 AM | 31
HAHAHA the jews consider the Al Sauds a joke and they want parity with them? HAHAHAHA Allowed to have nuclear weapons? HAHAHAHA!!! Too funny
Pnyx | Nov 14, 2017 11:16:44 AM | 32
Israel's government would be foolish if it were to engage in a deal that promises them what they already have de facto and demands that they abandon the greatest strategic advantage Israel has; the exclusive regional possession of nuclear weapons.
Piotr Berman | Nov 14, 2017 11:39:51 AM | 33
The most dubious part of the "Saudi plan" is that it may be good for Saudis, in some deluded princely perspective, but there is really nothing of value for USA. Goodies for USA -- Palestinians giving up on the right of return? USA does not consider that right seriously, so value is zero, numerically speaking (zero shows a the result if you are not using exponential notation, 10^-50). Goodies for KSA: the status of "Grand Prince" in Golden Horde.

Golden Horde was a successor state of Mongolian empire that had supremacy over Rus among its various holdings. Rus was split into a number of principalities ruled by princes but one of them was given the function of Grand Prince, and he collected the taxes from all other princes and passing them to the Khan of the Horde. While the power of Grand Prince was considerable, he could be recalled (one way ticket to the capital of the Horde).

KSA imagines having that position in the Arab (or Muslim??) words, of course without the last detail -- obligatory invitation to D.C. with a dinner that may be wholesome, but then again, it may be poisoned. But it is much better to USA to deal with a number of small states that do not cooperate with each other. What if a single change of power in the Kingdom is followed by a request to close all bases? This is a type of bother that is better to prevent from even being contemplated. Mind you, Americans were disinvited from the Kingdom in the past. Trump may trust MbS, but Pentagon does not KSA.

Anna | Nov 14, 2017 11:47:18 AM | 34
You forgot to mention Macron's recent surprise visit. For some reason, Macron may be on the hook to them. He was awarded with a military contract (navy vessels) from UAE, KSA ally.
Piotr Berman | Nov 14, 2017 11:51:12 AM | 35
Macron on the hook? Like a hooker? But that lady has no intention to be restricted in the choice of customers. Over time, she will have a kind word (not just words) for everyone.
karlof1 | Nov 14, 2017 11:53:39 AM | 36
Grieved @30--

It would seem Nasrallah's/Hezbollah's intel reach is quite deep. As someone commented, the plan reeks of desperation; since it's founded on numerous falsehoods, it has no chance of success. I expect the Umma to denounce Saudi's betrayal of Palestine regardless of what their governments say.

fastfreddy | Nov 14, 2017 12:03:27 PM | 37
An array of unrealistic, unobtainable goals and a leak. Football analogy: It's a pump fake. Look for the hand off and a running play.

Also see a limited hangout: Warm the Arab public to the concept of totally screwing the Palestinians in Palestine's stolen land (Israel).

J Swift | Nov 14, 2017 12:07:23 PM | 38
I wrote a couple weeks ago that because of several years of weak chief executive, the power blocks in the US were pursuing their respective interests more independently and openly than ever (which they are); and in Arabia MbS is a power hungry Machiavellian prince who is also naive and thus hard to predict, but who must understand that he will need allies, and those allies will likely have an influence on him, for better or worse (which is also true). I was naturally hoping that his daddy's trip to Russia, as his last state visit, might indicate that the king was trying to open an option for MbS to turn to Russia for support against the CIA/State sponsored factions within SA, which might in turn lead to at least the opportunity for Russia to exert some calming influence on the region over time.

Well, that may have been the king's thought, but obviously his son has been getting his advice from elsewhere. In the US, a most unlikely alliance appears to have formed (at least with respect to the ME). Because of the vitriol existing between the neocons and Trump, and the fact that the office of the president has largely been taken over by the Pentagon (which often but does not always see eye-to-eye with the Zionist/Neocons), it was easy to overlook the growing power and influence of the Zionist worm in the White House, Kushner.

I think Trump never had a strong foreign policy concept in his own mind--mostly boiled down to a quasi-isolationist, so he hasn't fought hard against turning things over to the Pentagon and Kushner. It is now clear that Kushner, the US's own power hungry prince who is eager to prove his chops in an area he has no clue in--international politics--has fallen completely into the loving arms of Israel. It is clear now that the Trump/Kushner plans for SA are entirely a Nuttyahoo wet dream. The visit to SA, where they were persuaded to spend $110B of money they don't really have mostly on huge numbers of THAAD and other missile defense systems and front-line fighters. Next MbS was persuaded to confront Qatar, as any breaks in a united front against Iran must be spanked (notice how all these events keep happening a couple days after a visit from Kushner, who is usually hot off a meeting with his masters in Israel). Then MbS is apparently advised to go all in to remove opposition within the kingdom, which gives Trump glee because it also punishes Hillary's friends, but also commits MbS to the path, and makes him totally reliant on Israel/Kushner for protection (cutting RF's increasing attraction). Now the crude attempt to boil the pot in Lebanon.

So in short order there will be far more missile defenses than Riyadh needs (but exactly what Israel desires). Israel doesn't want to be first in on a direct attack on Iran, but if there is a whole air force worth of planes with Saudi markings just waiting for Israeli/US/Wahabi pilots to take first blood--once it's a regional war on, who will notice who's planes are attacking Iran after that? And MbS (under careful direction) has now set up trigger points from Yemen to Qatar to Lebanon, just waiting until the preparations are done and an event to be blamed on Iran, and away we go. Israel finally gets its wish. The good news is that MbS has likely bitten off more than he can chew by taking on all of his internal opposition at the same time as Iran, and done so in such a heavy handed manner that I doubt he can buy a life insurance policy. And Russia and Iran have maintained a steady and "back seat" approach to their assistance of everyone who seems to need it--and the US and Israel have been so brazen in their duplicity and untrustworthiness--most countries in the area (and the world) don't seem so eager to follow the US lead any more (plus, the Pentagon is still very strong in the US executive, and I don't think they're quite so anxious to tear into Iran). So there is hope this latest Israeli plan to drag the world into war against Iran will melt down just like it did in Syria, but who knows how much damage will be done before it does.

Temporarily Sane | Nov 14, 2017 12:16:56 PM | 39
@4 somebody
And neither the US nor Israel can politically afford to lose many soldiers in a ground war. So if Saudi wants to fight against Iran, they have to do it themselves.

MBS would have to be absolutely deranged to fight Iran directly. The KSA's regular troops are mostly foreigners from Pakistan and other poorer nations. They are well-equipped but poorly trained. In addition, fighting wars for a country one has no stake in makes for poor morale. They are getting their asses handed to them on a regular basis by the relatively poorly-equipped (but highly motivated) Houthi rebels in Yemen.

It is possible that MBS is wildly deluded but I can't see him facing Iran alone. What is more likely is covert and indirect warfare from the US and Israel with special forces and proxies (like the MEK terrorist group inside Iran and perhaps some Wahhabi fanatics) providing boots on the ground and the whole thing backed up by USAF air power and bankrolled by MBS.

William | Nov 14, 2017 12:19:44 PM | 40
Someone mentioned that 'parity on nukes is a non-starter. That is bullshit. SA already has 85 American B-61 nukes that were delivered to them by Israel at the time when it appeared that McStain's plan of raising an Arab Army out of Turkey would eventually defeat Syria.

No on has ever accounted for those nukes, and I seriously doubt, that once they got their hands on them, that SA would give them back. Matter of fact, video exists somewhere out in the ether of a SA attack on Yemenn in which one of the B-61 nukes was used, it just happens to have 'disappeared'.

I'd say this is a non-starter. The Palestinians though may take a page out of the Zionist playbook, take the money and then just keep fighting, after all, most of world opinion in now firmly with them.

PeacefulProsperity | Nov 14, 2017 12:25:14 PM | 41
From b's report:

"The Saudi tyrant abducted the Prime Minister of Lebanon, Saad Hariri, and declared war on the country. The purpose of this move is to remove or isolate Hizbullah, the Shia resistance of Lebanon which is allied with Iran and opposes the Saudi plans for Palestine."

That's absurd, ridculoous, doesn't make sense at all.

Hariri is a mortal enemy of Hizb, even accused them of assassinations attempts. Saudis keeping Hariri in house arrest gives the control of all Lebanon over to Hizb - a dream come true for them.

Add arresting plotters of 9/11 ponce Talal (also a major sponsor of Clinton/Bush criminal enterprise, CNN lies and Twitter censorship) and ponce Bandar (a butcher of Syria) to the picture and you can see that this all turns conveniently into Russia's advantage. Plus:

Russia, Saudi Arabia sign air defense contracts

And Turkey is already in the fold:

Putin says relations between Russia and Turkey may be considered as fully restored

Ghostship | Nov 14, 2017 12:27:17 PM | 42
>>>> stonebird | Nov 14, 2017 7:45:36 AM | 6
The "other" route via Greece would be used
.

Which one is that? Over the Caspian Sea, through the Caucasus(Armenia, Azerbaijan, Georgia, Turkey or Russia), across the Black Sea, through Bulgarian or Turkish airspace to Greece. That would be available one time only and the fuel loads the aircraft would have to carry would severely restrict the bomb load they could carry. Also, going by previous experience the first time any Iranian SAM batteries locked their radar onto the Israeli aircraft, they'd dump their drop tanks and bomb loads to head out of Iranian airspace ASAP.

Any attempt by Israel to attack Iran would be a disaster for Israel which is why the conspiracy is aimed at getting Hezbollah to launch missiles at Israel and Iran to launch missiles at Saudi Arabia in response to a Saudi attack on Hezbollah. Then the United States could argue that it's intervention against Hezbollah and Iran was legitimate, well at least legitimate enough satisfy the American public and the poodles.

PeacefulProsperity | Nov 14, 2017 12:31:24 PM | 43
Everything has been going well according to the Putin-Trump plan:

Trump: 'Time to Get Back to Healing a World That is Shattered and Broken'

McCain and the rest of war-mongers (e.g. Lynn de Rothshild) are scared to death by this:

US Senator McCain Slams Donald Trump Over 'Believing in Sincerity' - Sputnik International

Peace is coming to the ME Lebanon's Maronite Patriarch arrives in Riyadh on first visit

Remaining terror state is in the cross-hairs: US breaks ground for new permanent base in Israel

PeacefulProsperity | Nov 14, 2017 12:35:43 PM | 44
FWIW interesting info-crumbs Arrested: Saudi Prince Alwaleed bin Talal. His Ties to Las Vegas

This is the same Saudi Prince Alwaleed bin Talal who, together with Bill Gates, owns the Four Seasons Hotel that is located within the 5 top floors of the Mandalay Bay Hotel in Las Vegas.

That would be the same Mandalay Bay Hotel in Las Vegas that was the sight of the deadliest mass shooting in our nation's history.

The Four Seasons Hotel-within-a-hotel boasts its own private elevators and separate entrance.
His arrest may or may not reveal more ties to the Las Vegas Massacre. But it does reveal that he's a pretty shady character.

Prince Alaweed's arrest was the result of King Salman's decree to create an anti-corruption committee chaired by his son, Crown Prince Mohammed bin Salman.

King Salman decreed late on Saturday the creation of an anti-corruption committee chaired by Crown Prince Mohammed bin Salman "

"The allegations against Prince Alwaleed include money laundering, bribery and extorting officials, one official told Reuters, while Prince Miteb is accused of embezzlement, hiring ghost employees and awarding contracts to his own companies including a $10 billion deal for walkie talkies and bulletproof military gear worth billions of Saudi royals."

Prince Alaweed bin Talal is also Twitter's second largest shareholder. That would be the same Twitter that allows ISIS, Antifa and anyone who threatens to assassinate our President free reign on their platform but blocks conservative American patriots' accounts.

Speaking of information flow-the Prince's investment company, Kingdom Holding Company, is a major shareholder in Time Warner Cable. The same Time Warner cable that owns CNN. Oh- and they also own a major chunk of AOL that owns the Liberal multi-author blogging platform posing as a news source-Huffpost.
Jim Murren, CEO of MGM dumped millions of dollars worth of his stocks in the weeks leading up to the massacre.

That would be the same MGM that owns the Mandalay Bay Hotel. How fortunate that he dumped his stocks before the mass shooting.

MGM Stock Selloff and Saudi Connections to Mandalay Bay Hotel.

CEO Jim Murren circulated an internal memo that stated that he would match donations to CAIR ( a terrorist organization) and the ADL-a very anti-Trump, pro-Islamic organization. He must like Twitter.
The Saudis partnered with the MGM

Reuters reported that back in '07 Dubai World became partners with MGM.

"Dubai World, the investment holding firm of the Dubai government, will acquire a 9.5 percent stake in MGM Mirage and 50 percent of the casino operator's CityCenter development project for $5 billion."

Dubai World referred to the deal as a "long term strategic partnership."

Prince Alwaleed bin Talal hails from Saudi Arabia.

That would be the same country as the Saudi Royal Air Force-that just happened to be doing some "realistic combat training" in Las Vegas.

From a previous post,

It may or may not be "routine," but during the month of August, from the 5th to the 28th, the Saudi Air Force booked an entire tower of "SLS," a beleaguered Las Vegas hotel. They didn't stay there to ogle scantily clad Las Vegas women. Arrangements were made to keep all female staff away from them. Some areas were closed to the public and pictures of females were yanked from the walls.

The purpose was for "realistic combat training" and they're planning on making a habit of it. The Las Vegas Review Journal reported,

"Saudi Arabia's 10th Squadron Royal Saudi Air Force will be taking part in Red Flag 17-4 at Nellis Air Force Base, according to airwingspotter.com, a site dedicated to military aviation photography and spotting. Red Flag, combat training involving the air, space and cyberforces of the United States and its allies, will be held Aug. 14-25.

"Depending on the year, the Royal Saudi Air Force will bring 175-210 members to these realistic combat exercises," S&K said in the 2014 post."

Who needs a military base when you can rent a hotel? Food's better too.

Caught up in King Salman's sweep was the Commander of the Saudi Navy as well as the Minister of the National Guards. No mention yet of the Royal Saudi Air Force.

dognuke | Nov 14, 2017 12:43:17 PM | 45

Nuclear strike by proxy, Saudi Arabia purchased(or given) nuclear bomb(s). Temporary nuke parity.
The clown prince MbS is the perfect proxy to strike Iran.
Ghostship | Nov 14, 2017 1:04:26 PM | 46
>>>> Jackrabbit | Nov 14, 2017 8:07:28 AM | 11
I'm not convinced that this document is genuine because:

>> discussions with Israel about the Palestinians are unlikely to be phrased as a "final solution" with the severe negative historical connotations of that phrase;

>> this wording is also odd: "rapprochement with Israel involves a risk to the Muslim peoples of the Kingdom" because there is no need to make special reference to "Muslim peoples" when 99.9% of KSA is Muslim.

You are aware this is a machine translation? So unless you are fluent in Arabic and can translate the original article, your comment has little value just like Liz Sly's and Anne Barnard's reporting from Beirut.

As for "final solution" why would an Arab be concerned since beyond the Mufti of Jerusalem, Arabs played little or no part is the Holocaust. And the position and role of the Mufti of Jerusalem is heavily overstated by Zionists.

>> this wording is also odd: "rapprochement with Israel involves a risk to the Muslim peoples of the Kingdom" because there is no need to make special reference to "Muslim peoples" when 99.9% of KSA is Muslim.

Firstly this could again be down to machine translation but it's more likely to be that 30% of the population of Saudi Arabia are migrant workers so 99.9% of the population are not necessarily Muslims. If you'd bothered to check the CIA World Fact Book, the only honest publication that the CIA produces, you would have known this.

>> The accusation that Iran engages in "organized crime and drug trafficking" seems planted. I haven't seen such a charge before. The standard accusation (in the US) has been that Iran supports terrorism (meaning Hezbollah) and "destabilizes the region" (meaning they don't bow to US-Israeli-Saudi masters).

You obviously haven't be paying attention to the bilge about the Tri-border region in South America. I would guess that this is Kushner's contibution to the ploy - most Americans are deeply infected with a disease known as projection and thus assume their enemies would act as they do because being the exceptional country everybody wants to do what Americans do. In this case with the CIA funding their illegal activities prior to about 2001 with money raised from drug smuggling, Americans assume that is what the Iranians are also doing which is ironic when you understand that the Iranians are fighting an existential war against drugs.

Yul | Nov 14, 2017 1:06:55 PM | 47
https://www.ynetnews.com/articles/0,7340,L-5042362,00.html
Greenblatt: no resumption of Israel-Palestinian talks in sight

For sure: Abu Mazen must have told the Saudi Pretender and his senile father: Go and take a hike !

Ghostship | Nov 14, 2017 1:15:39 PM | 48
>>>> PeacefulProsperity | Nov 14, 2017 12:25:14 PM | 41

Oh, a Zionist troll talking bullshit as usual.

Ghostship | Nov 14, 2017 1:17:35 PM | 49
>>>> William | Nov 14, 2017 12:19:44 PM | 40

You could include a link or two to justify your staggering claim.

james | Nov 14, 2017 1:17:41 PM | 50
thanks b!

i agree with @20/21 anonymous.. this isn't a saudi plan! (The memo is signed by Adel al-Jubeir. (But who were the 'advisors' who dictated it to him?) )

this is a memo thought up in some neo cons head - whether they are located in israel, or some washington stink tank..

@29 dh.. i agree with much of what you say, but don't you think israel/saudi/usa trio are batshit crazy enough to do something stupid? witness their war on syria.. plenty of stupidity to continue on in the same fashion.

@18/30 jr and grieved... yes - qatar is a thorn in the side of the terrorist state saudi arabia.. nothing like another terrorist state calling you out, lol.. one of them has to be silenced... i doubt the attack is going to be on qatar myself..

@38 j swift.. thanks.. makes sense..

@45 dognuke.. unfortunately that is true and a possibility.. the clown prince is a really unstable dude..

Laguerre | Nov 14, 2017 1:21:30 PM | 51
It should be born in mind, of course, that this is only MbS plotting. It can't be spoken of publicly in Saudi Arabia, because the Saudi population is strongly pro-Palestinian. But all the media are owned by members of the royal family, so the population is kept in ignorance and quiet. I don't know whether that number of al-Akhbar has been suppressed in Saudi, but this news has sort of got out anyway, as it will be on the social media, which Saudis are dedicated to.

The fourth point is to bribe the public into accepting the plan. That'll cost a lot. And I don't think it will work. Another risk for MbS's power.

Ghostship | Nov 14, 2017 1:22:54 PM | 52
>>>> Anna | Nov 14, 2017 11:47:18 AM | 34

Airbus Industries also just received a large order for A-380s from Dubai (Emirates) - since Abu Dhabi pretty much owns Dubai after there financial troubles a few years back. it wouldn't surprise me if this was an MbZ bribe to various European countries to look the other way when things kick off.

Jackrabbit | Nov 14, 2017 1:27:18 PM | 53
Ghostship @46

Military usually want some measure of surprise. If only for this reason, signaling an attack on Lebanon would seem foolish. Unless it was a distraction.

Anyway, we then see a "leaking" of a secret Israeli cable (happens all the time, right?) that supports KSA's anti-Lebanon stance. Hmm... K.

Now we have another leak(!) that implicitly explains Israel's support of KSA as part of a larger "peace deal" (really a "war deal", isn't it?) that includes a betrayal of the Palestinians. Yeah that betrayal makes it totally believable, sure/sarc - but parity on nukes?!?

Ghostship | Nov 14, 2017 1:29:32 PM | 54
Posted by: Don Bacon | Nov 14, 2017 9:43:39 AM | 22
Palestine is a dead duck anyhow...

That's what the western MSM with support from Israel, Gulf governments and some Islamists want you to believe. Elsewhere it's still an important issue but US pressure means that many are reluctant to speak out but not Celtic supporters

Jackrabbit | Nov 14, 2017 1:35:27 PM | 55
Tomorrow's leak:

From Lebanese Government affirming Iran's support for Hezb and willingness to arm them with nuclear missiles.

Oh, and they will do the same for the Houthi in Yemen.

And they killed Kennedy.

/sarc

CarlD | Nov 14, 2017 1:36:09 PM | 56
Re: 40

Video evidence of tactical weapons used in Yemen and other
conflicts:
https/www.youtube.com/watch?v=neKIaVGj-9Y

CarlD | Nov 14, 2017 1:37:20 PM | 57
re 40:

please add missing slash

https://www.youtube.com/watch?v=neKIaVGj-9Y

james | Nov 14, 2017 1:53:48 PM | 58
related...Alastair Crooke - gambling all on black at the roulette wheel..

"This US-Israeli-Saudi-UAE project is, at bottom, an attempt to overturn reality, no less – it is rooted in a denial of the setback suffered by these states by their multiple failures to shape a New Middle East in the western mode. Now, in the wake of their failure in Syria – in which they went to the limits in search of victory – they seek another spin of the roulette wheel – in the hope of recouping all their earlier losses. It is, to say the least, a capricious hope."

Peter AU 1 | Nov 14, 2017 2:08:32 PM | 59
It is hard to see how they would go about attackiung Iran unless it is just a quick strike/raid and then they all go home again. For the US, military cargo planes with backloads of US boots neatly packaged in body bags is not acceptable.
Trump wants US to be a major energy exporter, but oil prices must go up to get fracking viable in a big way. A play to bump up oil prices? Another option is Trump and Kushner playing MBS to get Aramco listed in the US and prevent China from puchasing the full offering.
dh | Nov 14, 2017 2:16:59 PM | 60
@50 Thank you james for agreeing with my thoughtful and erudite post but unfortunately it was written by one of the other dh s. I've pretty much retired.

To answer your question....yes I think Israel and Saudis are crazy but maybe not crazy enough to strike Iran without a green light from Washington.

frances | Nov 14, 2017 2:52:32 PM | 61
Given the first demand: "First: The Saudis demand a "parity of the relationship" between Israel and Saudi Arabia. On the military level they demand that either Israel gives up on its nuclear weapons or Saudi Arabia is itself allowed to acquire such." This entire plan/proposal IMO is a nonstarter because of this initial and presumably most important (it is #1)requirement and whoever wrote it/approved it knew it.
james | Nov 14, 2017 3:00:33 PM | 62
@dh... that is interesting as i was surprised at the longer post by you.. now it makes sense!

i guess they will have to work on a false flag before they get the green light from washington... iran won't do something stupid.. that is reserved for the clown prince/nutjob duo at this point..

dh | Nov 14, 2017 3:20:38 PM | 63
@62 A false flag will require a substantial number of US fatalities. Thinking back to the US boat that 'strayed' into Iranian waters some time ago wonder how Donald would handle something similar. Those sailors or whatever they were got soundly humiliated but released unhurt. Hardly a casus belli.
Mina | Nov 14, 2017 3:28:41 PM | 64
so The Guardians' journalists don't watch the BBC
https://www.theguardian.com/world/2017/nov/14/russia-us-isis-syria-video-game-still
pantaraxia | Nov 14, 2017 3:28:56 PM | 65
@30 Grieved

The problem with this idea is that Turkey has already instituted a blocking action by placing Turkish forces in Qatar in response to the original Saudi threat. While the contingent was small, approximately one thousand men, the message was quite clear - hands off. Any move by the Saudis or their allies risks Turkish retaliation. it's a no-go zone.

Red Ryder | Nov 14, 2017 3:31:25 PM | 66
Regarding the Saudi military, as pointed out, they are out of troops.
They could not get Egyptians to fight in Yemen or Syria, nor could they get the Pakistanis to fight on their side in either war.

They are desperate.

A war on Qatar would be to ignite Turkey and Iran's support for Qatar, and thus the Israeli-US coalition could punish both those nations, a goal the US would enjoy doing.

The aim is to regain Hegemony over the ME. The Russia-Iran-Turkey alliance has pushed the US aside, if not away. Whatever allows the US to hurt Russia by striking Turkey and Iran would be the goal, and Israel would benefit along with the US.

It would be an air war and the US and Israel would win it.

It isn't about Saudi goals and needs. It's about the Hegemon and Jr. Hegemon in Tel Aviv.

CarlD | Nov 14, 2017 4:06:21 PM | 67
66

If it remains an air war, the probability is that US/Israel would overwhelm
at the beginning of a combined attack unless defenses are upgraded.

However, if in view of the probability of war, Russia were to rush AA
systems to Syria and Iran, the probability that substantial air forces
would be decimated is high. The US forces would certainly be pummeled
in their bases around the Gulf and their naval forces in the Gulf sunk
with the numerous Iran assets in the region.

Without resorting to nukes, the US is probably not going to win because
it cannot field sufficient boots on the ground in Iran. And remember, the
stakes are high for China to get its fuel from somewhere and the US will
have to take this into account. Depriving China of its needed fuel is no
laughing matter.

They are in Djibouti for a reason.

I believe Israel is trying to chew too big a bone. It will choke.

stonebird | Nov 14, 2017 4:16:23 PM | 68
@42 ghostship

This was originally proposed as a "one-off" bombing route. ie. via the Med to cross (at that time Turkey) Now could cross Greek airspace (would need NATO laisser-passer"). Caspian to Azerbaijan. (Has close links with Israel and just tried out an Israeli suicide drone on Armenia for a "client"). From there a short hop to Iran. Fueling over greek airspace.
Return route, nowadays, would be via Saudi Arabia (plus refueling and no need to go any further). It's actually easier than a few years ago.

The second para I agree with.
.....
General opinion.
Palestine. The single state AND the two state solution have probably been junked by Israel. Neither of the alternatives gives an ethnically pure "Jewish" state. So what to do with them? At the moment the Palestinians are being dispossesed (of land, houses), forcibly displaced (at the moment the focus is on the Jordan Valley and Bedouin villages anywhere). They are put in "camps" where they are subject to daily harassment and destruction of living amenities (including water). The desired effect is ethnic cleansing (a la Serbia). Gaza is a humanitarian disaster - under-developed children suffer stunting - and as well the IDF concentrate on children as it is easy to make them submit.

Where could they go? . Jordan - doesn't want them, as they would make up the majority, and put in peril the stability of the country.
Egypt - doesn't want them either.
"Gulf" countries - you must be joking, many are already minorities in their own countries. (Abu Dhabi,)
Leaves the neighbours, Lebanon, Syria and the EU (via Turkey?).
EU - Soros is taking care of that and destroying national unity at the same time.
Lebanon. Over-populated by refugees already.
Syria - Too many displaced persons, plus Palestinian refugee camps.

Maybe Israel imagines the solution is to force them on the latter two countries by means of military action as they won't take them voluntarily.

@29 dh | Nov 14, 2017 4:16:52 PM | 69
@50, @60

Sorry for using dh. Didn't realize that it was already taken.

I think that the real war, right now, is between the Globalists and Trump/MBS. Trump and MBS are both fighting for their survival. I can't see how attacking Iran would help them, quite the opposite.

@66 The Globalists want Hegemony over the ME. I'm not sure that Trump does. However, the Globalists first priority is to regain control over the U.S. (i.e. impeach Trump), and then continue their war with Russia. I can't see how driving Turkey and Iran into Russia's hands will help them either to tame Russia or to reassert Hegemony over the ME.

Jen | Nov 14, 2017 4:43:56 PM | 70
I think people here - and the KSA for that matter too - need to know that attacking and invading Iran won't be at the same (lower) scale as attacking and invading Lebanon, Qatar, Syria and even Iraq. These countries are flat and a major part of their territories is desert. Their populations are not that great either - the largest is Iraq with about 35 million.

Iran on the other hand is mostly mountainous (especially in its west and south) and its population reached 81 million some time in October 2017. An attack on Iran from the west is going to need foot soldiers to be effective. Where will Israel, the US or the KSA stump up the armies needed to invade Iran? Using ISIS and al Qaida / Jabhat al Nusra failed.

If an invasion comes from the east, how will Afghanistan (chaotic?) and Pakistan be brought on board to allow their use of airspace for air attacks?

A third option would be to stage air and naval attacks from India. That might be plausible if India under Narendra Modi and the BJP is friendly towards Israel and the US.

nottheonly1 | Nov 14, 2017 4:44:40 PM | 71
A number of thoughts comes to mind.
1) Divide and conquer
2) The Enemy of my enemy is my friend
3) Do as I say, not as I do
4) You are either with us or with the terrorists
5) Birds of a Fascist feather flock together

As to the "not in my name" shirt and withdrawal from the machine, it won't happen.
Remember the analogy about the frog in the water that will start to boil? No frog would ever do that. It is humans who threw the frog into the pot and watched.
Karma can be a nasty bitch. It has transformed humanity into a frog and the masses will be boiled.
To implement change, people would have to turn off the propaganda hammering down on them from all sides. But that won't happen. People are programmed to believe the lies they are dished out. No de-programming - no change.
Americans and their Fascist alies will have to go through their own collapsing 4th Reich.
And of course: Support your troops. Sell everything and donate the money to the MIC. Because they will come for it anyways. Only in a Fascist country, warriors are elevated over any civil person. This morning at court: people congratulating a father because his son just joined the troops.

Reject anything the parasites in the legislative tell you. Like George Carlin said: "I never believe what the government tells me."
End of story.
Spend as much time as you can with your loved ones. The Motherearthfuckers are about to turn the heat on. And it is already way too hot here.

Temporarily Sane | Nov 14, 2017 4:49:04 PM | 72
@44 Peaceful Prosperity

From the Sputink piece you linked to:

US President Donald Trump has said that heavy sanctions imposed on Russia should not become a barrier to future friendly cooperation between the two nations, adding that cordial international relations would be likely to help resolve the North Korean threat and many other global issues.

How noble and considerate of Trump. "Vlad, my friend, I know we are waging economic warfare on your people, surrounding your borders with nukes and want to take over and "regime change" your country. But, hey, never mind all that stuff and let us be friends! Then you can help us do to other sovereign nations what we are doing to you."

Touching, very touching It raises the question: What "many other global issues" is Trump trying to solve? Climate change, perhaps? Ending the war in Yemen? Rapprochement with Iran? Curbing corporate and Israeli influence in American elections and foreign policy?

Peaceful Prosperity...you are not still holding a candle for this duplicitous shitbag, are you?

Trumpets are the new Obots.

Joe | Nov 14, 2017 4:55:50 PM | 73
Just my 2 cents but it seems to me the real target has always been Russia, more specifically Gazprom, why not just take control of Qatar and their gas field which is also Irans gas field as well, which correct me if I'm wrong could be completely controlled/exploited from Qatar without anyone having to step foot into Iran, couple this with limited strikes on Irans gas infrastructure in the name of removing their ability to be "evildoers" and before you know it Aramaco, which now controls a third plus of the world's nat gas is listed on the NY exchange and it still only accepts dollars. Wonder what countries that pipeline would pass through...
Seby | Nov 14, 2017 5:00:52 PM | 74
Pleazzzzzz!!!!

What have the british installed wahabist medieval hole in the sand copulators ever really done for Palestine?

Mina | Nov 14, 2017 5:10:50 PM | 75
Ts
Trump has been busy planning a huge karaoke with his new buddy Duterte. Guns are on option, courtesy of the NRA
Tacitus | Nov 14, 2017 6:22:47 PM | 76
I am a new poster to this board. I've tried twice to post something and the message said it was posted successfully, but it is not visible in the comments section. Is there some mediator process that it has to go through first, or is there something else that I need to do? (I left the email and url boxes empty; could that be the issue?)
Yeah, Right | Nov 14, 2017 6:30:55 PM | 77
The way in which this plays out is almost pre-ordained.

There is no way that a formal, signed document will exist that states that when-you-shaft-Palestine then we-will-attack-Iran.

What will happen instead is that Trump will broker that "understanding" between Israel and Saudi Arabia. A nod and a wink, and maybe even a handshake.

But the Israelis will insist that the Saudis have to do that Palestine-shafting first, and in The Most Public Way Possible so that the House of Saud can't take it back. Trump will say that this is reasonable, and the dumb-ass Saudis will mull over it then say "OK, sure, if the Yanks vouch for you then so will we".

The Saudis will then dump on Abbas.
The USA will then heap congratulations on the Saudis.
The Israelis will shout Yipeeeeeeeeeeeee!!!!!!!!!!!!
The Palestinians will descend into a deep despair.

And then...... [sound of crickets chirping].

Saudi: Hey, when are you going to attack Iran?
Israel: We're working on it. Give us time.
USA: Hey, I thought we had an understanding!
Israel: We do, this takes a lot of planning.
[crickets]
[crickets]
[crickets]
Saudi: What gives, guys?
USA: When are you were going to attack Iran?
Israel: We changed our mind. Bite me.

Let's get real here: the Israelis have a track-record of "agreeing" to a quid-pro-quo, then immediately pocketing the "quid" while somehow, some way, never actually getting around to delivering on the "quo"

The Saudis will shaft the Palestinians.
The Israelis will then shaft the Saudis.
The Americans will fume (in private) but ultimately do nothing and say nothing.

And years later there will be an off-mike recording of Netanyahu boasting about how he f**ked over the Saudis, and gleefully explain that the reason why he could do that is because the Americans are at least as dumb-ass stoooooopid as, well, a Saudi Clown Prince.

I mean, haven't we seen this movie before?

james | Nov 14, 2017 6:31:02 PM | 78
tactus - it should go thru, unless you linked to the odd url that doesn't go thru - southfront is one of them going on memory..
BraveNewWorld | Nov 14, 2017 6:34:38 PM | 79
Sorry if some one has mentioned this already, but Jerusalem belongs neither to the Palestinains or the Israelis. It belongs to Jordan and Jordan is it's designated protector just as the freaks in KSA are the protectors of Mecca and Medena. The NATO countries on orders of Israel have burred the Palestinian cause. But if the children running the US and KSA tried giving the third holiest site in Islam (and likely the most important heritage site in the world) to the Jews so they could blow it up to build a Jewsih temple on top of it ,the back lash among the 1.5 billion Muslims in the world would be immense. Not to mention basically righting off international law in it's entirety. China, Russia and the EU would never allow it.serious

It has been obvious for years that Bibi and the KSA have have been cooking this up but it wasn't till last year they had any one stupid enough in the White House to try and take a run at it. If you want total war in the Middle East this is how you acheave it. The outcome will be a Palestinian state. Whether there will be a Jewish one if this is tried is up for debate.

Just Sayin' | Nov 14, 2017 6:48:08 PM | 80
Wonder what countries that pipeline would pass through...

Posted by: Joe | Nov 14, 2017 4:55:50 PM | 73

It's a source of not only bewilderment, but also amusement, that there are people so dumb/dishonest (delete as applicable) that after all we have seen in the last few years, even just what we have seen in the last few weeks, that still pretend/think/pretend-to-think that this has something to do with pipelines?

Seriously, would all you "It's the pipelines, stoopid!" gobshites kindly just stfu.

A dumber more gullible bunch of eejits would be hard to find

Debsisdead | Nov 14, 2017 7:06:41 PM | 81
Posted by: Tacitus | Nov 14, 2017 6:22:47 PM

Typepad insists on a viable email address - not your real one just a viable one whose mail server will respond to a call. mailinatorDOTcom (remove the DOT & replace with . to visit) is one of many spam dodging sites which will enable a poster to post here, plus let you use it to sign up to all sorts of BBs forums etc. They have a rotating list of email server suggestions. otherwise joblo(or whatever) at gmail will do the trick most times.

Curtis | Nov 14, 2017 7:26:18 PM | 82
Another plan to get the US to fight another war that benefits zionists, this time against Iran. I wonder who is in the role of Lord Balfour.
I like the idea of an independent religious Jerusalem city, I doubt either party will go for it. The same goes for an Israeli agreement for nuke parity with Saudis or a single open state for Palestinians. While many Palestinians want their own state and even some in Israel want this (including some Shin Bet officials) there are others who say it is too late due to the proliferation of settlements in West Bank. These others (like Miko Peled) say a single state as the only option left. It seems to be a very convoluted (Rube Goldberg?) solution to getting a united front to attack Iran and "solve" the Palestinian issue.
Joe | Nov 14, 2017 7:38:35 PM | 83
@Just sayin, perhaps you could spell it out for me then, but if all you got is name calling maybe you should stfu, kindly that is
Ghostship | Nov 14, 2017 7:45:48 PM | 84
>>>> CarlD | Nov 14, 2017 1:36:09 PM | 56
Video evidence of tactical weapons used in Yemen and other conflicts:

I doubt it, they all look like large conventional explosions to me.

The ones in Ukraine are from a detonation of a large weapons dump while the Saudis managed to hit a rocket manufacturing plant in Yemen that resulted in a very large explosion.

Daniel | Nov 14, 2017 7:46:39 PM | 85
Thanks for the link, CarlD. I think it entirely possible that 'tactical nukes" have been used. I would expect that at some point, a credible, government-tied group will report that these weapons have been used. This will serve to normalize their use in the future. People will feel that since they'd been used already, and we all survived, that using them again will not be so horrifying/dangerous.

More and more I'm thinking that humanity has reached the end of our rope, and we will have deserved it when the trapdoor finally springs.

Daniel | Nov 14, 2017 7:57:51 PM | 86
Mina @64. BBC is running that same "video game" story. In fact, on their Middle East News page earlier, they had both this and their "expose" of the US helping ISIL escape arrangement.
anonimo | Nov 14, 2017 8:11:53 PM | 87
and the big plan goes on:

get Jerusalem for the Vatican !!!

Grieved | Nov 14, 2017 8:42:04 PM | 88
@73 Joe

I hadn't even considered the aspect of that gas trading in dollars. Now there's a resource grab the US could really like.

I'm not actually at the point of thinking anything will happen, anywhere. There are simply no geopolitical advantages in any of the plays being mooted.

But there actually does seem at first glance to be some potentially cost-effective gain in plundering Qatar. Kind of wish no one had thought of it - I'd much rather see a cooperation develop between Iran and Qatar, the way it recently started to look like it might go.

As to your getting trolled, I will say that with what I've seen in the last few years, even with what I've seen in just the last few weeks, there's nothing I've ever encountered anywhere that says it's NOT the pipelines.

Perimetr | Nov 14, 2017 9:36:42 PM | 89
RE: Daniel | Nov 14, 2017 7:46:39 PM | 85, CarlD | Nov 14, 2017 1:36:09 PM | 56

I agree with Ghostship, no nukes have been used. The thermal signature from a nuclear detonation is unmistakable, it is many, many orders of magnitude greater than produced by a conventional explosive. Not to mention the by-products of fission, which are always produced by a nuke and are always detectable.
You will know when a nuke is used, believe me.

Peter AU 1 | Nov 14, 2017 10:15:21 PM | 90
Joe / Grieved
Best to discount nothing. Qatar gas the target? Quite possible. Pipelines for Qatar or in Joes theory, Saudi gas. Again possible.
Most depends on what Trump is behind the facade. The facade is the simple minded buffoon that makes a decision on what he has last seen on Fox news. What he has just pulled off with MBS...
My thoughts on Trump at the moment, what is real and not facade. He wants to return the US to the power is was post WWII and through the cold war era. Manufacturing power ect. The big thing, prevent China from overtaking US economicaly which would also mean overtaking the US in science tech and military. Hence the many meetings with Kissinger earlier, Kissinger meeting Putin ect.
Trump needs to seperate Russia and China. Russia is no threat to the US whereas economicaly China is the only threat the US faces (apart from itself).

Back to making America great again and gas. Saudi Arabia has oil (supposedly) and US has shale gas. Oil and gas are complementary to each oither rather than competitors. Gas prices are basicaly set by oil prices. The main competitors to US shale is Russian gas and Pars, both of which can be piped to where the gas is in demand. In my reading of Trump, which may not be right, Pars would have to be either US controlled/owned or unable to pipe gas.
The option there I guess is joint US Saudi control of pars.

All depends on what Trump is behind the facade.

Thoughts ??

Daniel | Nov 14, 2017 10:27:25 PM | 91
Perimetr @89

I would agree that it would be impossible to mistake a powerful hydrogen bomb for any sort of conventional bomb. That's not what is being proposed here, though.

Do you know about the "Davy Crocket" mini-nuke from the 1950s?

https://www.youtube.com/watch?v=eiM-RzPHyGs

Those were even carried in backpacks by the 1950s version of Special Ops soldiers. Since then, fission-fusion hybrid, mini-hydrogen and neutron bombs have been made. As I'm sure you'd agree, military technology is always far beyond what the public is allowed to know.

Like today's B61-12, the Davy Crockets could be dialed to produce explosions of greatly varying power.

https://www.globalsecurity.org/wmd/systems/b61.htm

The Soviet Union actually developed nuclear bullets!

https://southfront.org/nuclear-bullets-dangerous-soviet-project/

So, the range of even publicly known nuclear weapons is pretty great. Some of the explosions recorded in the past few years can be clearly seen as INCREASING in power as the explosion progresses. Though not impossible in some sort of thermobaric bomb, that is a signature of many nuclear bombs.

heath | Nov 14, 2017 10:31:40 PM | 92
Point 1 why would Israel give up its nukes?
Alaric | Nov 14, 2017 10:36:12 PM | 93
I don't buy this at face value. I suspect MBS used the threat of war on Lebanon as a distraction from his counter coup. The possibility of battle with Iran is a fear factor he exploits to stop a revolt against him.

The leaked plan and leaked Israeli wire to its embassies are both quite suspicious. Its possible the Israelis are helping MBS. It's just as possible that MBS' foes in Saudi, or the CIA, are leaking these things to embarrass MBS. All are in fact embarrassing to MBS. I don't know but everything about this is surreal. For all we know MBS' moves are just an aid to finish the counter coup and to drive up oil prices. Saudi needs cash. We should expect the very wealthy Saudi opposition to strike back in the media, and it's possible the intelligence community and state department support different sides here.

LNG man | Nov 14, 2017 10:41:32 PM | 94
To enable LNG, Kushner's army [US_I:SA] has been designed to colonize the Syria:Russian: Yemen:Qatar:Iran:Libya (SRYQIL) oil, gas competition, so that LNG can be port to port marketed. All eyes on LNG.

Posted by: LNG man |


Yeah, Right | Nov 14, 2017 10:47:39 PM | 95
@92 "Point 1 why would Israel give up its nukes?"

They wouldn't.

The Israelis might be willing to discuss this - maybe - but only if those discussions are "decoupled" from the issue of the Saudis altering the 2003 Saudi Peace Initiative so that Israel gets everything it wants, while the only thing the Palestinians get is their marching orders.

The Israelis will then pocket that neutered Saudi Peace Initiative (in essence, it would become the Netanyahu Land Grab Initiative, with the Saudis in the role of stenographer) and then proceed to endlessly delay, deflect and derail any negotiations towards a Middle East Nuclear Free Zone.

Something for nothing, which MbS ending up holding that Big Ol' Bag Of Nothin'.

Peter AU 1 | Nov 14, 2017 11:11:29 PM | 96
LNG man | Nov 14, 2017 10:41:32 PM | 94

LNG port to port is not competitive with Russian piped gas. From what I can see, US needs to either ensure they have control of alternative piped gas, or try and shut down pipes so they can flog shale LNG.

Stumpy | Nov 14, 2017 11:31:52 PM | 97
b's post here is articulate and cogent as ever and I cast no aspersion at him or fellow commenters. However, as far as I'm concerned the KSA-Israel drawing up these "accords" is all a pile of sabre-rattling and poseurism crap.

Anything touched by the KSA is a pile of B.S. e.g. the Qatar ultimatum. Anything said by Israel fits the purpose at the time if it varies with their expansionist/farengi code of conduct.

The only way I see any of this playing out is an interlocking web of extortion that compels the two weaker parties to conform to the will of the stronger, in my opinion Israel.

Who knows if Lebanon will cower under the threat but if the Iranian alliance bares its teeth, let's remember that their reach is likely global and likely already in place at key targets. The stupidity of launching a shooting war in the ME with Iran and Israel involved does not mean that someone will not dance the situation right up to the brink.

It's the Asian thrust we should consider, from China to Turkey via Russia. I would guess, and only guess, that Russia and China would most likely wait it out and pick up the pieces during ending credits, or become minimally involved only to prevent a breakout. Can't assume anything here.

Wouldn't it be interesting if the US/KSA/IZ trio throws everything into beating Iran only to have another player open a play to seize the Pacific? Pretty wild.

Debsisdead | Nov 15, 2017 12:40:03 AM | 98
Posted by: Stumpy | Nov 14, 2017 11:31:52 PM |

I reckon you're correct Stumpy. Over the years there have been many "amerika will attack Iran" scares - all have passed by without major incident despite the concerns of MoA-ites that "anything could happen in the next two hours"
It is highly likely that eventually some greedy opportunist with a hat size about 4 times larger than his dick measurement will eventually have a crack at taking down Iran, but I don't reckon we're anywhere near that point yet.

As far as 'world peace' & justice for suffering indigenous people goes, today I'm much more concerned about events in Zimbabwe.
Hopefully the military is acting out in order to protect the socialist revolution from greedies & nepotists, and not using the occasion of President Mugabe's age disorders to subvert the revolution by aiding africacom and the world bank oecd mob to boost the amerikan empire's consumption of one of the few remaining independent sovereign entities still surviving on this old rock.

Whatever does happen in Zimbabwe over the next week, few will be paying much interest whilst corporate media distracts so many with tall tales of the dissolute instincts of poor people everywhere.

Hmpf | Nov 15, 2017 2:01:08 AM | 99
@57

Utter nonsense! Large scale conventional; exploding tightly stacked munitions in a large ammo dump by means of sympathetic detonation. Large quantities of explosives going off must create a mushroom cloud - this is gas dynamics. Afterburning in the rising cloud results from hot oxygen-deficient stythe mixing with air which in return helps sustaining the upward momentum of the plume.

somebody | Nov 15, 2017 2:06:02 AM | 100
Posted by: Debsisdead | Nov 15, 2017 12:40:03 AM | 98

Look, Mugabe is 93. Have you ever been around anyone that age? It is very likely that he is not in any power, but the people who wake him up.

According to German media, Mugabe's wife made him dismiss the vice chancellor who probably had been doing the real work.

So all the army might be doing is to prevent the family from taking over.

[Nov 11, 2017] If The Saudi Arabia Situation Doesn't Worry You, You're Not Paying Attention Zero Hedge

Nov 11, 2017 | www.zerohedge.com

This pivotal agreement allowed KSA to secretly recycle its surplus petrodollars back into US Treasuries while receiving US military protection in exchange. The secret was kept for 41 years, only recently revealed in 2016 due to a Bloomberg FOIA request:

The basic framework was strikingly simple. The U.S. would buy oil from Saudi Arabia and provide the kingdom military aid and equipment. In return, the Saudis would plow billions of their petrodollar revenue back into Treasuries and finance America's spending.

It took several discreet follow-up meetings to iron out all the details, Parsky said. But at the end of months of negotiations, there remained one small, yet crucial, catch: King Faisal bin Abdulaziz Al Saud demanded the country's Treasury purchases stay "strictly secret," according to a diplomatic cable obtained by Bloomberg from the National Archives database.

"Buying bonds and all that was a strategy to recycle petrodollars back into the U.S.," said David Ottaway, a Middle East fellow at the Woodrow Wilson International Center in Washington. But politically, "it's always been an ambiguous, constrained relationship."

( Source )

The essence of this deal is pretty simple. KSA wanted to be able to sell its oil to its then largest buyer, the USA, while also having a safe place to park the funds, plus receive military protection to boot. But it didn't want anybody else, especially its Arab neighbors, to know that it was partnering so intimately with the US who, in turn, would be supporting Israel. That would have been politically incendiary in the Middle East region, coming as it did right on the heels of the Yom Kipper War (1973).

As for the US, it got the oil it wanted and – double bonus time here – got KSA to recycle the very same dollars used to buy that oil back into Treasuries and contracts for US military equipment and training.

Sweet deal.

Note that this is yet another secret world-shaping deal successfully kept out of the media for over four decades. Yes Virginia, conspiracies do happen. Secrets can be (and are routinely) kept by hundreds, even thousands, of people over long stretches of time.

Since that key deal was struck back in the early 1970s, the KSA has remained a steadfast supporter of the US and vice versa. In return, the US has never said anything substantive about KSA's alleged involvement in 9/11 or its grotesque human and women's rights violations. Not a peep.

Until recently.

Then Things Started To Break Down

In 2015, King Salman came to power. Things began to change pretty quickly, especially once he elevated his son Mohammed bin Salman (MBS) to a position of greater power.

Among MBS's first acts was to directly involve KSA into the Yemen civil war, with both troops on the ground and aerial bombings. That war has killed thousands of civilians while creating a humanitarian crisis that includes the largest modern-day outbreak of cholera, which is decimating highly populated areas. The conflct, which is considered a 'proxy war' because Iran is backing the Houthi rebels while KSA is backing the Yemeni government, continues to this day.

Then in 2016, KSA threatened to dump its $750 billion in (stated) US assets in response to a bill in Congress that would have released sensitive information implicating Saudi Arabia's involvement in 9/11. Then-president Obama had to fly over there to smooth things out. It seems the job he did was insufficient; because KSA-US relations unraveled at an accelerating pace afterwards. Mission NOT accomplished, it would seem.

In 2017, KSA accused Qatar of nefarious acts and made such extraordinary demands that an outbreak of war nearly broke out over the dispute. The Qatari leadership later accused KSA of fomenting 'regime change', souring the situation further. Again, Iran backed the Qatar government, which turned this conflict into another proxy battle between the two main regional Arab superpowers.

In parallel with all this, KSA was also supporting the mercenaries (aka "rebels" in western press) who were seeking to overthrow Assad in Syria -- yet another proxy war between KSA and Iran. It's been an open secret that, during this conflict, KSA has been providing support to some seriously bad terrorist organizations like Al-Qaeda, ISIS and other supposed enemies of the US/NATO. (Again, the US has never said 'boo' about that, proving that US rhetoric against "terrorists" is a fickle construct of political convenience, not a moral matter.)

Once Russia entered the war on the side of Syria's legitimate government, the US and KSA (and Israel) lost their momentum. Their dreams of toppling Assad and turning Syria into another failed petro-state like they did with Iraq and Libya are not likely to pan out as hoped.

But rather than retreat to lick their wounds, KSA's King Salman and his son are proving to be a lot nimbler than their predecessors.

Rather than continue a losing battle in Syria, they've instead turned their energies and attention to dramatically reshaping KSA's internal power structures:

Saudi Arabia's Saturday Night Massacre

For nearly a century, Saudi Arabia has been ruled by the elders of a royal family that now finds itself effectively controlled by a 32-year-old crown prince, Mohammad bin Salman. He helms the Defense Ministry, he has extravagant plans for economic development, and last week arranged for the arrest of some of the most powerful ministers and princes in the country.

A day before the arrests were announced, Houthi tribesmen in Yemen but allied with Iran, Saudi Arabia's regional rival, fired a ballistic missile at Riyadh.

The Saudis claim the missile came from Iran and that its firing might be considered "an act of war."

Saudi Arabia was created between the two world wars under British guidance. In the 1920s, a tribe known as the Sauds defeated the Hashemites, effectively annexing the exterior parts of Saudi Arabia they did not yet control. The United Kingdom recognized the Sauds' claim shortly thereafter. But since then, the Saudi tribe has been torn by ambition, resentment and intrigue. The Saudi royal family has more in common with the Corleones than with a Norman Rockwell painting.

The direct attack was undoubtedly met with threats of a coup. Whether one was actually planned didn't matter. Mohammed Bin Salman had to assume these threats were credible since so many interests were under attack. So he struck first, arresting princes and ex-minsters who constituted the Saudi elite. It was a dangerous gamble. A powerful opposition still exists, but he had no choice but to act. He could either strike as he did last Saturday night, or allow his enemies to choose the time and place of that attack. Nothing is secure yet, but with this strike, there is a chance he might have bought time. Any Saudi who would take on princes and clerics is obviously desperate, but he may well break the hold of the financial and religious elite.

( Source )

This 32 year-old prince, Mohammed bin Salman has struck first and deep, completely upending the internal power dynamics of Saudi Arabia.

He's taken on the political, financial and religious elites head on. For example, pushing through the decision to allow women to drive; a provocative move designed to send a clear message to the clerics who might oppose him. That message is: "I'm not fooling around here."

This is a classic example of how one goes about purging the opposition when either taking over a government after a coup, or implementing a big new strategy at a major corporation. You have to remove any possible opponents and then install your own loyalists. According the Rules for Rulers , you do this by diverting a portion of the flow of funds to your new backers while diminishing, imprisoning or killing all potential enemies.

So far, Mohammed bin Salman's action plan is par for the course. No surprises.

The above article from Stratfor (well worth reading in its entirety) continues with these interesting insights:

The Iranians have been doing well since the nuclear deal was signed in 2015. They have become the dominant political force in Iraq . Their support for the Bashar Assad regime in Syria may not have been enough to save him, but Iran was on what appears to be the winning side in the Syrian civil war. Hezbollah has been hurt by its participation in the war but is reviving, carrying Iranian influence in Lebanon at a time when Lebanon is in crisis after the resignation of its prime minister last week.

The Saudis, on the other hand, aren't doing as well. The Saudi-built anti-Houthi coalition in Yemen has failed to break the Houthi-led opposition. And Iran has openly entered into an alliance with Qatar against the wishes of the Saudis and their ally, the United Arab Emirates.

Iran seems to sense the possibility of achieving a dream: destabilizing Saudi Arabia , ending its ability to support anti-Iranian forces, and breaking the power of the Sunni Wahhabis. Iran must look at the arrests in Saudi Arabia as a very bad move. And they may be. Mohammad bin Salman has backed the fundamentalists and the financial elite against the wall.

They are desperate, and now it is their turn to roll the dice. If they fall short, it could result in a civil war in Saudi Arabia. If Iran can hit Riyadh with missiles, the crown prince's opponents could argue that the young prince is so busy with his plans that he isn't paying attention to the real threat. For the Iranians, the best outcome is to have no one come out on top.

This would reconfigure the geopolitics of the Middle East, and since the U.S. is deeply involved there, it has decisions to make.

So given Yemen, Syria, and its recent domestic purges, Saudi Arabia is in turmoil. It's in a far weaker position than it was a short while ago.

This leaves the US in a far weaker regional position, too, at precisely the time when China and Russia are increasing their own presence (which we'll get to next).

But first we have to discuss what might happen if a civil war were to engulf Saudi Arabia. The price of oil would undoubtedly spike. In turn, that would cripple the weaker countries, companies and households around the world that simply cannot afford a higher oil price. And there's a lot of them.

Financial markets would destabilize as long-suppressed volatility would explode higher, creating horrific losses across the board. That very few investors are mentally or financially prepared for such carnage is a massive understatement.

So..if you were Saudi Arabia, in need of helpful allies after being bogged down in an unwinnable war in Yemen, just defeated in a proxy war in Syria, and your longtime 'ally', the US, is busy pumping as much of its own oil as it can, what would you do?

Pivot To China

Given its situation, is it really any surprise that King Salman and his son have decided to pivot to China? In need of a new partner that would align better with their current and future interests, China is the obvious first choice.

So in March 2017, only a very short while after Obama's failed visit, a large and well-prepared KSA entourage accompanied King Salman to Beijing and inked tens of billions in new business deals:

China, Saudi Arabia eye $65 billion in deals as king visits

Mar 16, 2017

BEIJING (Reuters) - Saudi Arabia's King Salman oversaw the signing of deals worth as much as $65 billion on the first day of a visit to Beijing on Thursday, as the world's largest oil exporter looks to cement ties with the world's second-largest economy.

The deals included a memorandum of understanding (MoU) between giant state oil firm Saudi Aramco and China North Industries Group Corp (Norinco), to look into building refining and chemical plants in China.

Saudi Basic Industries Corp (SABIC) and Sinopec, which already jointly run a chemical complex in Tinajin, also agreed to develop petrochemical projects in both China and Saudi Arabia.

Salman told Xi he hoped China could play an even greater role in Middle East affairs, the ministry added.

Deputy Chinese Foreign Minister Zhang Ming said the memorandums of understanding and letters of intent were potentially worth about $65 billion, involving everything from energy to space.

( Source )

This was a very big deal in terms of Middle East geopolitics. It shook up many decades of established power, resulting in a shift away from dependence on America.

The Saudis arrived in China with such a huge crowd in tow that a reported 150 cooks had been brought along to just to feed everyone in the Saudi visitation party.

The resulting deals struck involved everything from energy to infrastructure to information technology to space. And this was just on the first visit. Quite often a brand new trade delegation event involves posturing and bluffing and feeling each other out; not deals being struck. So it's clear that before the visit, well before, lots and lots of deals were being negotiated and terms agreed to so that the thick MOU files were ready to sign during the actual visit.

The scope and size of these business deals are eye catching, but the real clincher is King Salman's public statement expressing hope China will play " an even greater role in Middle East affairs."

That, right there, is the sound of the geopolitical axis-tilting. That public statement tells us everything we need to know about the sort of change the Salman dynasty intends to pursue.

So it should have surprised no one to hear that, in August this year, another $70 billion of new deals were announced between China and KSA . The fanfare extolled that Saudi-Sino relations had entered a new era, with "the agreements covering investment, trade, energy, postal service, communications, and media."

This is a very rapid pace for such large deals. If KSA and China were dating, they'd be talking about moving in together already. They're clearly at the selecting furniture and carpet samples stage.

As for the US? It seems KSA isn't even returning its calls or texts at this point.

You Ain't Seen Nothing Yet...

All of the above merely describes how we arrived at where things stand today.

But as mentioned, the power grab underway in KSA by Mohammed bin Salman is unfolding in real-time. Developments are happening hourly -- while writing this, the very high-profile Prince Bandar bin Sultan (recent head of Saudi Intelligence and former longtime ambassador to the US) has been arrested .

The trajectory of events is headed in a direction that may well end the arrangement that has served as the axis around which geopolitics has spun for the past 40 years. The Saudis want new partners, and are courting China hard.

China, for reasons we discuss in Part 2 of this report, has an existential need to supplant America as Saudi Arabia's most vital oil customer.

And both Saudi Arabia and China are inking an increasing number of strategic oil deals with Russia. Why? We get into that in Part 2, too -- but suffice it to say, in the fast-shifting world of KSA foreign policy, it's China and Russia 'in', US 'out'.

Maybe not all the way out, but the US clearly has lost a lot of ground with KSA over the past few years. My analysis is that by funding an insane amount of shale oil development, at a loss, and at any cost (such as to our biggest Mideast ally) the US has time and again displayed that our 'friendship' does not run very deep. In a world where loyalty counts, the US has proved a disloyal partner. Can China position itself to be perceived of as a better mate? When it comes to business, I believe the answer is 'yes.'

In Part 2: The Oil Threat we couple these developments with China and Russia's recent efforts to drop the dollar from trade, especially when purchasing oil, and clearly see the unfolding of the biggest new driver of the world's financial, monetary and geopolitical arrangements in 50 years.

We also explain why, unless something very dramatically changes in either the supply or demand equation for oil, and soon, we can now put a timeline in place for when the great unraveling begins. Somewhere between the second half of 2018 and the end of 2019 oil will dramatically increase in price and that will shake the foundations of the global mountain of debt and its related underfunded liabilities. Think 9.0 on the financial Richter scale.

Let me be blunt - you have to have your preparations done before this happens. You really, really want to be a year early on this (at least). When it starts happening, the breakdown will progress faster than you can react.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access)

Escrava Isaura -> bobcatz , Nov 11, 2017 1:59 PM

The reason that the world is moving towards China this fast, it's because of Trump.

Trump is too radical, and that's why these nations are running for the exit.

"Trump's policies are taking a whole bunch of countries that were already worried about America's commitment to lead and America's commitment to its alliances. China also wants to be seen now as promoting globalization, promoting free trade, particularly for countries in Asia that don't want to count on the U.S." -- Ian Bremmer

TeethVillage88s -> Escrava Isaura , Nov 11, 2017 2:31 PM

Wot about Dick Cheney, Alberto Gonzales, Don Rumsfeld, G.W.B., Weapons of Mass Destruction in Iraq, Colin Powell, John Bolton, Condaleza Rice, Samantha Powers, Kagan, Susan Rice, Hilary Clinton, Clinton Foundation, noecons, McCain, Lindsey Graham, Phil Gramm, TBTF

Stuck on Zero -> williambanzai7 , Nov 11, 2017 1:09 PM

Grab your popcorn and watch to see whether the New Ottoman or New Persian Empire emerges the victor.

Grimaldus -> Stuck on Zero , Nov 11, 2017 2:08 PM

You seem to know the difference, a very basic one at that but the author does not.

"In 2017, KSA accused Qatar of nefarious acts and made such extraordinary demands that an outbreak of war nearly broke out over the dispute. The Qatari leadership later accused KSA of fomenting 'regime change', souring the situation further. Again, Iran backed the Qatar government, which turned this conflict into another proxy battle between the two main regional Arab superpowers."

Iran is Arab? I don't think so.

I tend to be skeptical when I see "breathless enthusiasm" touting the sky is falling geopolitically (which it always is ) and then the "Iran is Arabs" thing just killed it for me.

Oh well. I apologize for nit-picking and will get some popcorn.

Escrava Isaura -> Grimaldus , Nov 11, 2017 2:32 PM

That aside, the article still pretty good.

The core issues for the American living standards are:

The price of oil

And the Petrodollar

Lose control of these two and American living standard is over.

The only alternative left is force -- war.

apoplectic query , Nov 11, 2017 11:54 AM

Look on the bright side. Many of those rounded up were funding corrupt polititians in DC. And ISIS. And terrorist acts in the US, like Vegas and 911.

2banana -> apoplectic query , Nov 11, 2017 12:05 PM

"the kingdom also provides with full enthusiasm 20 percent of the cost of Hillary Clinton's campaign,"

-- Prince Mohammed bin Salman, 2016

The Clinton Foundation, which is chaired by both Hillary and her husband Bill Clinton, disclosed in 2008 that it had accepted up to US$25 million from the Saudi Kingdom in the same year.

Other foreign governments who have donated money to the Clintons include Norway, Kuwait, Qatar, Brunei, Oman, Italy and Jamaica, which together donated around US$20 million.

fearnot -> DelusionalGrandeur , Nov 11, 2017 12:18 PM

Now I see the big picture. The fuse to the mother of all "Truth bombs" as Bill Holter coined has just been lit and the fuse is short. Until now I personally never really saw the Rockefeller- Langley clan and its comrades all getting cleaned out with the fall of Petro Dollar. But it is the only way. And with that the NY Fed as Dudley knows will lose its narco money and means to support the dollar and its terror on mankind. The fall of Petro Dollar is the only means to the end of the evil and the evil doers of the last 40 years perpetrated by the psychopaths using the petro dollar as its fuel to the weapon of mass destruction. Alice in Wonderland America is about to go Mad Max.

The 1 hour Perpetual Asset interview "The Saudi Straw That Broke the Petro Dollar's Back" with Jim Willie on October 10 is well worth listening. https://m.youtube.com/watch?v=yY9j6vvCFE0 The conclusion laid out in interview is simple and brilliant, Langley (Bush-Clinton- Narco-CIA-Banker-Neo-Psycopaths) and the clear headed leaders in the Pentagon are having it. Peacock MBS caught in the middle trying to save his own neck and Kingdom is collateral damage.

After listening to interview, I ran across two zero hedge links below. The first article makes some very poignant and interesting points that reinforce the dollars end game that we are approaching. The markets have not caught on yet but will with a vengeance.

In the second article taking Bandar out must worry the Bush-Clinton- Narco-CIA-Banker-Neo-Psycopaths more than we can imagine. The last two paragraphs of article sum it up nicely. Time to pay the piper & the devil wants souls. All the gold, wealth, and power won't save them. From the looks of Trump/Putin in Vietnam not to mention Trump's warm welcome from Xi in China the heads of state seem jubilant in what is quickly spinning out of control for the psychopaths of debt, destruction, conquer, divide and slavery. Trump "strangely" pointed out that China and US need to jointly oversee security in Afghanistan which of course will be necessary to police while eliminating 1300 tons of opium production.

The PPT NYFed's actions in paper gold market this week seemed desperate. GS has to be feeling the heat.

1- Fischer and now Dudley resign. Hopeful to hear the latter is leaving BIS as well.

2- Powell a Carlye Group flunky was a brilliant FED appointment to appear to be status quo to ignorant market but is more likely a double agent than Bush butt buddy.

3- expect Cohn to give his resignation soon.

4- Expect NY Attorney General Eric Tradd Schneiderman to resign or do a 180

5- expect David A. Markowitz hired by Goldman in 2010 from the New York Attorney General's office to resign. He defended GS in their NYFed collusion/corruption case

http://www.zerohedge.com/news/2017-11-10/end-end-history-us-mid-east-pol...

http://www.zerohedge.com/news/2017-11-10/saudi-deep-state-prince-bandar-...

SoDamnMad -> otschelnik , Nov 11, 2017 2:11 PM

I have heard for almost a decade that KSA has been pumping some of their fields too fast requiring huge amounts of seawater to be pumped in to get the flow rates to stay high. Some oil professionals who know this also scoffed at the huge Aramco IPO value saying the oil isn't all there. Not sure what will happen with the teams set to rumble but I will bet Israel will make the first strike to use the element of surprise. I hope the fleet is ready and gets the carriers out of the Persion Gulf.

silverer -> Cluster_Frak , Nov 11, 2017 1:16 PM

Actually, the Saudi group is just climbing onto another life boat. They're the ones that made the US Ponzi possible by nodding to the US dollar as the reserve currency many years ago. They will force the US to face the music holding a 20 trillion debt. Now China gets a 20 to 30 year fiat ride like the US had. If they're careful, it could last much longer. In the US, there's nothing left floating to hang onto. Maybe some fracked oil for awhile, but it will have to go at a bargain price. The Saudis and Russia can cover a huge amount of the world's consumption. Big bank loans are piled all over the entire US economy. In order for the banks to save themselves, they've weighted down even the grunts at the bottom with eight year car loans which should have never been issued. With everything underwater, and the inability to export inflation by holding the reserve currency exclusively, the US is in for a major ass whooping. Better learn some basic camping skills.

Herdee , Nov 11, 2017 12:26 PM

Alasdair Macleod shines light on the current situation:

https://www.silverdoctors.com/gold/gold-news/london-analyst-first-the-cr...

[Nov 10, 2017] Kingdom Of Fear Saudi Arabia On Lockdown OilPrice.com

Nov 10, 2017 | oilprice.com

It is difficult to predict where all this will lead. Some, like Dennis Gartman, warn that although the immediate impact of the latest Saudi events is positive for prices, it will turn negative in the longer run as this sort of instability is unsustainable. Others, such as Morgan Stanley's commodity analysts, are revising upwards their oil price forecasts, encouraged by these same events. OPEC's Vienna meeting, where the cartel will discuss the extension of the oil production cut it agreed almost a year ago, is less than a month away. There are voices suggesting that Saudi Arabia could make a U-turn on its support for the deal in light of the now higher prices resulting from its internal tumult and the spike in tensions with Iran.

In the meantime, the Ritz-Carlton in Riyadh is fully booked until February, as per the hotel's website, and all guests were asked to leave or had their reservations cancelled.

[Nov 10, 2017] Why Saudi Arabia's Crackdown Sent Oil Prices Soaring OilPrice.com

Nov 10, 2017 | oilprice.com

The short-term outlook was bullish: MBS is seen as a key supporter for the OPEC policy of measured production cuts, and his consolidation of power means the cuts are likely to be maintained and extended through the rest of next year.

Conversely, rising prices may also signal increase instability in Saudi Arabia: there are signs that the crackdown may have been meant to stave off a more substantive challenge to MBS from upper-echelon figures in the Saudi hierarchy. The uncertainty in future Saudi oil policy has created a bull market. While MBS is known to favor an extension of production cuts, the turmoil within the Saudi ruling elite could signal a shift in policy in advance of the November 30 OPEC meeting in Vienna, where an extension to production cuts is expected to dominate the agenda

[Nov 10, 2017] Will Backlash Against Prince Purge Begin Within Military The American Conservative by Michael Horton

Don't forget Yemen war is expensive and oil ins still hovering around $60 not $80 needed for KSA to balance the budget. . KSA might run out of money just about the same time the old king dies. Going to be an interesting transition
Notable quotes:
"... The son of the eighty-one year old King Salman, Muhammad bin Salman, known as MbS, has amassed more power in the last two years than any member of the House of Saud, including its kings. The young prince, who before his father came to power held no position of significance, is now the heir to the throne, minister of defense, chairman of the newly launched "anti-corruption" committee, and, by royal decree, the man in charge of Saudi Arabia's primary source of wealth, Saudi Aramco. ..."
Nov 10, 2017 | www.theamericanconservative.com

Will Backlash Against Prince Purge Begin Within Military? Firing popular Saudi guard leader may have been a critical miscalculation. November 10, 2017 Saudi security forces on parade, 2009. Credit: AlJazeera/Omar Chatriwala/Creative Commons Muhammad bin Salman, the 32-year-old crown prince of Saudi Arabia, has been called bold, brash, and even an anti-corruption crusader in the press this week. But his arrest of hundreds of potential rivals, including 11 royal princes and many influential Saudi businessmen, can only be described as a pre-emptive coup.

If this was his aim, however, his firing of one prince -- the head of the Saudi Arabian National Guard -- may have been his fatal mistake.

The son of the eighty-one year old King Salman, Muhammad bin Salman, known as MbS, has amassed more power in the last two years than any member of the House of Saud, including its kings. The young prince, who before his father came to power held no position of significance, is now the heir to the throne, minister of defense, chairman of the newly launched "anti-corruption" committee, and, by royal decree, the man in charge of Saudi Arabia's primary source of wealth, Saudi Aramco.

... ... ...

Muhammad bin Salman's betrayal of decades of rule by consensus and consultation in favor of determined autocracy has undoubtedly made enemies of hundreds, if not thousands, of wealthy and influential princes and businessmen. These princes and businessmen are unlikely to wait for their invitation to the Ritz Carlton.

Michael Horton is a senior analyst for Arabian affairs at the Jamestown Foundation. He is a frequent contributor to J ane's Intelligence Review and has written for numerous other publications including: The National Interest The Economist , and West Point's CTC Sentinel.

[Nov 08, 2017] Don't Believe the 'Reformer' Hype About MBS The American Conservative

Nov 08, 2017 | www.theamericanconservative.com

Craighead) Rosie Bsheer warns Westerners not to fall for Mohammed bin Salman's reformer act:

Even as Western governments and media outlets sing his praises, the young crown prince is viewed domestically as an incompetent and corrupt ruler who hides behind liberalism, tolerance and anti-corruption rhetoric [bold mine-DL]. This view is shared by ruling members of the monarchy, economic elites and the population at large, who see bin Salman as someone who has disturbed the status quo for the sake of massive personal enrichment and political aggrandizement.

Many Westerners are often eager to promote individual foreign leaders in as "reformers" or "moderates" so that it makes it easier to justify a close U.S. relationship with these leaders. Few would openly argue that the U.S.-Saudi relationship should remain the same or become even closer if the next king is a reckless incompetent who is actively destabilizing the surrounding region. For that reason, there is great reluctance on the part of supporters of the relationship to judge MBS on what he has actually done rather than what he says he wants to do in the future.

Bsheer comments on MBS' recent power grab and how it benefits him and his father:

These arrests, cloaked in populist rhetoric trumpeting a purported campaign to end corruption, actually aim to silence and disempower, if not to completely purge, bureaucrats and members of the ruling family who hold economic and political power and are still not on board with Salman's rise to power.

The arrests benefit Salman in two ways. Politically, they upend the balance of power in the Saudi regime, leaving Salman with few rivals. Financially, they make it easier to claim his rivals' assets as his own, part of a two-year effort to consolidate economic power.

When stripped of their official justifications, we can see that these actions are not those of a reformer at all. They are the actions of a despot engaging in a massive abuse of power. If an adversarial authoritarian regime conducted such a purge and justified it in the same way, the near-unanimous response from the West would be criticism and ridicule, and that response would be appropriate. When MBS and his father do it, they are embraced by the president and their justification is taken at face value by far too many news outlets.

At the very least, MBS and his father should be subject to the same skepticism and criticism as any other authoritarian government. We should be wary of accepting the "reformer" credentials of a person who has so far distinguished himself for his hubris and incompetence while compiling a record of failure and repeated violations of international law. Perhaps we could refrain from labeling the man who is helping to starve millions of people to death as a "moderate." Ideally, the U.S. should take the opportunity provided by MBS' rise to recognize that the relationship with the Saudis has become a liability and put as much distance between us and Riyadh as possible.

The Terror , says: November 8, 2017 at 12:10 pm

The world has plenty of experience – all too much – with "reformers" who arrest and kill their rivals, and who commit mass atrocities against civilian populations, as MBS is doing in Yemen.

Our "friendships" in the Middle East have damaged and soiled us more than any foreign relationships in our history that I can think of.

At least when we "opened" to China we did it fairly clear-eyed, and one could credibly argue that it was necessary and served our national interest. But our sick, codependent relationships with Saudi Arabia and Israel have only entangled us in pointless messes, put America itself at risk, fouled us morally, and made us simultaneously a frightening, destabilizing force on the world stage, and an international laughingstock.

When and where will it end? I had some hope that Trump might do it, but so far he seems to be doubling down on the Bush the Younger / Obama stupidity.

[Nov 07, 2017] Moon of Alabama: Saudi Arabia This 'Night Of The Long Knives' Is A Panic-Fueled Move

Nov 07, 2017 | marknesop.wordpress.com

et Al , November 6, 2017 at 8:04 am

Moon of Alabama: Saudi Arabia – This 'Night Of The Long Knives' Is A Panic-Fueled Move
http://www.moonofalabama.org/2017/11/saudi-purge.html

Yesterday the ruling Salman clan in Saudi Arabia executed a Night of the Long Knives cleansing the state of all potential competition. The Saudi King Salman and his son Clown Prince Mohammad bin Salman initiated a large arrest wave and purge of high ranking princes and officials. Part of this internal coup was the confiscation of huge financial estates to the advantage of the Salman clan.

The earlier forced resignation of the Lebanese Prime Minister Saad al-Hariri is probably related to the last night's events. The Israeli Prime Minister Netanyahoo endorsed the resignation. This guarantees that Hariri will never again be accepted in a leading role in Lebanon .
####

Plenty more at the link and don't forget to check the comments, of which PaveWay IV & guidoamm are enlightening, the latter: I know from someone that, till last month, managed a fleet of personal jets for the great and the good in Saudi Arabia, that there is an exodus under way. The great and the good are literally taking the cuckoo clocks onboard their 380s and relocating to their foreign residences. Owners of the fleets have not been paying their bills for months neither to the crews, nor to the management nor, indeed, to the facilities.
####

Just what Europe needs, a bunch of Saudi princes permanently flaunting themselves away from home in various capitals.

saskydisc , November 6, 2017 at 1:56 pm
Saudi declares war on Lebanon, by claiming that Lebanon declares war on Saudi Arabia . Given that the Saudis have made their alliance with Israel open, this is a threat to the Lebanese government and society, and a dare to the Russian government regarding its anti-ISIS and anti-Al Qaeda policy.
marknesop , November 7, 2017 at 8:28 am
Not to mention the S-400 sale.

[Nov 05, 2017] The sale of ARAMCO is a sign of desperation in the Saudi regime, not strength

Nov 05, 2017 | www.moonofalabama.org

Anonymous | Nov 4, 2017 1:33:00 PM | 18

The sale of ARAMCO is a sign of desperation in the Saudi regime, not strength. They know they are running on empty and will have to use whatever resources they have already to stay in power. The forced reduction in oil price was ostensably aimed at Russia, but it has also crippled Saudi too. Qui bono? A forced sale of ARAMCO will lead to them getting below par in a forced sale - to whom? Zionist central bankers?

The Zionists have seen rapprochement between Turkey and Russia, now Saudi and Russia so they will be desperate. What better way to stir things up than linking Saudi in as a primary driver for the Lebanese / Hezbollah position, with the hope of splitting the Russian rapprochment. However, the reality is that Hezbollah/Lebanon is not an existential national security threat to Saudi, but it is to Israel. And that is the elephant in the room again.

Israel was so close to seeing all its regional enemies embroiled in terrorism and social/economic disruption - Iran, Iraq, Syria, Saudi, Turkey, Lebanon - with the prospect of making great gains (for national security purposes natch) in the Golan where Zionist proxy forces have been guarding territory for it. And now it looks to be fading dream. Even Druze living in the Occupied Golan have warned the IDF that they will defend their co-religionists in Syria against ISIS/whatever.

Destruction of Hezbollah/Lebanon only benefits Israel.


Peter AU 1 | Nov 4, 2017 12:28:08 PM | 10
b @2

There was talk not long ago of China buying the full 5% of Aramco. Not sure how much was in that, but possibly why US is backing Saudi in their new Lebanon adventure. The US backs Saudi's in Lebanon and Saudi does not sell Aramco to China?

pantaraxia | Nov 4, 2017 6:29:40 PM | 61
@54 Lozion

In Shocking Purge, Saudi King Arrests Billionaire Prince Bin Talal, Others In Cabinet Crackdown
http://www.zerohedge.com/news/2017-11-04/shocking-purge-saudi-king-arrests-billionaire-prince-bin-talal-others-anti-money-lau

In a shocking development, Saudi press Al Mayadeen reported late on Saturday that prominent billionaire, member of the royal Saudi family, and one of the biggest shareholders of Citi, News Corp. and Twitter - not to mention frequent CNBC guest - Al-Waleed bin Talal, has been arrested for corruption and money laundering charges, along with several other top officials. Among those fired and/or arrested are also the head of National Royal Guards, Miteb Bin Abdullah, the Minister of Economy and Planning, Adel Fakeih, and Admiral Abdullah bin Sultan bin Mohammed Al-Sultan, the Commander of the Saudi Naval Forces

snip

the heads of the main three Saudi owned TV networks were arrested, Alwalid Bin Talal (Rotana), Walid Al Brahim (MBC), Saleh Kamel (ART)

snip

This could be a service to Trump, who hates Al-Walid: the two fought it out on twitter during the campaign although Al-Walid tried to reconcile with Trump after his election but to no avail.

snip

To summarise today's even more bizarre Saudi news day:
-Trump urges Aramco IPO
-Lebanon PM resigns
-Saudis intercept missile
-Major cabinet reshuffle; 3 Saudi princes - who run the anti-graft committee - arrested for money-laundering
-A total of 11 princes, >30 ministers arrested on corruption

[Oct 24, 2017] Saudi Arabia is a weak state in actual capabilities in the world

Oct 24, 2017 | turcopolier.typepad.com

Saudi Arabia. Trump prostrated himself and his country before the Saudis and the leaders of the Islamic World. The Saudis expect that this was more than a symbolic and empty gesture. Saudi Arabia is a weak state in actual capabilities in the world It is a state that the US will not need much longer as a source of petroleum. The feebleness of the Saudi government is demonstrated by the ineffectual nature of its war in Yemen, This genocide is being aided and abetted by the US government as part of its cartoon-like conception of basic social and political structures in Islamdom. The Saudi government grows ever weaker as a result of this war and decline in its monetized assets because of a growing surplus of petroleum in the world. The Saudi princelings are not worth the effort being put into keeping them happy.

Qatar . US military operations in the ME are centered around the command and control facility at Al-Obeid in Qatar as well as the air base itself. The air base is useful but is only one of many used by the US in the ME. By siding with the Saudis DJT has de-stabilized the US relationsip with Qatar and is driving the Qataris in the direction of an pro-Iranian stance. Would the US fight to keep al-Obeid? The Saudis won't do it for the US.

... ... ...

[Oct 15, 2017] Saudi Aramco Reportedly Shelves IPO In Face-Saving Move Zero Hedge

Notable quotes:
"... Some analysts view the possible IPO delay as a sign of the problems Aramco and the Saudi government currently face. A lack of transparency, issues with its oil and gas reserves, and the role of the Saudi government as the main stakeholder have all been suggested as the reason for this possible delay. Most of these suggestions, however, are based purely on issues surrounding the IPO itself. The true reason for this delay, however, likely hides among the intricate societal and economic problems in the Kingdom. ..."
"... One obvious reason for a delay is the still-fledgling global oil price. A higher price setting -- above $60 per barrel -- would surely drive up the overall interest in the IPO. As long as OPEC and non-OPEC members, such as Russia, are still struggling to get a grip on the oil market, the potential for disaster looms. Needless to say, an oil price slump would have a detrimental effect on the expected revenues of the IPO. ..."
"... The impact of an influx of $1-2 trillion into the current Saudi economy is bound to have a significant impact. The implementation of Saudi Vision 2030 is broad and ambitiously planned. A full diversification of the economy is needed to guarantee work and salaries for future young Saudis, with the end of government subsidies or handouts. ..."
"... We previously indicated that China could step in as a financial savior. With around 8.5 million bpd of crude oil imports, which is 2.5 million bdp more than in 2014, the attractiveness of having a stake in Saudi Aramco is huge. Even though an energy diversification program is in place, China's imports from Saudi Arabia are going to increase. For Beijing, a stake in one of its main suppliers is a very attractive proposition. It will not only lock in Saudi crude oil and petroleum product exports to China but it will also provide some additional political and strategic clout in the heart of the Middle East. ..."
"... Given most of the largest sovereign wealth funds were created from their own oil revenue, I don't see them getting into someone else's oil. ..."
Oct 15, 2017 | www.zerohedge.com

The FT notes that talks about a private sale to foreign governments - including China - and other investors have gathered pace in recent weeks, according to five people familiar with the IPO preparations, amid growing concerns about the feasibility of an international listing.

The Saudi state oil company has struggled to select a suitable international venue for its shares, as New York and London have vied for what has been billed as the largest ever flotation.

The company would still aim to list shares on the kingdom's Tadawul exchange next year if they pursue the private sale, the people said.

The latest proposal by the company's financial advisers was described by one of the people as a "face-saving" option for Saudi Aramco, which has worked on plans to list its shares internationally for more than a year.

Desk chatter included comments that the Saudis were anxious about the level of due diligence and transparency involved in a public offering.

A Saudi Aramco spokesperson said:

"A range of options, for the public listing of Saudi Aramco, continue to be held under active review. No decision has been made and the IPO process remains on track."

The planned listing of a 5 per cent stake in Saudi Aramco is the centrepiece of an economic reform programme led by Saudi Arabia's powerful crown prince Mohammed bin Salman, who is keen for a 2018 IPO. He has said the company could be worth $2tn although a Financial Times analysis put the valuation figure at around $1tn.

An economic recession in the kingdom is piling pressure on the prince, the king's son and next in line for the throne, amid calls for the government to increase investment and ease austerity. As we noted previously, there could be more at play here...

Some analysts view the possible IPO delay as a sign of the problems Aramco and the Saudi government currently face. A lack of transparency, issues with its oil and gas reserves, and the role of the Saudi government as the main stakeholder have all been suggested as the reason for this possible delay. Most of these suggestions, however, are based purely on issues surrounding the IPO itself. The true reason for this delay, however, likely hides among the intricate societal and economic problems in the Kingdom.

One obvious reason for a delay is the still-fledgling global oil price. A higher price setting -- above $60 per barrel -- would surely drive up the overall interest in the IPO. As long as OPEC and non-OPEC members, such as Russia, are still struggling to get a grip on the oil market, the potential for disaster looms. Needless to say, an oil price slump would have a detrimental effect on the expected revenues of the IPO.

The analysts, it seems, feel no need to look any further than this simple oil price explanation, but several other key factors should be addressed

The impact of an influx of $1-2 trillion into the current Saudi economy is bound to have a significant impact. The implementation of Saudi Vision 2030 is broad and ambitiously planned. A full diversification of the economy is needed to guarantee work and salaries for future young Saudis, with the end of government subsidies or handouts.

A multitrillion investment scheme in a rather small local economy will likely result in total disorder, inflation and possibly ineffective investment schemes. The attractiveness of investing the total amount could lead to staggering inflation, higher costs and superfluous projects being realized.

A delay of such an influx of cash seems to be more and more attractive, giving the Saudi government and local industries more time to adjust and put in place the right steps for a sustainable and commercially attractive economic future.

We previously indicated that China could step in as a financial savior. With around 8.5 million bpd of crude oil imports, which is 2.5 million bdp more than in 2014, the attractiveness of having a stake in Saudi Aramco is huge. Even though an energy diversification program is in place, China's imports from Saudi Arabia are going to increase. For Beijing, a stake in one of its main suppliers is a very attractive proposition. It will not only lock in Saudi crude oil and petroleum product exports to China but it will also provide some additional political and strategic clout in the heart of the Middle East.

There will, of course, be a few big bankers who will be upset as their billion dollar fee/commission just went up in smoke, but this may give MBS some breathing room - without the undue attention of an IPO - as he deals with the nation's economic slowdown. However, coming just a few days after the Saudi king's trip to Moscow, the timing of this leaked information seems interesting at the least.

Tugg McFancy •Oct 13, 2017 5:41 PM

Given most of the largest sovereign wealth funds were created from their own oil revenue, I don't see them getting into someone else's oil.

Freddie -> Government needs you to pay taxes •Oct 13, 2017 3:00 PM

They would have to release information on their in the ground oil reserves. Their biggest oil field Ghawar is 60 years old and almost dead. They shelved it to hide this.

[Oct 12, 2017] The House of Saud Bows to the House of Putin by Pepe Escobar

Oct 12, 2017 | www.counterpunch.org

The deal may certainly be seen as a purely strategic/economic measure to stabilize the oil market – with no geopolitical overtones. And yet OPEC is geared to become a brand new animal – with Russia and Saudi Arabia de facto deciding where the global oil markets go, and then telling the other OPEC players. It's open to question what Iran, Algeria, Nigeria, Venezuela, among others, will have to say about this. The barely disguised aim is to bring oil prices up to a band of $60-75 a barrel by the middle of next year. Certainly a good deal for the Aramco IPO.

There were a rash of other deals clinched in Moscow – such as Aramco and the Russian Direct Investment Fund (RDIF) $1 billion fund for oil-services projects in Russia, plus another $1 billion for a technology fund.

[Oct 11, 2017] Saudis to Make Deepest Cut to Crude Supply -- over half million of barrels

Notable quotes:
"... The market is "balancing", stocks are drawing down, demand is healthy, US rig count/LTO does not increase, Nigeria and Libya have a very small upside in the short term, Venezuela is a pretty big downside risk, offshore is not too healthy. And the Saudis cut _voluntarily_ because ? ..."
"... If true, it seems likely to me that the Saudi's [and Russia?] are going to push the oil price issue and the best interests of the West be damned. Looks to me like SS might get back in the money next year. ..."
"... I don't think the Saudis or Russians would be concerned too much about what happens in the west. The upcoming supply shortage will happen, anyway. There is a lot of talk by the Saudis of making sure prices don't rise too much, but I am sure that is fake concern. ..."
"... I am sure this post does not apply to shale, because shale is a Wall Street phenomenon. However, for us, a price spike will not immediately lead to drilling wells. First, after what we have been going through the last three years, I would want to make sure the price is going to hold. Yes, no way to know that really, but I can guarantee we would not be rushing out to get permits. ..."
"... That is what always blows me away about Wall Street. They analyze every metric imaginable when it comes to E & P's except the bottom line. I'd rather own 50 BOPD and make $50K per month than own 500 BOPD and lose $50K per month. ..."
"... Is it possible that all of the end of oil talk actually helps cause a supply crunch? Believe me, it is going through our minds now that maybe we need to be worried about decreasing demand in our lifetimes due to EV's. ..."
"... Best to ignore the EV wackos and watch Chinese and India oil consumption data. ..."
Oct 11, 2017 | peakoilbarrel.com

Jeff says: 10/09/2017 at 1:44 pm

Saudis to Make Deepest Cut to Crude Supply Despite Demand, -0.560mbd for November supply.
https://www.bloomberg.com/news/articles/2017-10-09/saudis-to-make-deepest-cut-to-oil-supply-despite-strong-demand

The market is "balancing", stocks are drawing down, demand is healthy, US rig count/LTO does not increase, Nigeria and Libya have a very small upside in the short term, Venezuela is a pretty big downside risk, offshore is not too healthy. And the Saudis cut _voluntarily_ because ?

Guym says: 10/09/2017 at 3:23 pm
Because, frankly they know more about the oil market than most of the "anal ists". Rather than fighting them, and claiming no more need for "cuts", they are playing along with the crowd. When the shortage hits, they can claim surprise and blame the EIA for over reporting. Better price for the IPO.
clueless says: 10/09/2017 at 3:45 pm
If true, it seems likely to me that the Saudi's [and Russia?] are going to push the oil price issue and the best interests of the West be damned. Looks to me like SS might get back in the money next year.

I wonder if Trump will realize that now is not the time to have Exxon's ex-CEO as Secretary of State. I think that Trump really wanted better relations with Russia [and Russia wanted better US relations], but politics has totally destroyed that idea – and I think that Russia now knows it.

Guym says: 10/09/2017 at 4:06 pm
I don't think the Saudis or Russians would be concerned too much about what happens in the west. The upcoming supply shortage will happen, anyway. There is a lot of talk by the Saudis of making sure prices don't rise too much, but I am sure that is fake concern. They make it look like they are concerned shale production will gear up, which goes along with what the pundits are saying. They are playing us like a violin. Much like their purported "cuts". Jack production up several months, take it back to where it was before, and call it a cut. We bought it, hook line and sinker.
shallow sand says: 10/09/2017 at 8:24 pm
I am sure this post does not apply to shale, because shale is a Wall Street phenomenon. However, for us, a price spike will not immediately lead to drilling wells. First, after what we have been going through the last three years, I would want to make sure the price is going to hold. Yes, no way to know that really, but I can guarantee we would not be rushing out to get permits.

Second, after this crash, we would want to heal some. Get cash balances higher, then maybe actually take some decent draws. After all, we are in this for the income, not to see how much we can produce. That is what always blows me away about Wall Street. They analyze every metric imaginable when it comes to E & P's except the bottom line. I'd rather own 50 BOPD and make $50K per month than own 500 BOPD and lose $50K per month.

Third, there are some much cheaper things we can do to boost production than drilling new wells. Workovers may not yield as much, but they cost 1/5 or less that of a new well.

I wonder, outside of shale, if we would see this type of attitude if there is a supply crunch? Will all those high cost projects suddenly come back on line.

Finally, everyone and their dog is proclaiming the end of oil anyway. Everything is going to electric in terms of transportation. Countries abolishing ICE vehicle production. Never mind that is in 2040 mostly.

Now, why would I want to drill more wells knowing oil is nearing the end? Might as well just try to make what I can off this existing ones. No reason to spend a bunch of CAPEX. Is it possible that all of the end of oil talk actually helps cause a supply crunch? Believe me, it is going through our minds now that maybe we need to be worried about decreasing demand in our lifetimes due to EV's.

Watcher says: 10/10/2017 at 12:53 am
Best to ignore the EV wackos and watch Chinese and India oil consumption data.

[Oct 11, 2017] Saudis to Make Deepest Cut to Crude Supply Despite Strong Demand

www.bloomberg.com
Saudi Aramco plans to make "the deepest customer allocation cuts in its history" in oil supplies in November to help reduce global inventories and balance the market.

State-run Saudi Arabian Oil Co., known as Aramco, will make an "unprecedented" cut of 560,000 barrels a day in its allocations to customers next month, the Saudi energy ministry said in a statement. Aramco plans to supply 7.15 million barrels a day "despite very strong demand" that exceeds 7.7 million barrels a day, it said.

"Saudi Arabia is once again demonstrating extraordinary leadership in its commitment to re-balancing the market, as we approach the upcoming key meeting of November 30 in Vienna, by restraining not only the top-line of production volume, but even more importantly the bottom line of exports, which are what ultimately shape global inventories and market balances," the ministry said. "The kingdom expects all other participants in the effort to follow suit and to maintain the high levels of overall conformity achieved in August going forward."

Saudi Arabia, the world's top crude exporter, is leading the Organization of Petroleum Exporting Countries and other producers including Russia in paring output under a deal that helped propel oil into a bull market in September. Lower compliance with the curbs promised by some nations combined with rising production in OPEC members Libya and Nigeria -- both exempt from reducing output due to their internal strife -- have added pressure on Saudi Arabia to make deeper cuts of its own.

Brent, the global benchmark, erased earlier declines to trade marginally higher at $55.62 a barrel at 3:47 pm in London after the news of the Saudi oil allocations cuts.

The decrease in allocations for November "constitutes a full 290,000 barrels a day reduction over and above the 486,000 barrels a day" that Saudi Arabia pledged to cut as part of its commitment to the global output accord, the ministry said. This adds up "to a massive total of almost 800,000 barrels a day" in cuts, it said.

[Oct 11, 2017] State-run Saudi Arabian Oil Co., known as Aramco, will make an "unprecedented" cut of 560,000 barrels a day in its allocations to customers next month, the Saudi energy ministry said in a statement. Aramco plans to supply 7.15 million barrels a day "despite very strong demand" that exceeds 7.7 million barrels a day, it said.

Oct 11, 2017 | www.bloomberg.com

Saudi Aramco plans to make "the deepest customer allocation cuts in its history" in oil supplies in November to help reduce global inventories and balance the market.

"Saudi Arabia is once again demonstrating extraordinary leadership in its commitment to re-balancing the market, as we approach the upcoming key meeting of November 30 in Vienna, by restraining not only the top-line of production volume, but even more importantly the bottom line of exports, which are what ultimately shape global inventories and market balances," the ministry said. "The kingdom expects all other participants in the effort to follow suit and to maintain the high levels of overall conformity achieved in August going forward."

Saudi Arabia, the world's top crude exporter, is leading the Organization of Petroleum Exporting Countries and other producers including Russia in paring output under a deal that helped propel oil into a bull market in September. Lower compliance with the curbs promised by some nations combined with rising production in OPEC members Libya and Nigeria -- both exempt from reducing output due to their internal strife -- have added pressure on Saudi Arabia to make deeper cuts of its own.

Brent, the global benchmark, erased earlier declines to trade marginally higher at $55.62 a barrel at 3:47 pm in London after the news of the Saudi oil allocations cuts.

The decrease in allocations for November "constitutes a full 290,000 barrels a day reduction over and above the 486,000 barrels a day" that Saudi Arabia pledged to cut as part of its commitment to the global output accord, the ministry said. This adds up "to a massive total of almost 800,000 barrels a day" in cuts, it said.

[Oct 04, 2017] Wheels and Deals Trouble Brewing in the House of Saud by Pepe Escobar

The quote attributed to Mark Twain and Yogi Berra "It's Difficult to Make Predictions, Especially About the Future" still holds. This assessment by Pete Escobar about forthcoming bankruptcy of KAS need to be verified in three years from now. It is unclear whether the key future events (such as prediction that the current Crown Prince might be deposed with the CIA help) will take place.
It is, nevertheless, clear that KAS economics is under considerable stress due to low oil prices and that eventually can bankrupt the kingdom as foreign currency reserves shrink rapidly. What such economic crisis might entail for KAS we can only guess by reshuffling at the top is quite probably in this case. So in a way the future of KAS hangs on how soon oil prices will be pushed back into $100 range.
Notable quotes:
"... MBS is surrounded by inexperienced thirty-something princes, and alienating just about everyone else. ..."
"... "the CIA is outraged that the compromise worked out in April, 2014 has been abrogated wherein the greatest anti-terrorist factor in the Middle East, Mohammed bin Nayef, was arrested." That may prompt "vigorous action taken against MBS possibly in early October." And it might even coincide with the Salman-Trump get together. ..."
"... Asia Times' Gulf business source stresses how "the Saudi economy is under extreme strain based on their oil price war against Russia, and they are behind their bills in paying just about all their contractors. That could lead to the bankruptcy of some of the major enterprises in Saudi Arabia. The Saudi Arabia of MBS features the Crown Prince buying a US$600 million yacht and his father spending US$100 million on his summer vacation, highlighted on the front pages of the New York Times while the Kingdom strangles under their leadership." ..."
"... MBS's pet project, the spun-to-death Vision 2030, in theory aims to diversify from mere oil profits and dependency on the US to a more modern economy (and a more independent foreign policy). That's completely misguided, according to the source, because "the problem in Saudi Arabia is that their companies cannot function with their local population and [are] reliant on expatriates for about 70% or more of their staff. Aramco cannot run without expatriates. Therefore, selling 5% of Aramco to diversify does not solve the problem. If he wants a more productive society, and less handouts and meaningless government jobs, he has to first train and employ his own people." ..."
"... The similarly lauded Aramco IPO, arguably the largest share sale in history and originally scheduled for next year, has once again been postponed – "possibly" to the second half of 2019, according to officials in Riyadh. And still no one knows where shares will be sold; the NYSE is far from a done deal. ..."
"... I n parallel, MBS's war on Yemen, and the Saudi drive for regime change in Syria and to reshape the Greater Middle East, have turned out to be spectacular disasters. ..."
"... The Islamic State project was conceived as the ideal tool to force Iraq to implode. It's now public domain that the organization's funding came mostly from Saudi Arabia. Even the former imam of Mecca has publicly admitted ISIS' leadership "draw their ideas from what is written in our own books, our own principles." ..."
"... Salafi-jihadism is more than alive inside the Kingdom even as MBS tries to spin a (fake) liberal trend (the "baby you can drive my car" stunt). The problem is Riyadh congenitally cannot deliver on any liberal promise; the only legitimacy for the House of Saud lies in those religious "books" and "principles." ..."
"... In Syria, besides the fact that an absolute majority of the country's population does not wish to live in a Takfiristan , Saudi Arabia supported ISIS while Qatar supported al-Qaeda (Jabhat al-Nusra). That ended up in a crossfire bloodbath, with all those non-existent US-supported "moderate rebels" reduced to road kill. ..."
"... In Enemy of the State, the latest Mitch Rapp thriller written by Kyle Mills, President Alexander, sitting at the White House, blurts, "the Middle East is imploding because those Saudi sons of bitches have been pumping up religious fundamentalism to hide the fact that they're robbing their people blind." That's a fair assessment. ..."
"... In terms of what Washington wants, the CIA is not fond of MBS, to say the least. They want "their" man Nayef back. As for the Trump administration, rumors swirl it is " desperate for Saudi money , especially infrastructure investments in the Rust Belt." ..."
"... This piece first appeared in Asia Times . ..."
Oct 04, 2017 | www.counterpunch.org

No wonder, considering that the ousted Crown Prince Mohammed bin Nayef – highly regarded in the Beltway, especially Langley – is under house arrest. His massive web of agents at the Interior Ministry has largely been "relieved of their authority". The new Interior Minister is Abdulaziz bin Saud bin Nayef, 34, the eldest son of the governor of the country's largely Shi'ite Eastern Province, where all the oil is. Curiously, the father is now reporting to his son. MBS is surrounded by inexperienced thirty-something princes, and alienating just about everyone else.

Former King Abdulaziz set up his Saudi succession based on the seniority of his sons; in theory, if each one lived to the same age all would have a shot at the throne, thus avoiding the bloodletting historically common in Arabian clans over lines of succession.

Now, says the source, "a bloodbath is predicted to be imminent." Especially because "the CIA is outraged that the compromise worked out in April, 2014 has been abrogated wherein the greatest anti-terrorist factor in the Middle East, Mohammed bin Nayef, was arrested." That may prompt "vigorous action taken against MBS possibly in early October." And it might even coincide with the Salman-Trump get together.

ISIS playing by the (Saudi) book

Asia Times' Gulf business source stresses how "the Saudi economy is under extreme strain based on their oil price war against Russia, and they are behind their bills in paying just about all their contractors. That could lead to the bankruptcy of some of the major enterprises in Saudi Arabia. The Saudi Arabia of MBS features the Crown Prince buying a US$600 million yacht and his father spending US$100 million on his summer vacation, highlighted on the front pages of the New York Times while the Kingdom strangles under their leadership."

MBS's pet project, the spun-to-death Vision 2030, in theory aims to diversify from mere oil profits and dependency on the US to a more modern economy (and a more independent foreign policy). That's completely misguided, according to the source, because "the problem in Saudi Arabia is that their companies cannot function with their local population and [are] reliant on expatriates for about 70% or more of their staff. Aramco cannot run without expatriates. Therefore, selling 5% of Aramco to diversify does not solve the problem. If he wants a more productive society, and less handouts and meaningless government jobs, he has to first train and employ his own people."

The similarly lauded Aramco IPO, arguably the largest share sale in history and originally scheduled for next year, has once again been postponed – "possibly" to the second half of 2019, according to officials in Riyadh. And still no one knows where shares will be sold; the NYSE is far from a done deal.

I n parallel, MBS's war on Yemen, and the Saudi drive for regime change in Syria and to reshape the Greater Middle East, have turned out to be spectacular disasters. Egypt and Pakistan have refused to send troops to Yemen, where relentless Saudi air bombing – with US and UK weapons – has accelerated malnutrition, famine and cholera, and configured a massive humanitarian crisis.

The Islamic State project was conceived as the ideal tool to force Iraq to implode. It's now public domain that the organization's funding came mostly from Saudi Arabia. Even the former imam of Mecca has publicly admitted ISIS' leadership "draw their ideas from what is written in our own books, our own principles."

Which brings us to the ultimate Saudi contradiction. Salafi-jihadism is more than alive inside the Kingdom even as MBS tries to spin a (fake) liberal trend (the "baby you can drive my car" stunt). The problem is Riyadh congenitally cannot deliver on any liberal promise; the only legitimacy for the House of Saud lies in those religious "books" and "principles."

In Syria, besides the fact that an absolute majority of the country's population does not wish to live in a Takfiristan , Saudi Arabia supported ISIS while Qatar supported al-Qaeda (Jabhat al-Nusra). That ended up in a crossfire bloodbath, with all those non-existent US-supported "moderate rebels" reduced to road kill.

And then there's the economic blockade against Qatar – another brilliant MBS plot. That has only served to improve Doha's relations with both Ankara and Tehran. Qatari Emir Tamim bin Hamad Al Thani was not regime-changed, whether or not Trump really dissuaded Riyadh and Abu Dhabi from taking "military action." There was no economic strangulation: Total, for instance, is about to invest US$2 billion to expand production of Qatari natural gas. And Qatar, via its sovereign fund, counterpunched with the ultimate soft power move – it bought global footballing brand Neymar for PSG , and the "blockade" sank without a trace.

"Robbing their people blind"

In Enemy of the State, the latest Mitch Rapp thriller written by Kyle Mills, President Alexander, sitting at the White House, blurts, "the Middle East is imploding because those Saudi sons of bitches have been pumping up religious fundamentalism to hide the fact that they're robbing their people blind." That's a fair assessment.

No dissent whatsoever is allowed in Saudi Arabia. Even the economic analyst Isam Az-Zamil, very close to the top, has been arrested during the current repression campaign. So opposition to MBS does not come only from the royal family or some top clerics – although the official spin rules that only those supporting Muslim Brotherhood, Turkey, Iran and Qatari "terrorism" are being targeted.

In terms of what Washington wants, the CIA is not fond of MBS, to say the least. They want "their" man Nayef back. As for the Trump administration, rumors swirl it is " desperate for Saudi money , especially infrastructure investments in the Rust Belt."

It will be immensely enlightening to compare what Trump gets from Salman with what Putin gets from Salman: the ailing King will visit Moscow in late October. Rosneft is interested in buying shares of Aramco when the IPO takes place. Riyadh and Moscow are considering an OPEC deal extension as well as an OPEC-non-OPEC cooperation platform incorporating the Gas Exporting Countries Forum (GECF).

Riyadh has read the writing on the new wall: Moscow's rising political / strategic capital all across the board, from Iran, Syria and Qatar to Turkey and Yemen. That does not sit well with the US deep state. Even if Trump gets some Rust Belt deals, the burning question is whether the CIA and its friends can live with MBS on the House of Saud throne.

This piece first appeared in Asia Times .

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007), Red Zone Blues: a snapshot of Baghdad during the surge and Obama does Globalistan (Nimble Books, 2009). His latest book is Empire of Chaos . He may be reached at pepeasia@yahoo.com .

[Oct 02, 2017] Saudi Arabia Must Prepare for the Post-Petroleum Order by Mark P. Lagon

War in Yemen is perfect destruction from internal problems facing Saudi regime. And Wahhabism is like albatross around the neck on any attempts to reform the county. So as soon as oil ends Saudi Arabia will end as a state too. that means it is unclear if they still exist in 2050 or 2100.
Oct 02, 2017 | nationalinterest.org

Perhaps the prince is purposefully driving us to distraction...

Intensified brutality has not been limited to Saudi soil. As defense minister, Mohammed bin Salman was the architect of a more interventionist posture for Saudi Arabia -- motivated far less by quashing terrorism than its regional and sectarian rivalries. In particular, he shaped a policy that flagrantly violated humanitarian norms against Yemen's civilian population. Even the most jaundiced skeptic about the United Nations would regard Secretary-General Antonio Guterres as a highly credible voice on humanitarian situations given that he is the former high commissioner for refugees and former prime minister of Portugal. His special representative for children abused in wartime, Virginia Gamba, has documented hundreds of cases of Yemeni children killed and maimed by the Saudi's indiscriminate use of force.

... ... ...

enoch arden , September 30, 2017 7:20 AM

There will never be any science in Saudi Arabia. It isn't a part of their civilisation. It has never been in history. The great Islamic science of the Middle Ages existed in entirely different places: Iran, Mesopotamia, Syria and Egypt. The territory to the south has always been a scientific desert. No "human rights" or feminism can change this fundamental historic tradition.

KlingOn2K , September 30, 2017 3:56 AM

It has to be said that this near-existential crisis sneaked up on OPEC nations rather swiftly. I can't see how a pampered and indulged populace can get around to educating itself and working for a living in short order. There is a lot of tumultuous years ahead for these nations.

virgile , October 1, 2017 9:14 AM

Saudi Arabia has no chance to emerge from the middle age unless it leaders admit that their religion Wahhabism is obsolete and need to be revisited.
The trouble is that Wahhabismm and strict Sunnism, contrary to Shiism, forbids any attempt to revisit the teaching of the Sunna ( Koran + Hadith). Wahhabism can't evolve.

Therefore Saudi Arabia is trapped in that scheme and can never get out of it. The only way out is the total collapse of the kingdom as a whole. Maybe that is the real Vision!

Petar Petrovic , October 1, 2017 10:10 AM

Saudis should look at Syria as a model of democracy and pluralism in Arabic Islamic world, yet with their USA friends they tried to destroy it.

Petar Petrovic , October 1, 2017 10:07 AM

And these are the sort of people Trump visited first and they are USA allies in fratricidal war in Syria...there are actually lots of similarity between USA and Saudi Arabia;they are both sadistic governments.

Jeff Edward Easterling , October 1, 2017 1:00 AM

Thanks! :D

Since the actual military/defense/intelligence related spending is 1 trillion dollars a year, including about 100 billion in interest we pay on it, if we cut the spending a little and rely on national guard more since I've read it is cheaper to fund and if necessary nationalize our oil and gas industry like a lot of other countries we could start paying off our debt. :D

Schlesinger's Zenith ElPrimero , September 30, 2017 7:09 AM

The whole world must prepare for the post-petroleum order. But it's not, so there will be chaos and war. A country like Australia could fare better than most - if it could defend itself.

[Aug 09, 2017] When Sadr arrived in Jeddah, an anonymous Twitter user known as Mujtahid -- noted for his regular leaking of alleged developments within the secretive House of Saud -- tweeted that the warm welcoming of Sadr and prior to him al-Araji, offering thousands of [hajj] visas to PMU [Popular Mobilization Units], celebrating the [liberation] of Mosul, are all attempts to get closer to Iran so that they can convince the Houthis to have mercy on bin Salman.

Aug 09, 2017 | www.moonofalabama.org

Posted by: Yul | Aug 4, 2017 7:58:45 PM | 41

Dr Brenner,

Don't know whether you've have seen this article and the navettes of various Iraqi Shi'a authorities to Riyadh, in particular Muqtada's visit this week:

When Sadr arrived in Jeddah, an anonymous Twitter user known as Mujtahid -- noted for his regular leaking of alleged developments within the secretive House of Saud -- tweeted that the warm welcoming of Sadr "and prior to him al-Araji, offering thousands of [hajj] visas to PMU [Popular Mobilization Units], celebrating the [liberation] of Mosul, are all attempts to get closer to Iran so that they can convince the Houthis to have mercy on bin Salman." Thamer al-Sabhan in a July 31 tweet attacked "[Ayatollah Ruhollah] Khomeini's version of Shiism" and praised what Sabhan called "genuine Shiism." Less than 24 hours later, however, that tweet was removed. It is still unclear whether Sadr is really attempting to mediate between Tehran and Riyadh. However, a senior Iranian official who spoke to Al-Monitor on condition of anonymity expressed doubt that such an endeavor would succeed in ending the rivalry between the two regional powers.

http://www.al-monitor.com/pulse/originals/2017/08/iraq-sadr-bin-salman-meeting-saudi-iran-rapprochement.html

Dr Brenner,

Don't know whether you've have seen this article and the navettes of various Iraqi Shi'a authorities to Riyadh, in particular Muqtada's visit this week:

When Sadr arrived in Jeddah, an anonymous Twitter user known as Mujtahid -- noted for his regular leaking of alleged developments within the secretive House of Saud -- tweeted that the warm welcoming of Sadr "and prior to him al-Araji, offering thousands of [hajj] visas to PMU [Popular Mobilization Units], celebrating the [liberation] of Mosul, are all attempts to get closer to Iran so that they can convince the Houthis to have mercy on bin Salman." Thamer al-Sabhan in a July 31 tweet attacked "[Ayatollah Ruhollah] Khomeini's version of Shiism" and praised what Sabhan called "genuine Shiism." Less than 24 hours later, however, that tweet was removed. It is still unclear whether Sadr is really attempting to mediate between Tehran and Riyadh. However, a senior Iranian official who spoke to Al-Monitor on condition of anonymity expressed doubt that such an endeavor would succeed in ending the rivalry between the two regional powers.

http://www.al-monitor.com/pulse/originals/2017/08/iraq-sadr-bin-salman-meeting-saudi-iran-rapprochement.html

[Jul 20, 2017] Saudi Arabia - Bin Salman's Coup Is A Model For His Own Ouster

Jul 20, 2017 | www.moonofalabama.org

Someone wanted the public to know that the new Saudi clown prince Mohammed Bin Salman (MbS) took up his new position by unceremoniously disposing his predecessor Mohammed bin Nayef (MbN) by force. The juicy details, true or not, were briefed to Reuters, the Wall Street Journal and the New York Times on the same day:

As next in line to be king of Saudi Arabia, Mohammed bin Nayef was unaccustomed to being told what to do. Then, one night in June, he was summoned to a palace in Mecca, held against his will and pressured for hours to give up his claim to the throne .

By dawn, he had given in, and Saudi Arabia woke to the news that it had a new crown prince: the king's 31-year-old son, Mohammed bin Salman.

Bin Nayef was a darling of the CIA and his disposal was not welcome. It may well be that the author of the tale of his ouster has his office in Langley, Virginia.

We had correctly called the MbN removal a coup and predicted that "the old al-Saud family king [..] will be offed soon." From the current Reuters piece:

Quoting a witness at the palace, one Saudi source said King Salman this month pre-recorded a statement in which he announces the transfer of the throne to his son. The announcement could be broadcast at any time, perhaps as soon as September

We also wrote that "[m]any Arab peninsula citizens will want to see [the new clown prince's] head on a pike."

The details of how MbS deposed the previous crown prince MbN will enrage further parts of the Saudi citizens. Additional leaks about extensive MbS contacts with Israel will increase the bad feelings against him. This especially as Israeli is further encroaching on the al-Haram a-Sharif and the Al-Aqsa mosque on the (likely falsely) claimed Jewish temple mount.

MbS' attempt to push Qatar around has, as predicted , failed. The four countries that had joined against Qatar could not agree to increase the pressure. The demands made to Qatar have now been retracted . This is a huge loss of face for MbS and his Emirati mentor Mohammad bin Zayed. The Saudi war against Yemen kills many civilians and costs lots of money but is militarily lost. The announced big economic reforms have made no progress. The Gulf Cooperation Council is defunct and may fall further apart.

Everything MbS has touched failed. His actions violate traditions and religious commandments. His coup has set an example that can now be used against himself. It would not be astonishing to see a revolt against Mohammed Bin Salman even before he is able to make himself king.

james | Jul 20, 2017 3:32:42 PM | 1

thanks b.. i really resent the war on yemen by this asshole in power.. i hope he is gone soon and for that matter - saudi arabia - israel - and all the rest of the rot contributing to de-stability in the mid east all go the way of the dodo bird..
karlof1 | Jul 20, 2017 3:40:40 PM | 2
Pepe and b probably used similar sources since their articles are quite alike! http://www.atimes.com/article/coup-house-saud/

Relatedly, MBS may not be the primary instigator of the Qatar crisis according to this item, https://southfront.org/finally-know-really-behind-qatar-crisis/

Recently, several articles, including the one above, at Southfront were republications of items originating at a new--to me--site, other barflies may want to explore, http://theantimedia.org/

karlof1 | Jul 20, 2017 3:59:08 PM | 3
The Angry Arab alerts us to "Ben Hubbard's propaganda work for MBS," http://angryarab.blogspot.com/2017/07/nyts-ben-hubbards-propaganda-work-for.html

As'ad also goes off today at blatant propaganda published by The Economist regarding Hezbollah and its alleged involvement with drug trade--something Nasrallah condemns very mightily, http://angryarab.blogspot.com/2017/07/how-did-economist-documents-its.html

b | Jul 20, 2017 4:01:21 PM | 4
MbS smells the anger, tries to coup-proof his regime:
Saudi Arabia establishes new apparatus for state security
JEDDAH: Saudi Arabia created a new apparatus for state security in Royal Decrees issued Thursday.
The new body, State Security Presidency, will be cornered all matters related to state security and be overseen by the king.

...

all matters related to combating terrorism and financial investigations to be separated from the Ministry of Interior and added to the State Security Presidency.

Everything related to the Security Affairs Agency and other functions related to the Ministry of Interior tasks including employees (civil and military), budgets, documents and information are to be added to the State Security Presidency.

The (just newly installed) interior minister is said to be a friend of MbS but he is from the family of MbN and thereby a danger. Must be disarmed ...
karlof1 | Jul 20, 2017 4:16:03 PM | 5
Sorry to monopolize the beginnings of this thread. At the end of his essay about events in Mosul, Craig Murray has this to say about Saudi:

"The other interesting silence is from Saudi Arabia, which poses as the defender of Sunni Islam throughout the world, but actually has no interest at all in it, except as a tool for promoting the much more worldly interests of the Saudi elite....

"For the Saudi elite, the money they pumped into ISIS in Iraq was a trifle; Mosul ISIL were pawns to be sacrificed and the Sunni civilian population of Mosul is no more important to them. By the combination of funding the spread of Wahhabi ideology and providing unlimited arms and organisational financing, the Saudis can pop up another Al Qaida, Al Nusra or ISIL more or less anywhere, any time it seems useful. Meantime they are focused on cementing their burgeoning axis of Saudi Arabia/Israel/USA to continue the violent promotion of Saudi regional ambition." https://www.craigmurray.org.uk/archives/2017/07/mosul-worse-srebrenica/

It now appears the Unipolarists are reduced to just 4 nations: Outlaw US Empire, UK, Zionist Occupied Palestine, and Saudi Arabia. If Corbyn can become UK's PM, then that number might get reduced to 3.

Clueless Joe | Jul 20, 2017 4:31:55 PM | 6
B: I think your last sentence is key. Some grown-ups, in the US and in the Gulf, leaked this because they want to prevent current crown prince of becoming King, and hope to see him replaced as future king before Salman bites the bullet.
I mean, Mohammed BS has shown how bad he is at managing slightly complex crises, be it Yemen, current jihadi setbacks in Syria, or Qatar - the latter being the biggest indictment I suppose, considering the long-term consequences. So, some smarter people want to push him out before he can become king and weaken the Saudi kingdom to the breaking point.
Not sure what was meant by that, though: "on the (likely falsely) claimed Jewish temple mount"
ProPeace | Jul 20, 2017 4:40:24 PM | 7
CV Locations should be watched closely: CVN-77 George H.W. Bush 05Jul-18Jul2017, Med

Also, I believe this 2015 article is worth reminding: The secret projects of Israël and Saudi Arabia

...According to our information, for the last 17 months (in other words, since the announcement of the negotiations between Washington and Teheran, which have in fact been proceeding for the last 27 months), Tel-Aviv has been engaged in secret negotiations with Saudi Arabia. Extremely high-level delegations have met five times – in India, Italy and the Czech Republic.

The cooperation between Tel-Aviv and Riyadh is part of the US plan to create a " Common Arab Defence Force ", under the auspices of the Arab League, but under Israeli command. This " Force " is already effective in Yemen, where Israeli pilots fly Saudi bombers within the framework of an Arab Coalition whose headquarters have been installed by the Israelis in Somaliland, a non-recognised state situated on the other side of the the Bab el-Mandeb straits [1].

However, Riyadh does not intend to officialise this cooperation as long as Tel-Aviv refuses the Arab Peace Initiative, presented to the Arab League in 2002 by Prince Abdullah before he became king [2].

Israël and Saudi Arabia have reached agreement on several objectives.

On the political level :

  • To " democratise " the Gulf States, in other words, to associate the people in the management of their countries, while affirming the intangibility of the the monarchy and the Wahhabite way of life ; To change the political system in Iran (and no longer wage war on Iran) ;
  • To create an independent Kurdistan in such a way as to weaken Iran, Turkey (despite the fact that it is a long-standing ally of Israël), and Iraq (but not Syria, which is already seriously weakened).

On the economic level :

  • To exploit the Rub'al-Khali oil-fields and organise a federation between Saudi Arabia, Yemen, and perhaps Oman and the United Arab Emirates ;
  • To exploit the Ogaden oil-fields, under Ethiopian control, secure the Yemeni port of Aden, and build a bridge linking Djibouti and Yemen.

In other words, while Tel-Aviv and Riyadh are making the best of a bad deal, and accepting that two thirds of Iraq, Syria, and half of Lebanon will be controlled by Iran, they intend :

  • To ensure that Iran gives up on the exportation of its revolution ;
  • To control the rest of the region by excluding Turkey, which took over from Saudi Arabia in the supervision of international terrorism, and has just lost in Syria...
/div> div
div
stonebird | Jul 20, 2017 4:53:03 PM | 8
Do not underestimate the power of the religious autorities. When I was there (admittedly many, many years ago), the monarchy was very careful to always have their agreement for any policy change. Even now with the strict laws governing behaviour (ie. Women, TV and prayers) their impact on ordinary Saudi society apparently hasn't changed much. It may have even got worse.

So the Clown prince's closer ties with Israel - are going to be under close scrutiny. Particularly if Netanyhu continues with the "isolation" and alienation of the Al-Aqsa mosque. Note that the numbers of people hurt in IDF actions against demonstrators has been totally under-reported, if at all. (reported 70 the first day and 35 another. Those wounded include an Imam.)
This is going to pose an ethical problem for ALL the Gulf states. They will have to be seen doing something to retain credibility.

On a jovial note; The traditional way, if the reigning Leader did not hand down part of the money to the other tribesmen according to tradition - was to slit his throat. (The King gets it all, then hands down part of it to Princes, who then hand down part of what they recieved to tribesmen and so on right to the bottom. (widows in the Souk with no family). When there is a lot this works fine. I do not know if this will work when there is less to go round.)

Anonymous | Jul 20, 2017 6:12:01 PM | 9
Israel is upping the ante in Syria.

"Israel is going to build a new field hospital in the Israeli-occupied part of the Golan Heights in Syria. According to the Lieutenant Colonel Tomer Koler, the hospital will be located on the Syrian side of the fence build by Israel in the Golan Heights and may become operational next month."

https://southfront.org/israel-build-new-field-hospital-treat-syrian-militants/

Up to now the IDF has treated its terrorists in Israel proper. Now it seems that even Israel is invading Syria. The extra land grab has started.

[Jul 18, 2017] MoA - Can Washington Prevent The Death Of The Gulf States

Jul 18, 2017 | www.moonofalabama.org
Can Washington Prevent The Death Of The Gulf States?

U.S. Secretary of State Tillerson is angry that Saudi Arabia and the UAE rejected his efforts to calm down their spat with Qatar. His revenge, and a threat of more serious measures, comes in the form of a WaPo "leak" - UAE orchestrated hacking of Qatari government sites, sparking regional upheaval, according to U.S. intelligence officials :

The United Arab Emirates orchestrated the hacking of Qatari government news and social media sites in order to post incendiary false quotes attributed to Qatar's emir, Sheikh Tamim Bin Hamad al-Thani, in late May that sparked the ongoing upheaval between Qatar and its neighbors, according to U.S. intelligence officials.

Officials became aware last week that newly analyzed information gathered by U.S. intelligence agencies confirmed that on May 23, senior members of the UAE government discussed the plan and its implementation . The officials said it remains unclear whether the UAE carried out the hacks itself or contracted to have them done.

That the UAE and/or the Saudis were involved in the hack was pretty clear from the get go. They were the only ones who had a clear motive. Qatar already had specific evidence for the source of the hacking. Congressional anti-Russian sources ignored that and accused , as usual , Russia and Putin.

Tillerson's real message is not the hacking accusation. The hacks themselves are not relevant to the spat and to Tillerson's efforts to defuse it. The "leak" sets the UAE and Saudi leadership on notice that the U.S. has sources and methods to learn of their government's innermost discussions. The real threat to them is that other dirt could be released from the same source.

It is doubtful that this threat will change the minds of these rulers. They believe in their own invincibility. Ian Welsh describes the mindset in his prediction of The Death of Saudi Arabia and other Gulf states:

This is fairly standard: all dynasties go bad eventually because the kings-to-be grow up in wealth and power and think it's the natural state of things: that they are brilliant and deserve it all, when it was handed them on a platter . Perhaps they are good at palace intrigue and think that extends beyond the palace.

It doesn't.

Welsh comes to the same conclusion as I did when the recent GCC infighting broke out:

No matter how the spat with Qatar ends, the GCC unity has (again) been exposed as a sham. It can not be repaired. Saudi "leadership" is shown to be just brutal bullying and will be resisted. U.S. plans for a united GCC under Saudi leadership and U.S. control are in shambles.
...
The Saudi under their new leadership overestimate their capabilities. So did Trump when he raised their role. The Saudi "apes with Macbooks" do not have the capabilities needed for a serious political actor in this world. Their money can paper over that for only so long.

The step Tillerson and some "intelligence officials" now took may be a sign panic. The "leak" revealed "sources and methods". Like every other government the UAE senior officials suspect that the U.S. is trying to listen to their internal deliberations. But they now know for sure. The specific date given in the "leak" will help them to take some countermeasures. Leaking "sources and methods" is not done lightly. That it has to resort to such measures shows that the U.S. administration is not in control of the situation.

During the fall of the Ottoman empire Britain created today's Saudi Arabia. Two world wars exhausted Britain's power. The U.S. took over the management of the empire including the Gulf states. It needs Saudi Arabia for its fossil energy and the related reserve currency status of the U.S. dollar. Unrest in Saudi Arabia is not in the U.S. interest but such is now in sight. The "leak" is just a tactical measure of an inexperienced administration. It is not enough to defuse or mitigate the conflict and its consequences.

What strategies will Washington develop to counter the foreseeable instability in Saudi Arabia and other Gulf states?

Peter AU | Jul 17, 2017 3:04:50 PM | 1

The petro dollar has been around some time now and has given US control of the world trade currency. As far rich kids being handed everything on a platter, the US government is no different to the Saudi's. This will be interesting.
Don Wiscacho | Jul 17, 2017 3:29:16 PM | 2
What can Washington do to save the khalijis?

Nothing beyond sell them weapons and eavesdropping technology. But this only buys some time, and time unfortunately for the GCC countries, isn't on their side.

With increasing swiftness, across the world technologies are being improved on and invented which will eventually wean everyone off fossil fuels. This won't happen overnight, and even when it does, petroleum will still have value as it is used in innumerable applications. But the price will fall, making the latest crash look like a road bump. When that happens, the show's over folks. The GCC countries will become ungovernable, then uninhabitable. There simply are too many people, too few resources.

The only hope the GCC states have is to diversify their economies. Not MBS's 'Prosperity through Austerity' but a multi-pronged tract to develop all critical sectors. The UAE and Qatar are trying, but betting the house on finance and real estate to the detriment of everything else. Petro dollars are still propping up those houses of cards. Oman is the only one seemingly doing things right: good relations with neighbors, trade, and developing domestic industry. If the rest of the GCC doesn't follow Oman's lead, they are simply finished.

Peter AU | Jul 17, 2017 3:39:08 PM | 5
ab initio | Jul 17, 2017 3:30:38 PM | 3 "In any case reserve currency status is not all beneficial to the US."

This is what gives the US the power to sanction countries and make it stick world wide. It is a huge part of US power.

karlof1 | Jul 17, 2017 3:57:40 PM | 6
Peter AU @5--

Thanks for calling the trolling. Its comment was almost 100% disinformation.

In answer to b's query, the Outlaw US Empire cannot save itself let alone any of its vassals. They will be used until they are no longer of use. And that time is rapidly approaching. Although, the Qataris seem best positioned to avoid extinction.

Now that I know of them, I get to purchase Mark Curtis's line of books documenting British Imperialism and its association with terrorism. Thanks b!

ruralito | Jul 17, 2017 4:12:50 PM | 7
shrinkage?

https://southfront.org/trump-hints-abandoning-key-qatar-military-base-talks-saudi-king/

Mike Maloney | Jul 17, 2017 4:18:06 PM | 8
The United States and the Kingdom of Saudi Arabia are ontologically inseparable. You can't have one without the other. The penetration of the U.S. deep state by al-Saud -- whether it's D.C. think tanks or Fortune 500 executive boards -- is complete.

Tillerson knows this, that's why his "woe is me" shuttle diplomacy is nothing more than Kabuki.

This doesn't mean that al-Thani is without wires into the U.S. deep state; it has plenty. That's what makes this GCC throw-down so delightful. The U.S. is at a point where it can no longer sublate all the contradictions produced by its hegemony.

stumpy | Jul 17, 2017 4:58:59 PM | 9
anon @ 4
Re: hack:
Perhaps we shouldnt accept claims about UAE just like that. Lets be honest.

I agree. Consider the source at WAPO. Some credibility gap there. I would guess that Tillerson is not the sole source for whatever might have been leaked (if not invented).

Also, as far as sources and methods, it's one thing to burn an inside informer type of asset, but leaking SIGINT in the form of general pronouncements without physical evidence doesn't burn the source, only indicates a potential weakness in the cyber defenses of the target. For all we know there was no hack, per se, given that a lot of US and allied contractors were probably in on the installation and operation of UAE computer systems.

My impression, not to contradict b's analysis but to propose a direction of thought, is that the WAPO is promulgating a brag, that the US can look up anyone's skirt anytime and tell whatever they want. Thus, reminding the players that they'd better stay in line, as b states.

karlof1 | Jul 17, 2017 6:21:58 PM | 10
Considering Saudi Arabia's creation, its falling to pieces would be considered Nature's reaction to an artificial construct. Soon, instead of Saudis buying Outlaw US Empire weaponry, it will be asking for handouts as it did during its formative years when the UK held its reins. Given its role in the violent histories of the British and Outlaw US Empires, the remaining nations of the planet will be quite pleased to see its demise--even more so given that the three constitute the nest for Global Terrorism. Dan Glazebrook's series detailing the history of "British collusion with sectarian violence" at RT, one of which b linked to, are well worth the time; this links to the first installment, https://www.rt.com/op-edge/338247-uk-extremists-syria-isis-violence/
fast freddy | Jul 17, 2017 6:27:34 PM | 11
It seems that it is not the US, but Israel which owns the most advanced spying hacking technology. The US sublet fiber optic data interception to Israeli companies NARUS and Verint. These companies have since been folded (hidden) into other multinational holding companies, but still (Boeing, Carlisle Group).

When is this a good idea for "National Security" (which is the constant refrain when withholding information from the public)?

https://www.wired.com/2012/04/shady-companies-nsa/

fast freddy | Jul 17, 2017 6:27:35 PM | 12
It seems that it is not the US, but Israel which owns the most advanced spying hacking technology. The US sublet fiber optic data interception to Israeli companies NARUS and Verint. These companies have since been folded (hidden) into other multinational holding companies, but still (Boeing, Carlisle Group).

When is this a good idea for "National Security" (which is the constant refrain when withholding information from the public)?

https://www.wired.com/2012/04/shady-companies-nsa/

Jay | Jul 17, 2017 8:39:20 PM | 13
"It [the USA] needs Saudi Arabia for its fossil energy and the related reserve currency status of the U.S. dollar."

Well Saudi oil is mostly going to Europe, but the Saudi policy does obviously effect the price of oil futures around the world.

A lot more than oil backs the US dollar, the "oil based reserve status" only goes so far.

nobody | Jul 17, 2017 8:52:28 PM | 14
The step Tillerson and some "intelligence officials" now took may be a sign >[of]< panic.

Posted by b on July 17, 2017 at 02:33 PM | Permalink

The last monarch to get "mixed messages" from USA was the late Shah of Iran. Qatar and "Saudi" Arabia, take note.

Voltaire network is pushing an interesting deep analysis that we are witnessing ex-Empire strikes back, with the Occulted British ex-Empire putin' [haha] the finishing touches on their expulsion of the ex-Colonial Empire from "their" sphere of influence (aptly named by the slimy blood sucking limeys as "their" "Middle East").

The dismantling of the "Hyperpower" is nearly complete. Bankster power remains untouched.

As you were.

ProPeace | Jul 17, 2017 8:58:09 PM | 15
This is interesting Pentagon study declares American empire is 'collapsing'
james | Jul 17, 2017 9:28:16 PM | 16
thanks b.. i have been yammering on about 2020 as a critical turning point in world events and that saudi arabia is very central to all this.. in my astro comments on nov 2, 2013 i stated "below is a chart for the next conjunction of saturn/pluto set to riyadh. this exact conjunction happens only once in early 2020, but i suspect given how close it is to the astro positions in the 1902 chart for saudi arabia, that if this chart has legs, this conjunction is going to bring about a transformation of present day saudi arabia and it will probably not be a pretty or easy transition given the issue of terrorism associated with these religious groups i have also mentioned.. saturn and pluto have a connection to terrorism as i understand it and were in the long opposition at the time of 9-11 as well... on the other hand, perhaps it indicates a further clamp down on freedoms and a type of totalitarianism. i suspect it will fluctuate between the two.. and, it is probably already in the process of developing here in 2013.. " from this thread..

@8 mike maloney... i fully concur to your words here: "The U.S. is at a point where it can no longer sublate all the contradictions produced by its hegemony."

saudi arabia and the world by extension are going to look very differently come 2020... lol - how is that for a lousy astro prediction? that is like saying, tomorrow things will look differently.. of course i have mentioned this about saudi arabia in the past at moa...

i enjoyed the article "The Death of Saudi Arabia".. it was fun reading the comments to that post too.. i recognized a few regulars in the comment section from sst and moa..

dh | Jul 17, 2017 9:33:07 PM | 17
@15 Looks like a big scare piece followed by plea for more weapons. Thank you Pentagon.
virgile | Jul 17, 2017 9:53:51 PM | 18
The US continues the strategy they have started less than decade ago: Weaken Saudi Arabia to the point it will accept a peace deal with Israel.
The US threw the Saudis into the Syrian quagmire, the Egyptian quagmire, then in the Yemen quagmire, now in the Qatar quagmire.
When the Saudi kingdom will come out of these, it will be exhausted and in a state of terror in front of the Iranian steadily growing political and economical strength. The threat of the collapse to their family ruled system is looming.
The USA seems to have accepted that the Iran Islamic republic's semi-democratic system is here to stay and evolve while the GCC autocratic monarchies are threatened of extinction.
Buying billions of weapons from the USA seems to give these dying entities the illusion that the USA is on their side. In fact the USA has been backstabbing them continuously thus weakening them by the day and preparation for their collapse.
The emirates will have make reforms of a democratic nature if they want to survive.
Saudi Arabia is doomed.
Sloopyjoe | Jul 17, 2017 10:55:16 PM | 19
First post here.

I have seen a lot of confusion/deception as to the nature/history of the Arabia. In order to understand history properly, one must be willingly open-minded and examine as much evidence as possible. Especially, evidence that is contrary to your understanding. This takes intellectual honesty, critical thinking, and courage. History is written by the winners/manipulators. You rarely hear from the other side. Meaning, you never get the complete picture. Therefore, you cannot get historical accuracy unless you do a bit a honest digging. Ex., Anybody with a working brain stem understands that the official story of 9-11 is a big pile of Donkey Doughnuts.

I am not a biblical scholar nor am I very religiously inclined. I prefer historical accuracy over warm and fuzzy beliefs.

I realize there are many readers who are religious and may be ingrained in their beliefs. What I am presenting below will challenge your root understandings. Please try to have an open mind and use logic, reason, evidence(both pro and con), and patterns of behavior to better your knowledge base. Below are links pertaining to the Arabia/Israel:

https://ashraf62.wordpress.com/2016/04/08/the-jewish-roots-of-takfiri-culture/
http://themillenniumreport.com/2015/12/the-house-of-saud-its-jewish-origin-and-installation-by-the-british-crown/
http://www.voltairenet.org/article192024.html
http://en.abna24.com/service/iran/archive/2016/06/18/760877/story.html
https://biblicisminstitute.wordpress.com/2016/01/05/jews-and-history-lies-galore/
http://www.informationclearinghouse.info/pdf/The%20Zionist%20Plan%20for%20the%20Middle%20East.pdf
https://ashraf62.wordpress.com/2015/04/17/the-real-exodus-end-of-israel-3/
http://wikivisually.com/wiki/Ze%27ev_Herzog

Second external link from above article. You need to use Google translate for this article. The Israeli Govt loves to scrub inconvenient facts about their history.
http://www.hayadan.org.il/bible-no-evidence-291099/

To find a cure, one must address the root causes of the illness - Sloopyjoe

[Jul 18, 2017] Revisiting Saudi Arabia Zero Hedge

Jul 18, 2017 | www.zerohedge.com
Revisiting Saudi Arabia Capitalist Exploits Jul 17, 2017 7:46 PM 0 SHARES www.CapitalistExploits.at

In May of last year I was attempting to figure out if there was an asymmetric play to be had in the land of sand and black gloop. There were a lot of moving pieces to deal with. I think it's worth revisiting but first it's worth reviewing what I thought just over a year ago. Much has subsequently happened so we can piece a little bit more together now.

Only Two Options For The Saudi Sheikhs A few years ago, when living in Phuket, Thailand, a group of Saudis stayed for a week's holiday in a neighboring villa. Outside of the religious and social confines of the land of black gold and endless sand, this group made a bunch of spoiled 5-year olds left to run amok in a candy shop without adult supervision look positively angelic. They were very visible, with an entourage of young Thai "ladies" and a fleet of Land Cruisers to haul them about. On one occasion, after my son witnessed one of the guys buying a beer and throwing a US$100 bill at the waiter, telling him to keep the change, he asked me how come they had so much money to waste. I explained that Saudi Arabia has two things in abundance: sand and oil. And though the world doesn't need sand as much as it does oil, they have grown very wealthy selling the oil to the rest of the world. Depending on whose numbers you take, somewhere between 75% and 85% of Saudi Arabia's revenues come from oil exports, and fully 90% of revenues come from oil and gas. Clearly the Kingdom is dependent on oil revenues in the same way that an infant is dependent on its mother's milk. And unless you've been living under a rock for the last few years, you'll have noticed that the price of oil has collapsed. Now, in a "normal" market the reduced revenues would manifest in a weaker local currency as demand for Riyals declines. But governments and central bankers don't believe in "normal" markets and so the Saudi riyal has been pegged at 3.75 to the US dollar since 1986. It's not hard to see a situation where Saudi Arabia may very well be forced to de-peg the currency to curb the fall in the country's FX reserves should low oil prices persist. Let's look at some of the potential catalysts for this. Could Yellen Kill The Peg? While the Sheiks contemplate how to deal with their predicament from diamond encrusted cars and golden toilets, across the pond we find that monetary policy in the US has been tightening albeit modestly. What's important to understand is that in order for Saudi Arabia to maintain its currency peg it needs to follow FED monetary policy. By following Yellen the Saudis land up sacrificing growth, and by diverging they sacrifice FX reserves in order to maintain the peg. Clearly neither are attractive propositions. According to the Saudi Arabian Monetary Agency (SAMA), for every 100 basis point increase in the Saudi Interbank Offered Rate (SIBOR) this leads to a 90 basis point decline in GDP in the subsequent quarter, and a further 95 basis points in the following quarter. Falling GDP in a country where over 60% of the population are under 30 brings about its own set of problems. Political instability in the Kingdom has been rising and the royal family is increasingly fighting for survival. After all, they had the experience of watching the Arab Spring unfold on their flat screens. If, on the other hand, they opt not to follow the stumpy lady, the gap between interest rates in the US and Saudi Arabia will be quickly exploited by people like me as arbitrage opportunities open up. So this is what we're all looking at right now: SAMA will have to buy riyals in the open market by selling from its hoard of dollar reserves. Any rise in interest rates in the US will mean SAMA will have to further deplete reserves. As I have mentioned before, all pegs eventually break. The question is one of timing. How long do the Sheiks have under current oil prices? The falling oil price since mid-2014, has significantly reduced Saudi Arabian revenues. So much so that the scorecard for 2015 showed a deficit of $98bn, and SAMA is estimating a further $87bn deficit this year. The Saudi government have been funding this deficit by drawing down on forex reserves, spending $132bn in the year to January of this year. With current prices and current reserves they can easily last another 4 years. Some things I'm thinking about:

[Jul 03, 2017] Mohammed ben Salmane takes power at Riyadh

Notable quotes:
"... Mohammed ben Nayef Al Saoud was considered as the US's man. He has been trained first in Oregon, then later by the FBI and Scotland Yard. He obtained results in struggles against Al-Qaeda dissidents. With his removal, the hopes of the Nayef branch coming to the throne have come to an end. ..."
"... Mohammed ben Salmane does not have an academic training. At the very most, he is the holder of a baccalaureate awarded by a local school, and we do not know if you actually need to study to obtain this qualification. ..."
"... Washington had approved the chosen solution to the issue of succession. This solution had been adopted by 31 of 34 members of the allegiance council (the Family Council). It skips two generations. Henceforth, Mohammad ben Salmane is placing young people at the head of different administrations of the country, a country where the average age of the population is 27 years. ..."
Jul 03, 2017 | www.voltairenet.org

King Salmane ben Abdelaziz Al Saoud (81 years old) has removed from office 57 year old Emir Mohammed ben Nayef Al Saoud. The latter was the Crown Prince, Vice-Prime Minister and the Minister of Home Affairs, all at the same time.

De facto, the King's son, Prince Mohammed ben Salmane Al Saoud (31 years), will become the new Crown Prince.

Mohammed ben Nayef Al Saoud was considered as the US's man. He has been trained first in Oregon, then later by the FBI and Scotland Yard. He obtained results in struggles against Al-Qaeda dissidents. With his removal, the hopes of the Nayef branch coming to the throne have come to an end.

Mohammed ben Salmane does not have an academic training. At the very most, he is the holder of a baccalaureate awarded by a local school, and we do not know if you actually need to study to obtain this qualification. He made his political debut as the assistant to his father, first the Governor of Riyadh and then the Minister of Defense. When Salmane becomes king in 2015, Mohammed succeeded his father as the Minister of Defense and engaged his country's troops in the disastrous conflict in Yemen. Having royal power at his disposition, he launched a vast project for economic reform (Vision 2030), which ushered in the privatization of Aramco (the country's only source of revenue) and his country's development beyond the oil sector. He is particularly well known for his jet-set life-style and for buying a yacht, Serene, for half a billion euro.

It seems that King Salmane should shortly abdicate, leaving his son in charge. Thus the difficult question of succession is provisionally settled, in a country where up until now was governed by a rule requiring the oldest son of the dynasty's founder to accede to power. Thus the current king, King Salmane, is the 25th of Abdelaziz ben Abderrahmane Al Saoud's 53 sons.

At King Abdallah's death (January 2015), his half brother, Prince Moukrine ben Abdelaziz Al Saoud, had been appointed Crown Prince. But three months later (April 2015), he had been rudely cut out of the order of succession, something quite unprecedented. He was replaced by Prince Mohammed ben Nayef, who in turn has just been removed from the picture.

As a consolation prize, the Nayefs secured that a son-in-law of Prince Mohammed ben Nayef replaces him at the Ministry of Home Affairs. It would be a son-in-law and not a son, because Prince Mohammed ben Nayef did not have male progeny.

The next king, Mohammed, could rule for about fifty years. But were he to die, then his eldest son, also a minor, would succeed him.

Washington had approved the chosen solution to the issue of succession. This solution had been adopted by 31 of 34 members of the allegiance council (the Family Council). It skips two generations. Henceforth, Mohammad ben Salmane is placing young people at the head of different administrations of the country, a country where the average age of the population is 27 years.

[Jun 30, 2017] Trump, MBS, and the Noxious Saudi Relationship The American Conservative

Jun 30, 2017 | www.theamericanconservative.com
Aaron David Miller and Richard Sokolsky also judge Mohammed bin Salman's record to be very poor:

But one thing is already stunningly clear when it comes to his handling of foreign policy: In two short years, as the deputy crown prince and defense minister, MBS has driven the Kingdom into a series of royal blunders in Yemen, Qatar and Iran, and he has likely over promised what Saudi Arabia is able and willing to do on the Israeli-Palestinian peacemaking front. Far from demonstrating judgment and experience, he's proven to be reckless and impulsive, with little sense of how to link tactics and strategy. And sadly, he's managed to implicate and drag the new Trump administration into some of these misadventures, too.

Miller and Sokolsky are right about MBS' shoddy record, but their warning to the Trump administration is very likely too late. They urge the administration to rethink its position before "its Middle East policy becomes a wholly owned subsidiary of Saudi Arabia," but I fear that that already happened at the Riyadh summit. Unfortunately, some top U.S. officials are only just now realizing it and don't know how to stop it. There could be some belated efforts to undo this, but Trump isn't interested. He doesn't seem to see anything wrong with identifying the U.S. so closely with the Saudis, and he doesn't see their recklessness and destructive behavior for what they are. Since he is impulsive, careless, and has poor judgment, it isn't surprising that he has such an affinity for the aging Saudi despot and his favorite incompetent son. On top of all that, MBS is a short-sighted, foolish hard-liner on Iran, and as far as we can tell Trump is much the same, so we should expect them to be on the same page.

There's no question that every foreign policy initiative associated with MBS has "turned into a hot mess," but this has been obvious in Yemen for the last two years. If no one in the Trump administration noticed that before, what is going to make them realize it now? The authors are also right that Trump's decision "to side with Saudi Arabia in its conflict with Qatar and in Yemen is akin to pouring gasoline on a fire," but until very recently uncritical backing of the Saudis in their regional adventurism enjoyed broad bipartisan support that helped make it possible for things to get this bad. There were very few in Washington who thought that pouring gasoline on the fire was the wrong thing to do, and for more than two years the U.S. poured a lot of gas on the fire in Yemen that has been consuming thousands of lives and putting millions at risk of starvation.

My point here is that Trump has pressed ahead with uncritical support for the Saudis because that has been the conventional hawkish position in Washington for years before he got there. He is catering to the existing warped desire to provide even more support to Riyadh than Obama did. It was conventional wisdom among many foreign policy pundits and analysts that Obama had not been "pro-Saudi" enough, and Trump apparently bought into that view. Trump's enthusiastic embrace of the Saudis is the result of endlessly berating Obama for not giving the Saudis absolutely everything they wanted.

There is now more open opposition to at least some aspects of U.S. policy in Yemen, as we saw with the recent close vote on a Saudi arms sale. The Qatar crisis has prompted more criticism of the Saudis from our government than two years of destroying and starving an entire country. Yet there is still remarkably little scrutiny of the underlying U.S.-Saudi relationship despite growing evidence that the kingdom has become a regional menace and a major liability to the U.S. Until that changes and until Trump's excessive fondness for the Saudi leadership starts to become a major political problem for him, pleading with the arsonist's enabler to put out fires will have little effect.

[Jun 26, 2017] Saudi Hijinks, US Policy Stinks

Notable quotes:
"... Trump is capricious, ignorant and impetuous. His understanding of international relations and history seems woefully inadequate. He also appears to be unscrupulous and reckless. It's all about making money that matters to him. ..."
"... From the earliest opportunity, the Saudi prince wheedled his way into Trump's court. He was greeted in the White House back in March, one of the first foreign leaders to do so. Then two months later, Trump ventured on his maiden foreign trip as president in which he made Saudi Arabia his first stop. ..."
"... The power-struggle antics among the absolute rulers of the House of Saud have promoted a prince who has a reckless outsized ego and lust for dominance. President Donald Trump seems cut from the same cloth. ..."
"... · 5 days ago ..."
marknesop.wordpress.com
The United States' decades-long "special relationship" with Saudi Arabia has always carried major downsides. Yes, the Saudis are a pillar in maintaining the American petrodollar system to prevent the collapse of the US economy; and, yes, the Saudi rulers are lavish spenders on US weapons, which props up the Pentagon military-industrial complex – another lifeline for American capitalism.

However, the Saudi rulers are also longtime sponsors of Wahhabi fundamentalism which has injected deadly sectarian poison into the Middle East region and beyond. Washington is complicit in fomenting sectarianism through its relationship with Saudi Arabia, and the price for that Faustian pact is a world in turmoil from terrorism.

Donald Trump's presidency is an unfortunate marriage of interests with Saudi Arabia. Trump is capricious, ignorant and impetuous. His understanding of international relations and history seems woefully inadequate. He also appears to be unscrupulous and reckless. It's all about making money that matters to him.

From the earliest opportunity, the Saudi prince wheedled his way into Trump's court. He was greeted in the White House back in March, one of the first foreign leaders to do so. Then two months later, Trump ventured on his maiden foreign trip as president in which he made Saudi Arabia his first stop. Trump was royally received by the House of Saud with sword-waving ceremony . And then the Saudis signed record arms deal with the US worth up to $350 billion – the biggest ever in history.

It was during Trump's Saudi visit that the policy of increased hostility towards Iran and isolation of erstwhile Saudi and American ally Qatar was hatched. This reckless, clueless embrace of Saudi Arabia by Trump has led to a dangerous escalation in tensions across the Middle East, which are seen playing out in Syria and towards Iran and Russia.

Trump the tycoon and the Saudi upstart-prince are a duo who are plunging the world into danger of all-out war. The pair are a match made in hell, both being rash and irresponsible in their behavior.

Nobody outside Saudi Arabia had heard of Crown Prince Mohammed bin Salman until his father become king in January 2015 on the death of King Abdullah. In the space of two years, the young prince has been made defense minister and de facto chief of Saudi's oil economy. Now, this week he has been shunted into becoming heir to the throne, sidelining his elder cousin and nephew to the king.

The precocious prince has only enjoyed this meteoric rise in the House of Saud because of his father's favoritism. Other more senior royals feel ousted and see the new Crown Prince as undeserving of his assigned authority. In short, he is out of his depth.

In the Saudi succession rules, the royal line is supposed to pass from brother to brother. There are still surviving brothers of the Saudi founding king, Ibn Saud, who have been removed from the succession. The present King Salman first broke the rules when he made his nephew Mohammed bin Nayef the Crown Prince back in April 2015. Now he has broken the rules again by making his own son the heir and unceremoniously pushing bin Nayef to the side. Such are the hijinks of despots.

Crown Prince Mohammed bin Salman is the architect behind the disastrous war in Yemen, which is turning into a Vietnam-style quagmire for Saudi Arabia, costing the kingdom billions of dollars every month. He is also reportedly the architect behind the policy of renewed hostility towards Iran. In an interview before Trump's Saudi trip, Mohammed bin Salman said he would never talk to Iran and even threatened to unleash violence on Iranian territory. That threat was followed by the deadly terror attack in Tehran on June 7 in which up to 17 people were killed by Daesh suicide squads.

The hiked-up hostile policy towards Iran has, in turn, led to Saudi Arabia blockading Qatar and causing a bitter rift in the Persian Gulf because Qatar is perceived as being too soft on Iran.

The power-struggle antics among the absolute rulers of the House of Saud have promoted a prince who has a reckless outsized ego and lust for dominance. President Donald Trump seems cut from the same cloth. Courting the young Saudi heir may be lucrative for American weapons-dealing and no doubt the Trump business brand in the oil-rich region. But the consequences of such capricious and clueless "leadership" are throwing the region and the world into increasing conflict.

This week the US State Department flatly contradicted Trump's policy of supporting the Saudi-led blockade on Qatar . It said it was mystified that the Saudis had not presented any evidence to justify the blockade. This is just one example where Trump is being made to look a total fool by following stupid Saudi policy – policy that is made by a prince who has gathered a record for disaster in several other spheres.

What a double act. Saudi despotism marries Trump cluelessness. And the world is reaping the calamity of clowns.

This article was first published by Sputnik

Gustavo Caldas · 5 days ago

An attack from Saudi Arabia to Iran will mean the demise of the Kingdom of Saudi Arabia . And the intervention of the USA in support of Saudi Arabia would mean a war of the USA against the SCO (Shangai Cooperation Organization). Those are BAD odds.

guest01 · 5 days ago

Quote from article: "America's deepening and reckless military involvement in Syria is a result of Trump cozying up with the Saudi despots."

America's deepening and reckless military involvement in Syria is a result of Trump obeying Israel's orders. America's military was recklessly involved in Syria long before Trump became president. The chaos in Syria was instigated by USA. US military trained, armed and supported terrorists, bombed Syrian military and civilians and established military base in Syria during Obama presidency.

Trump is "cozying up with the Saudi despots" because he got his orders from Netanyahu and Israelis. Before he began "cozying up with the Saudi despots", Trump ordered shooting missiles into Syrian military airport because his Zionist Jewish daughter and son-in-law told him to do so. If Netanyahu and/or his Zionist Jew son-in-law Jared Kushner were to order Trump to bomb Saudi Arabia, Trump would bomb Saudi Arabia.

All along, Trump was blaming Saudis for 9/11 inside job attacks and was threatening Saudis that they should be coming up with more money to USA just as he expected NATO members to pay for US wars costs. He was badmouthing Saudis until he got his orders from Netanyahu and Israel.

Saudis are puppets of USA; Saudis do exactly what USA wants them to do and USA does exactly what Israel wants it to do. Note that the Saudi demands against Qatar are to distance itself from all who resist Israel, namely, Lebanese Hezbollah, Hamas, Iran and Syria. Also, Israel was very pleased that Trump signed billions of dollars worth of weapons agreement with Saudi Arabia because these weapons will be used against Israel's perceived enemies and some will be given to terrorists Israel supports in that region.

Israel rules and Trump wants to make Israel great.

[Jun 25, 2017] The story about about the legendary Qatari pipeline is probably British fake

Notable quotes:
"... A pipeline through Syria would have been a great boost to national economy for a number of years & could raise a port of the country to one of global importance, just at a time that Turkey started turning the spigot of Euphrates off ..."
"... Consider that Qatar would have been a captive ally for Syria, a commodity rather in short supply for that country. The best part of it is, perhaps, that Syria presumably had a natural aversion to the transit fees. ..."
"... There is another interesting story in this regard, which is to do with (at least) three rounds of exploration for gas in Saudi Arabia, all failed, and the special need for gas to service its petrochemical industry. If memory serves, the reason is they want to upgrade the heavy crude portion of their production, which has steadily been growing, and which the Saudis might have to sell as bunker oil at great discount, if they fail to find gas. ..."
"... the Qataris were told in no uncertain terms that their gas 'had to remain in the peninsula' (Arabian subcontinent) for consumption, to serve the oil sector. ..."
"... If this is right (honestly, I do not know), it might explain quite a bit about the rivalries of the extremist Moslem clergy, and their activities both within the Moslem world and abroad, why not, even developments in Europe & the States. ..."
Jun 25, 2017 | www.moonofalabama.org

atVec | Jun 23, 2017 10:14:39 PM 52

|Jen@31 writes about the legendary Qatari pipeline. That story made its appearance early in the conflict, and if anybody knows its origin, I would be keen to be let know.
That story goes that Assad would not let Qatar have its pipeline because, presumably, Russians wanted to retain their stranglehold on European gas supplies.

The subtext is that those Russians must be very hard task masters and Assad, the lowliest of low lives, a terrified thug. And when the troubles started, Assad did not go back to the Qataris to discuss the matter over.

Sorry, I cannot square that.

A pipeline through Syria would have been a great boost to national economy for a number of years & could raise a port of the country to one of global importance, just at a time that Turkey started turning the spigot of Euphrates off (this is a sense I have, do not know if it is right) & a protracted drought and economic hardship all hit the country at the same time.

Consider that Qatar would have been a captive ally for Syria, a commodity rather in short supply for that country. The best part of it is, perhaps, that Syria presumably had a natural aversion to the transit fees.

There is another interesting story in this regard, which is to do with (at least) three rounds of exploration for gas in Saudi Arabia, all failed, and the special need for gas to service its petrochemical industry. If memory serves, the reason is they want to upgrade the heavy crude portion of their production, which has steadily been growing, and which the Saudis might have to sell as bunker oil at great discount, if they fail to find gas.

The story was run in the English papers of the Gulf circa 2012, whereby the Qataris were told in no uncertain terms that their gas 'had to remain in the peninsula' (Arabian subcontinent) for consumption, to serve the oil sector.

Once I chanced on an article on the educational proclivities of the thousands of the Saudi princes. Any guess? Yes, a good portion of them goes in for religious studies! Somehow I do not think they aspire to be lowly priests; but if not, where might they wish to have their sees? What if the other principalities of the Gulf have nobilities with similar outlooks & hopes?

If this is right (honestly, I do not know), it might explain quite a bit about the rivalries of the extremist Moslem clergy, and their activities both within the Moslem world and abroad, why not, even developments in Europe & the States.

Regards, Vec.

Lozion | Jun 23, 2017 10:24:34 PM | 53

@36 & @31 I think you are both right. The Pipelinistan angle is a major part of this feud.

A probable change of heart from Qatar who has seen the light that no regime change will happen in Syria therefore making a Fars --> Iraq --> Syria -> Lebanon LNG pipeline a realistic endeavor is causing panic in KSA/US/IS who are trying to pressure Qatar to back-off from any deals with Iran..

If Turkey is firm on protecting Qatar then the ultimatum will come to pass and be null and void..

Don Bass | Jun 24, 2017 1:34:34 AM | 57

@ Vic

Y'know, when I read a comment such as yours: "~ I don't reckon its got anything to do with a pipeline ~" I immediately think of that old trope: Better to remain silent and be thought a fool, than to open ones mouth and remove all doubts"

Vic: instead of visiting here to blatantly display your ignorance, how about more usefully spending that typing time to research the topic, hmmm?

The Imperial drive to crush Syria has been in play since the early 1980s, when Assad senior was in power.

Here's a link: http://www.globalresearch.ca/1983-cia-document-reveals-plan-to-destroy-syria-foreshadows-current-crisis/5577785

And another http://www.washingtonsblog.com/2014/07/57-years-ago-u-s-britain-approved-use-islamic-extremists-topple-syrian-government.html

And another http://www.newyorker.com/magazine/2007/03/05/the-redirection

And here's your bonus link, cause I'm feeling the karma burst of sharing http://humansarefree.com/2014/09/exposing-covert-origins-of-isis.html

Now, go and do your homework: you may be able to raise your F to a C, for a pass grade, once you've done some actual reading on the topic.

[Jun 24, 2017] The Saudi-Qatar spat - the reconciliation offer to be refused>. Qater will move closer to Turkey

Highly recommended!
Notable quotes:
"... "In my view this is a deep power struggle between Qatar and Saudi Arabia that has little to do with stated reasons regarding Muslim Brotherhood and Iran. The action to isolate Qatar was clearly instigated during US President Trump's recent visit in Riyadh where he pushed the unfortunate idea of a Saudi-led "Arab NATO" to oppose Iranian influence in the region. ..."
"... Moreover, Qatar was acting increasingly independent of the heavy Wahhabite hand of Saudi Arabia and threatening Saudi domination over the Gulf States. Kuwait, Oman, as well as non-Gulf Turkey were coming closer to Qatar and even Pakistan now may think twice about joining a Saudi-led "Arab NATO". Bin Salman has proven a disaster as a defense strategist, as proven in the Yemen debacle. ..."
"... Kuwait and Oman are urgently trying to get Saudi to backdown on this, but that is unlikely as behind Saudi Arabia stands the US and promises of tens of billions of dollars in US arms. ..."
"... This foolish US move to use their proxy, in this case Riyadh, to discipline those not "behaving" according to Washington wishes, could well be the turning point, the point of collapse of US remaining influence in the entire Middle East in the next several years." ..."
"... KSA could not have taken this course of action all by itself. Someone somewhere must be egging them on. But who? The US seems to have no interest in a Saudi-Qatari conflict. Israel might, but only if said conflict is resolved in Saudi favor. ..."
"... I am therefore coming to the conclusion that there is no longer clear leadership of US policy and there are different factions within the US government. The white house and CIA are supporting the Saudis while the Pentagon supports Qatar. This is just a hunch, but it seems like it could make sense. Perhaps this is what happens when a government is in a state of decompensation. ..."
"... It is mind boggling that a fundamental reshaping of the Middle East was most likely put in motion by Trump completely oblivious of what he was doing shooting from the hip on his Saudi trip. ..."
"... Outside of an outright invasion of Qatar by Saudi Arabia, it is hard to see this as a once in a life time geopolitical gift to Russia, Iran, Turkey, Syria, and Iran. ..."
"... Now when July 3 comes and goes, Saudi Arabia will look completely impotent in the eyes of the countries in the region. ..."
"... Gaddafi's speech to the Arab League in Syria 2008 was so prescient ..."
"... "We [the Arabs] are the enemies of one another I'm sad to say, we deceive one another, we gloat at the misfortune of one another, and we conspire against one another, and an Arab's enemy is another Arab's friend. ..."
"... I quite like the WWI parallel. Trump as Kaiser Wilhelm? There certainly are some striking similarities in character. ..."
"... "...gifted, with a quick understanding, sometimes brilliant, with a taste for the modern,-technology, industry, science -- but at the same time superficial, hasty, restless, unable to relax, without any deeper level of seriousness, without any desire for hard work or drive to see things through to the end, without any sense of sobriety, for balance and boundaries, or even for reality and real problems, uncontrollable and scarcely capable of learning from experience, desperate for applause and success, -- as Bismarck said early on in his life, he wanted every day to be his birthday-romantic, sentimental and theatrical, unsure and arrogant, with an immeasurably exaggerated self-confidence and desire to show off, a juvenile cadet, who never took the tone of the officers' mess out of his voice, and brashly wanted to play the part of the supreme warlord, full of panicky fear of a monotonous life without any diversions, and yet aimless, pathological in his hatred against his English mother." ..."
"... It also stands to reason if you simply consider Saudi's importance regionally: A lot is made of Iran's threat to Saudi influence, but Turkey - thanks in part to considerable investment by Qatar currently while investment from elsewhere has reduced massively -- is also very threatening to Saudi's influence, especially on the religious front. ..."
"... Iran representing Shia interests in the region and Turkey representing Sunni interests is not a difficult future to imagine. It would of course grate with Saudi Arabia given that it had poured vast amounts of money into the Turkish economy and the diyanet. ..."
"... Hassan Nasrallah has given his annual International Al-Quds Day speech with plenty of fire aimed at the usual suspects. The Daily Star reports: 'Nasrallah accused Saudi Arabia of "paving way for Israel" in the region. ..."
"... Actually, I hope for many more benefits will show up from this quarrel than improved profits for Iranian produce growers. It is worthwhile to observe that Dubai, a component emirate of UAE, has gigantic economic links with Iran, which must be tolerated by overlords from Abu Dhabi: they had to bail out their cousins after real estate collapse, so they have big money stake in Dubai being prosperous. Potentially, Dubai and especially the hapless vegetable and dairy producers in KSA can lose a bundle (the latter had to invest a lot in farms for Qatari market, it is not like letting cows graze on abundant grasslands plus planting cucumbers and waiting for the rain to water them). Aljazeera and Muslim Brotherhood are more irritating to KSA and UAE than an occasional polite missive to Iran. ..."
"... Qatar opened the Middle East's first centre for clearing transactions in the Chinese yuan on Tuesday, saying it would boost trade and investment between China and Gulf Arab economies. ..."
"... The only hope for Saudi Arabia is to re-denominate oil sales in multiple currencies such as the WTO drawing rights, of course based on another formula, perhaps based on the countries that purchase the most oil. This would be the only way for the royalty to gain longevity as rulers of the country. Any other scenario spells disaster. ..."
Jun 23, 2017 | www.moonofalabama.org
Pft | Jun 23, 2017 8:43:28 PM | 45
William Engdahls views. "In my view this is a deep power struggle between Qatar and Saudi Arabia that has little to do with stated reasons regarding Muslim Brotherhood and Iran. The action to isolate Qatar was clearly instigated during US President Trump's recent visit in Riyadh where he pushed the unfortunate idea of a Saudi-led "Arab NATO" to oppose Iranian influence in the region.

The Saudi move, clearly instigated by Prince Bin Salman, Minister of Defense, was not about going against terrorism. If it were about terrorism, bin Salman would have to arrest himself and most of his Saudi cabinet as one of the largest financiers of terrorism in the world, and shut all Saudi-financed madrasses around the world, from Pakistan to Bosnia-Herzgovina to Kosovo. Another factor according to informed sources in Holland is that Washington wanted to punish Qatar for seeking natural gas sales with China priced not in US dollars but in Renminbi. That apparently alarmed Washington, as Qatar is the world's largest LNG exporter and most to Asia.

Moreover, Qatar was acting increasingly independent of the heavy Wahhabite hand of Saudi Arabia and threatening Saudi domination over the Gulf States. Kuwait, Oman, as well as non-Gulf Turkey were coming closer to Qatar and even Pakistan now may think twice about joining a Saudi-led "Arab NATO". Bin Salman has proven a disaster as a defense strategist, as proven in the Yemen debacle.

As to the future, it appears that Qatar is not about to rollover and surrender in face of Saudi actions. Already Sheikh Tamim bin Hamad al-Thani is moving to establish closer ties with Iran, with Turkey that might include Turkish military support, and most recently with Russia.

Kuwait and Oman are urgently trying to get Saudi to backdown on this, but that is unlikely as behind Saudi Arabia stands the US and promises of tens of billions of dollars in US arms.

This foolish US move to use their proxy, in this case Riyadh, to discipline those not "behaving" according to Washington wishes, could well be the turning point, the point of collapse of US remaining influence in the entire Middle East in the next several years."

lysander | Jun 23, 2017 7:43:17 PM | 42
KSA could not have taken this course of action all by itself. Someone somewhere must be egging them on. But who? The US seems to have no interest in a Saudi-Qatari conflict. Israel might, but only if said conflict is resolved in Saudi favor.

I am therefore coming to the conclusion that there is no longer clear leadership of US policy and there are different factions within the US government. The white house and CIA are supporting the Saudis while the Pentagon supports Qatar. This is just a hunch, but it seems like it could make sense. Perhaps this is what happens when a government is in a state of decompensation.

R Winner | Jun 23, 2017 1:41:04 PM | 4

It is mind boggling that a fundamental reshaping of the Middle East was most likely put in motion by Trump completely oblivious of what he was doing shooting from the hip on his Saudi trip.

Outside of an outright invasion of Qatar by Saudi Arabia, it is hard to see this as a once in a life time geopolitical gift to Russia, Iran, Turkey, Syria, and Iran.

Juggs | Jun 23, 2017 2:24:33 PM | 9
Now when July 3 comes and goes, Saudi Arabia will look completely impotent in the eyes of the countries in the region.

I wonder if there is some sort of interest between Russia, Turkey, Qatar, and Iran on a coup in Saudi Arabia. I can't imagine it would be that difficult. I know it is not Putin's policy to play these types of games like the US Regime, but one has to assume that people are just fucking done with the clowns running Saudi Arabia.

harrylaw | Jun 23, 2017 2:36:39 PM | 10
Gaddafi's speech to the Arab League in Syria 2008 was so prescient..

"We [the Arabs] are the enemies of one another I'm sad to say, we deceive one another, we gloat at the misfortune of one another, and we conspire against one another, and an Arab's enemy is another Arab's friend.

Along comes a foreign power, occupies an Arab country [Iraq] and hangs its President,and we all sit on the sidelines laughing. Any one of you might be next, yes.

https://www.youtube.com/watch?v=VZZvPlGCt_8

okie farmer | Jun 23, 2017 2:37:39 PM | 11
https://www.theguardian.com/world/2017/jun/23/close-al-jazeera-saudi-arabia-issues-qatar-with-13-demands-to-end-blockade
Qatar given 10 days to meet 13 sweeping demands by Saudi Arabia
Gulf dispute deepens as allies issue ultimatum for ending blockade that includes closing al-Jazeera and cutting back ties with Iran
Juggs | Jun 23, 2017 2:41:55 PM | 13
Peter AU "Is Qatar, like Turkey, already heading for a multi-polar world? For 25 years, the US was the only game in town, but with Russia's move into Syria there are now options."

Hard to see the world heading in that direction:

I wonder if Qatar is already in talks with China about joining the Silk Road Initiative now that it is openly moving into the Russia and Iran sphere.

karlof1 | Jun 23, 2017 3:06:36 PM | 16
Juggs 13--

"I wonder if Qatar is already in talks with China about joining the Silk Road Initiative..."

You'll find the answer's yes as Pepe explains, https://sputniknews.com/columnists/201706161054701807-west-cannot-smell-what-eurasia-cooking/ and http://www.atimes.com/article/blood-tracks-new-silk-roads/

dh | Jun 23, 2017 3:20:35 PM | 19
@17 The best is yet to come. There's a chance Netanyahu will fly into Riyadh to tell everybody what to do. I'm sure he wants what's best for the region.
L'Akratique | Jun 23, 2017 3:29:54 PM | 20
I quite like the WWI parallel. Trump as Kaiser Wilhelm? There certainly are some striking similarities in character.

Quote from Thomas Nipperdey:

"...gifted, with a quick understanding, sometimes brilliant, with a taste for the modern,-technology, industry, science -- but at the same time superficial, hasty, restless, unable to relax, without any deeper level of seriousness, without any desire for hard work or drive to see things through to the end, without any sense of sobriety, for balance and boundaries, or even for reality and real problems, uncontrollable and scarcely capable of learning from experience, desperate for applause and success, -- as Bismarck said early on in his life, he wanted every day to be his birthday-romantic, sentimental and theatrical, unsure and arrogant, with an immeasurably exaggerated self-confidence and desire to show off, a juvenile cadet, who never took the tone of the officers' mess out of his voice, and brashly wanted to play the part of the supreme warlord, full of panicky fear of a monotonous life without any diversions, and yet aimless, pathological in his hatred against his English mother."

cankles | Jun 23, 2017 4:05:49 PM | 25
@Laguerre #23
I have difficulty in seeing a relationship with the Silk Road Initiative, other than that Qatar exports a lot of LNG to China.

China Eyes Qatar in its Quest to Build a New Silk Road

Last month at the China-Arab Cooperation Forum in Doha, Chinese Foreign Minister Wang Yi postulated that Qatar should take part in the realization of China's Silk Road Initiatives.
Laguerre | Jun 23, 2017 4:42:05 PM | 27
@cankles | Jun 23, 2017 4:05:49 PM | 25

Yeah, you're right. I hadn't looked into the question sufficiently. Of course the Chinese are looking for more external finance for the project. They don't want to be the only ones who pay. Fat chance, though. The Qataris have been in austerity since the decline in the oil price. Someone I know who works in the Qatar Museum has seen all her colleagues let go. And now the crisis with Saudi.

The Qataris may even have signed contracts with China. But if you know anything about the Gulf, there's a wide gap between signing a contract, and actually getting paid. It depends upon how the prince concerned feels about the project when the question of payment comes up. A company I worked for in the 80s took two years to get payment, even though they were experts in Gulfi relations.

AtaBrit | Jun 23, 2017 4:51:40 PM | 28
Great piece.

The issue of the threat regarding the Turkish base didn't surprise me much, though. I think it's clear that if MB is the target, then of course Turkey has to become a target, and Qatar - Turkey ties have to be broken. It stands to reason.

It also stands to reason if you simply consider Saudi's importance regionally: A lot is made of Iran's threat to Saudi influence, but Turkey - thanks in part to considerable investment by Qatar currently while investment from elsewhere has reduced massively -- is also very threatening to Saudi's influence, especially on the religious front.

Iran representing Shia interests in the region and Turkey representing Sunni interests is not a difficult future to imagine. It would of course grate with Saudi Arabia given that it had poured vast amounts of money into the Turkish economy and the diyanet.

On a slightly different note there's a scandal going on in western Turkey, in Duzce, at the moment because the local authority has unveiled a statue of Rabia - the four fingered Muslim Brotherhood salute! :-)

Mina | Jun 23, 2017 5:09:45 PM | 29
http://english.ahram.org.eg/NewsContent/2/8/271450/World/Region/UN-blames-warring-sides-for-Yemens-cholera-catastr.aspx
let's blame underfed guys in skirts for fun
karlof1 | Jun 23, 2017 5:16:47 PM | 30
Hassan Nasrallah has given his annual International Al-Quds Day speech with plenty of fire aimed at the usual suspects. The Daily Star reports: 'Nasrallah accused Saudi Arabia of "paving way for Israel" in the region.

'"It's unfortunate that Saudi Arabia is the head of terrorism and today it's holding its neighbors accountable for supporting terrorism," Nasrallah said, hinting to the recent economic sanctions against Qatar.' https://www.dailystar.com.lb/News/Lebanon-News/2017/Jun-23/410688-nasrallah-says-regional-conflicts-seek-to-serve-israel-interest.ashx

Al-Manar provides this report, http://english.almanar.com.lb/292250

Unfortunately, I cannot locate an English language transcript, although one might become available eventually as is usually the case.

Piotr Berman | Jun 23, 2017 6:42:14 PM | 36
Piotr Berman

Aljazeera evil? Are you joking? ....

@Anon | Jun 23, 2017 3:47:56 PM | 24

You did not address the argument I made, namely, that Aljazeera editors apparently belong to "Muslims, who immediately set out to support it [Darwinian theory of evolution] unaware of the blasphemy and error in it." These guys pretend to be nice Wahhabis, dressing in dishdashas, their womenfolks in abayas, but in fact they spread heretical and blasphemous doctrines. However, I am more of a Khazar than a Wahhabi and I do not treat this argument seriously.

It is the fact that compared to other government supported TV/online venues, say RT or PressTV, Aljazeera is well written and edited, has plenty of valuable material, etc. It is a worthwhile place to check when you want to get a composite picture on some issues. And it irritates KSA potentates in a myriad of ways, precisely because it targets "politically engaged Muslim".

It is a good example that pluralism has inherent positive aspects, devils that quarrel are better than "One Ring to rule them all, One Ring to find them, One Ring to bring them all, and in the darkness bind them."

====

Actually, I hope for many more benefits will show up from this quarrel than improved profits for Iranian produce growers. It is worthwhile to observe that Dubai, a component emirate of UAE, has gigantic economic links with Iran, which must be tolerated by overlords from Abu Dhabi: they had to bail out their cousins after real estate collapse, so they have big money stake in Dubai being prosperous. Potentially, Dubai and especially the hapless vegetable and dairy producers in KSA can lose a bundle (the latter had to invest a lot in farms for Qatari market, it is not like letting cows graze on abundant grasslands plus planting cucumbers and waiting for the rain to water them). Aljazeera and Muslim Brotherhood are more irritating to KSA and UAE than an occasional polite missive to Iran.

One pattern in Syrian civil war were persistent and bloody feuds between jihadists that formed roughly four groups:

  1. "salafi", presumably funded by KSA,
  2. "brothers", presumably funded by Qatar and Turkey,
  3. al-Qaeda/al-Nusra/something new that was forcing the first two groups to surrender some weapons (and money?),
  4. and ISIS that had more complex sources (or more hidden).

Medium term strategy of Syrian government and allies for the near future is to "de-escalate" in the western part of the country and finish off ISIS, partitioning hitherto ISIS territories in some satisfactory way, while maintaining some type of truce with the Kurds. Then finish off the jihadists, except those most directly protected by Turkey. Finally, take care of the Kurds. Some sufficiently safe federalism can be part of the solution, but nothing that would lead to enclaves with their own military forces and their own foreign policy, like Iraqi Kurdistan.

That requires the opposing parties to exhibit somewhat suicidal behavior. A big time official feud between "brothers" and "salafi + Kurds" (a pair that shares some funding but with scant mutual affection" can help a lot. Most of all, a big time feud between Turkey and KSA can stabilize the situation in which jihadists from Idlib and northern Hama observe a truce/de-escalation, while their colleagues from south Syria get clobbered, and definitely will induce them to refrain from attacking Syrian government while it is busy against ISIS. After Erdogan was prevented from marching onto Raqqa, he has two options: "Sunnistan" in eastern Syria under domination of YPG or a much smaller YPG dominated territory that can be subsequently digested. Option one is a true nightmare for Erdogan, more than a mere paranoia. However, Erdogan is also "pan-Sunni" Islamist, so he could be tempted to backstab infidels from Damascus, as he was doing before. An open feud with Sunnistan sponsors should help him to choose.

likklemore | Jun 23, 2017 6:49:14 PM | 37
Cankles @ 25 Is that really you? If so, you should know -

Look behind the curtain. This has to do with maintaining the price of oil in US$.

Qatar launches first Chinese yuan clearing hub in Middle East .

Qatar opened the Middle East's first centre for clearing transactions in the Chinese yuan on Tuesday, saying it would boost trade and investment between China and Gulf Arab economies.

"The launch of the region's first renminbi clearing center in Doha creates the necessary platform to realise the full potential of Qatar and the region's trade relationship with China," Qatar's central bank governor Sheikh Abdullah bin Saud al-Thani said at a ceremony.

"It will facilitate greater cross-border renminbi investment and financing business, and promote greater trade and economic links between China and the region, paving the way for better financial cooperation and enhancing the pre-eminence of Qatar as a financial hub in MENA (Middle East and North Africa)."
Industrial and Commercial Bank of China's (ICBC) Doha branch is the clearing bank for the centre, which intends to serve companies from around the Middle East.

A clearing bank can handle all parts of a currency transaction from when a commitment is made until it is settled, reducing costs and time taken for trading.

The centre "will improve the ease of transactions between companies in the region and China by allowing them to settle their trade directly in renminbi, drawing increased trade through Qatar and boosting bilateral and economic collaboration between Qatar and China," said ICBC chairman Jiang Jianqing.

At present, Qatar and the Gulf's other wealthy oil and gas exporters use the U.S. dollar much more than the yuan. Most of their currencies are pegged to the dollar, and most of their huge foreign currency reserves are denominated in dollars.

Laguerre @27

Date of article April 24, 2017

In April 2015, Qatar opened Qatar Renminbi Centre (QRC), the region's first clearing centre for the Chinese currency. This allows for trades priced in RMB to be cleared locally in Qatar rather than in other centres such as Shanghai or Hong Kong.ICBC has since become the designated clearance bank servicing the QRC, which has handled more than 350bn yuan ($52.6bn) since its inception.
http://emerge85.io/blog/the-middle-kingdoms-big-four-and-the-gulf

~ ~ ~ ~
Trending and not very far to seeing what is now held under the table. Oil will also be priced in RMB because KSA, to maintain their share of exports to China, will need to get on board. For now, it's been reaffirmed, SA does the whipping and USA protects the Royals.

rawdawgbugfalo | Jun 23, 2017 6:54:19 PM | 38
Well said, I still think this is all dreamlike. Having natural gas and sharing it with Iran is a mf.

Qatar: Is it about Trump, Israel or Nascent Influence? http://wsenmw.blogspot.com/2017/06/qatar-is-it-about-trump-israel-or.html

Piotr Berman | Jun 23, 2017 7:34:43 PM | 40
About Sunni-Shia split. My impression is that this is mostly KSA + UAE obsession. For example, there is a substantial Shia minority in Pakistan, but the dominant thinking among the Sunnis seems to be "Muslim solidarity". There is a minority that is virulently anti-Shia, but they are politically isolated and despised exactly on the account of breaking that solidarity. After all, Pakistan forms the boundary of the Umma with non-Muslim India. I base that opinion on comments in online Pakistani newspapers, and what I have heard from an acquaintance who was a religiously conservative Sunni Pakistani. To him, the attack on Yemen by KSA was wrong "because they are Muslim". So even if Pakistan is to a certain extend in Saudi pocket, and its deep state has an extremist Sunni component, overt siding against "fellow Muslim" is out of the question.

Egypt is another case. One can find rather isolated anti-Shia outbursts, like writings of some fossils in Al-Azhar (who are responsible for the state religion), but the government steers away from that, and in spite of hefty subsidies, it joined Yemen war only symbolically and for a very short time (unlike Sudan that really needs the cash for its mercenaries). As you move further away from the Persian Gulf, the indifference to the "split" increases. As far as Qatar and Aljazeera are concerned, probably no one detests them more than Egyptian elite, as they were valiantly fighting Muslim Brotherhood for the sake of progress with some occasional large massacres (killing several hundreds of protesters, issuing hundreds of death penalties to participants in a single protest, in absentia! incredible idiocy+cruelty). That explains why al-Sisi joined KSA against Qatar.

However, the civil war in Libya that embroils Egypt is a classic case of unexpected alliances. Egypt with a help from Russia, KSA and UAE supports the "eastern government" that bases legitimacy on democratic parliament re-assembled in Tobruq on Egyptian border, and dominated by military strongman Haftar. The latter has the best chance of all people to become a military strongman of all Libya, but apparently has meager popularity and thus, too few troops. He patched that problem by an alliance with a Salafi group that had a numerous militia, currently partitioned into smaller units and incorporated into Haftar's brigades. Even with that, his progress on the ground is very, very gradual. Against him is the government in Tripolis, legitimized by a more fresh parliament and UN/EU, plus a military force that includes several militias. Part of the parliamentary support stems from Muslim Brotherhood, and some part of military support comes from Salafi militias. There are also aspects of a "war of all against all", seems that Saharan tribes collected a lot of fresh blood feuds.

Thus Qatari+Turkish support for Tripoli government is aligned with EU, and Egyptian support for Tobruq government is aligned with Russia and KSA.

Dusty | Jun 23, 2017 7:38:26 PM | 41
I thought I might just throw this out there and see what sticks. US policy is based on power and control. Saudi Arabia has been a good ally but it does not serve use policy or strategic goals any longer. Not really. I think the grand prize for destabilizing the middle east is Saudi Arabia. It would be the only way to truly control the development of other nations or more specifically, to control their rivalries and save the the US from complete economic breakdown. The Saudi's are being plumbed by the best of them, telling them they are you friends, we have your back and so long as Saudi Arabia loses more money and keeps lossing money in needless wars etc.

The only hope for Saudi Arabia is to re-denominate oil sales in multiple currencies such as the WTO drawing rights, of course based on another formula, perhaps based on the countries that purchase the most oil. This would be the only way for the royalty to gain longevity as rulers of the country. Any other scenario spells disaster. Of course, it would be a rough go for them for a while, but in the end, a slight change in outlook and the unfair advantage given to the US would go a long way, economically to stabilizing large blocks of countries. They also could of course change their outlook on the world, but that is certainly a difficult challenge. If the Muslim world came together based on their similarities, they could be a very powerful block.

The US no longer has the financial velocity it once maintained and this is much more due to insane ideas about being a hegemon. I never thought revolution would be possible in the US, but it is coming and it won't take much. The country does not appear to have intelligence peddle back a number of policies, drunk on its own poison, it makes capitalism look disgusting. A new business model is needed, one that developes mutual trade based on respect from within the exchange itself. Saudi Arabia needs to cultivate multi-channel support for its biggest resource so that when the returns are no longer there, they will have also developed multiple avenues to prosperity. Just a thought.

[Jun 14, 2017] The Saudi War Against Qatar by Justin Raimondo

Notable quotes:
"... Which leads us to a larger question: who benefits? Clearly both the Saudis and the Israelis – whose semi-clandestine alliance has been documented in this space – had everything to gain from this intra-Arab spat. United by fear and hatred of Iran, Riyadh and Tel Aviv have been quietly cooperating to unite the Sunni Arabs against Iran – and draw the United States into open conflict with Tehran. Both abhorred and denounced the Iran deal, and are seeking to actively undermine it: that's another item at the top of the FDD/UAE meet up. ..."
"... Another factor is the relationship between Mr. Al-Taiba and Jared Kushner, Trump's son-in-law and a powerful figure in the administration: the ambassador has been described as Kushner's " mentor " when it comes to schooling him on all matters Middle Eastern. Kushner, for his part, is a strong advocate for Israel. ..."
"... There are no innocents, no "good guys" in this part of the world: the reality is that all of these Middle Eastern actors have been subsidizing terrorist outfits, in Syria and elsewhere. The Saudis are perhaps the worst offenders : their worldwide network of radical Wahabist mosques and "educational" outfits has been pushing a terrorist agenda for decades. ..."
"... The UAE has also been a lucrative source of funding for radical Islamic terrorism, notably in Afghanistan and Pakistan . And while Qatar has not been stingy in this regard, its stance has been notably non-sectarian: while they've given support to the Muslim Brotherhood – perhaps the least radical Sunni organization – they are also capable of sending official congratulations to recently re-elected Iranian President Hassan Rouhani. ..."
"... This is their great "sin" in the eyes of the Saudi-led Sunni Axis: they have tried to mediate the Sunni-Shi'ite religious war, which threatens the entire region with the kind of bloody turmoil that occasioned Europe's Thirty Years' War between Catholics and Protestants. ..."
"... The crazy notion that Iran is the world's leading exporter of terrorism is a page right out of the Israeli-Saudi playbook ..."
"... The Saudi-Qatari conflict has all the hallmarks of a joint Saudi-Israeli operation, complete with cyber-hacking, a full-scale propaganda war, and a clueless Uncle Sam stupidly falling for a brazen deception. What's amazing is that, despite the plethora of evidence that the whole thing is a pretty transparent put up job, the usual suspects continue to get away with it. ..."
www.moonofalabama.org

Despite the Qataris' claim – since verified by the FBI, according to Qatar's foreign minister – that the Qatar News Agency site had been hacked, and that the Emir had given no such speech, both the Saudis and the UAkE, through their official media outlets, launched a campaign targeting Qatar. Overflight rights were revoked: diplomatic contacts ended: Qatar citizens were forbidden to enter Saudi/UAE territory even to change planes. And in a public statement delivered in the rose garden of the White House President Trump clearly sided with the Saudi/UAE consortium, complementing a series of remarkably stupid tweets that basically said the same thing.

The US news media managed to get a Russian angle on all this, claiming that "Russian hackers" were behind the targeting of the Qatar News Agency: as usual they offered no evidence for this assertion. Yet just who was behind this hacking incident seems crucial to understanding the real genesis of – and motive behind – the Qatar controversy, which could augur a new regional crisis possibly dragging in Iran.

So let's look at the timeline in the context of yet another hacking incident, this one involving the hotmail account of Yousef Al-Otaiba, the UAE's well-connected ambassador to the US. The Saudi-Qatari conflict has all the hallmarks of a joint Saudi-Israeli operation, complete with cyber-hacking, a full-scale propaganda war, and a clueless Uncle Sam stupidly falling for a brazen deception. What's amazing is that, despite the plethora of evidence that the whole thing is a pretty transparent put up job, the usual suspects continue to get away with it. he hackers, who call themselves "GlobalLeaks," released a tranche of emails between Al-Taiba and individuals connected to the Foundation for the Defense of Democracies (FDD). The Foundation is a pro-Israel thinktank originally called "Emet: An Educational Initiative, Inc.," founded in 2001 by a group of pro-Israel billionaires and designed to blunt growing American sympathy for the Palestinians. FDD has since expanded its mission, under chief honcho Clifford May, to encompass a full-scale projection of Israeli propaganda in the US. The Otaiba-FDD emails reveal extensive cooperation between the ostensibly ultra-Islamic UAE – which, like its Saudi allies and much of the Arab world, has never recognized the state of Israel - and the staunchly Zionist FDD. (See some of the emails here, here, here, and here.) A great deal of the back and forth is between FDD general counsel and former Bush era National Security Advisor John Hannah and Mr. Al-Otaiba.

The emails detail FDD's efforts to show Al-Otaiba that UAE companies doing business with Iran need to be sanctioned: a "target list" is included. The correspondence also details plans for a June 11-14 meeting with FDD personnel and UAE political and military officials, including the ambassador, FDD CEO Mark Dubowitz, and former US defense secretary Robert Gates. And most significantly, on the agenda was "discussion of possible U.S./UAE policies to positively impact Iranian internal situation" including "political, economic, military, intelligence, and cyber tools" designed to "contain and defeat Iranian aggression."

Hmmmm "cyber tools," eh?

Now add to the timeline this reporting by the New York Times:

"[T]hree days after the Trump meeting in Riyadh, the Foundation for the Defense of Democracies held a conference in Washington dedicated to criticism of Qatar, titled 'Qatar and the Muslim Brotherhood's Global Affiliates.'

"Robert M. Gates, the former defense secretary and a friend of Mr. Otaiba, gave the keynote. Attendees included many of the authors of the critical op-ed articles and senior Obama administration officials. Organizers encouraged Mr. Otaiba to attend, and his staff sent Abu Dhabi, the Emirati capital, a detailed report.

"No representative of Qatar was invited. The hack of the Qatari news agency took place after midnight that night."

What a coincidence!

As this piece in the Washington Post puts it, the speculation that "Russian hackers" under Russian state control are behind the Qatar hack is "unlikely." Emails from the hackers bearing Russian "(.ru) addresses seem designed to put detectives off the trail. The Post piece avers that hackers-for-hire were the responsible parties, but the question is: who were they working for?

Which leads us to a larger question: who benefits? Clearly both the Saudis and the Israelis – whose semi-clandestine alliance has been documented in this space – had everything to gain from this intra-Arab spat. United by fear and hatred of Iran, Riyadh and Tel Aviv have been quietly cooperating to unite the Sunni Arabs against Iran – and draw the United States into open conflict with Tehran. Both abhorred and denounced the Iran deal, and are seeking to actively undermine it: that's another item at the top of the FDD/UAE meet up.

Another factor is the relationship between Mr. Al-Taiba and Jared Kushner, Trump's son-in-law and a powerful figure in the administration: the ambassador has been described as Kushner's "mentor" when it comes to schooling him on all matters Middle Eastern. Kushner, for his part, is a strong advocate for Israel.

There are no innocents, no "good guys" in this part of the world: the reality is that all of these Middle Eastern actors have been subsidizing terrorist outfits, in Syria and elsewhere. The Saudis are perhaps the worst offenders: their worldwide network of radical Wahabist mosques and "educational" outfits has been pushing a terrorist agenda for decades.

The UAE has also been a lucrative source of funding for radical Islamic terrorism, notably in Afghanistan and Pakistan. And while Qatar has not been stingy in this regard, its stance has been notably non-sectarian: while they've given support to the Muslim Brotherhood – perhaps the least radical Sunni organization – they are also capable of sending official congratulations to recently re-elected Iranian President Hassan Rouhani.

This is their great "sin" in the eyes of the Saudi-led Sunni Axis: they have tried to mediate the Sunni-Shi'ite religious war, which threatens the entire region with the kind of bloody turmoil that occasioned Europe's Thirty Years' War between Catholics and Protestants.

The idea that Qatar is solely responsible for the growth and development of Middle Eastern terrorism is laughable on its face: that narrative simply won't stand even the most careless scrutiny. And the proposition that Saudi Arabia is any kind of anti-terrorist bulwark is a cruel joke. That the Trump administration is taking this line is absolutely criminal: it amounts to appeasing and succoring the epicenter of radical Islamic terrorism.

The crazy notion that Iran is the world's leading exporter of terrorism is a page right out of the Israeli-Saudi playbook: for the Trump administration to echo this nonsense contradicts the facts and contravenes American interests in the region. For it is the Saudis who have been funding and arming ISIS, and al-Qaeda, in Syria. And the Israelis have openly proclaimed their preference for ISIS over Syrian strongman Bashar al-Assad. It is radical Sunni fundamentalists, not pro-Iranian Shi'ites, who have been conducting a global jihad against American and European targets. Iran is fighting ISIS in Syria – while the US in bombing Syrian government troops, the main obstacle to the ISIS/al-Qaeda forces.

The Saudi-Qatari conflict has all the hallmarks of a joint Saudi-Israeli operation, complete with cyber-hacking, a full-scale propaganda war, and a clueless Uncle Sam stupidly falling for a brazen deception. What's amazing is that, despite the plethora of evidence that the whole thing is a pretty transparent put up job, the usual suspects continue to get away with it.

... ... ...

[May 30, 2017] Saudi nobility might escape leaving the peasantry behind to sort things out

May 30, 2017 | peakoilbarrel.com
Eulenspiegel says: 05/24/2017 at 3:20 am
Saudi Arabia and independend from oil? Good joke.

They are that wasteful, they never had to look for costs, they need foreign workers for anything they do – that won't work out.

At the moment they have zero income without energy sector, if you don't count the Hadsch around Mekka as income.
And they are too big to copy the Dubai model, just to build real estate as an industry to live from.

They could go solar – but then they should start to invest billions in infrastructure to sell the stuff to Europe and China now.

George Kaplan says: 05/24/2017 at 10:00 am
I'll bet some money is going into upgrading their escape pod fleet of jets.
Caelan MacIntyre says: 05/24/2017 at 6:31 pm
My chips in for that bet too. Leave the peasantry behind to sort things out.

Perpetual Fall to the Sun

[May 29, 2017] Irans Supreme Leader Saudis Are Worthless, Inept, Villainous Milk Cows for the Americans

May 29, 2017 | www.breitbart.com
Iranian Supreme Leader Ayatollah Khamenei launched his latest rhetorical broadside at Iran's arch-rivals in Saudi Arabia from a ceremony commemorating the Muslim holiday of Ramadan on Saturday. Khamenei said the Saudi rulers are "worthless, inept, and villainous."

Khamenei also insulted the Saudis as "idiots" for thinking they could purchase the friendship of "pagans and enemies" with their oil money, describing them as "milk cows for the Americans."

Khamenei said the Muslim world is in "grave danger" because of leaders like the Saudis and their "refusal to follow the Koran and lack of belief in the truth." The Saudi monarchy is a major force in the world of Sunni Islam, while Iran's theocracy leads the Shiites, putting them on the opposite side of a religious schism that reaches back to the 7th Century.

That ancient conflict is mixed with contemporary geopolitical concerns, such as the civil war in Yemen, which has become a proxy war between Iran and Saudi Arabia.

The Supreme Leader of Iran, which supports the Shiite Houthi insurgents against the internationally recognized government of Yemen, blamed the Saudis for the continuing bloodshed in that war-torn country, as well as the oppression of Shiites by the Sunni government of Saudi Arabia's allies in Bahrain. Iran's Foreign Minister recently added another link to that chain of blame by accusing U.S. President Donald Trump of emboldening the government of Bahrain to crack down on Shiite demonstrators.

"They act cordially towards the enemies of Islam while having the opposite behavior towards the Muslim people of Bahrain and Yemen. They will face certain downfall," Khamenei predicted.

He blasted the Saudis for signing a multibillion-dollar arms deal with the "infidel" Americans, saying that the money should have been used to "improve the lives of their own people."

Fox News notes that recently re-elected Iranian President Hassan Rouhani, whose more moderate approach is frequently at odds with the "hardline" ayatollahs, has been calling for improved relations with Sunni nations.

"We want the rule of moderation and rationality in the relations between countries and we believe that a political solution should be a priority. The countries of the region need more cooperation and consultations to resolve the crisis in the region and we are ready to cooperate in this field," Rouhani said during a telephone conversation with the Emir of Qatar.

Rouhani's outreach to Qatar might be a little on the opportunistic side, since the emirate is currently experiencing a bit of turbulence in its relationships with Saudi Arabia, Egypt, and other major Saudi states. In fact, on Monday a minister from the United Arab Emirates described the rift as a "severe" crisis that could pose a "grave danger" to the future of the Gulf Cooperation Council.

[May 25, 2017] EconoSpeak Some Saudi-US History

May 25, 2017 | econospeak.blogspot.com
Given Donald Trump's new commitment to support military adventurism by Saudi Arabia in Yemen and more generally against Iran, it might be worth reconsidering how this alliance developed.

The beginning for Saudi Arabia was in 1744 when a wandering radical cleric, Mohammed bin Abdel-Wahhab met up with a local chieftain, Mohammed bin Saud in the village of Diriyah, whose ruins are now located in the suburbs of the current Saudi Arabian capital, Riyadh. Wahhab converted Saud to his cause of spreading the strictest of the four Sunni shari'as, the Hanbali code, throughout the world, and this remains to this day the ideology of the House of Saud, the ruling family of Saudi Arabia, with this ideology widely known as Wahhabism. The territory ruled by the early Saudis expanded to cover a fair amount of the Nejd, the central portion of the Arabian peninsula, but when they threatened control of Mecca in 1818, ruled by Egyptians under the Ottomans who collected the moneys gained from pilgrims visiting there, the Egyptian leader, Muhammed Ali, invaded the Nejd and destroyed Diriyah. The Saud family moved to the next village over, Riyadh, and reconstructed their small state, which expanded again in the mid-1800s, although near the end of the century they were defeated and exiled to Kuwait by the rival Rashid family from Hail to the north of Riyadh.

In 1902 the 27 year old family leader, Abdulaziz bin al-Rahman bin Faisal al Saud, reconquered Riyadh and would eventually establish the modern Kingdom of Saudi Arabia (KSA) through marital and martial conquests, with its modern boundaries established in 1932, and Abdulaziz (known in the West as "Ibn Saud") bearing the title of King and Protector of the Two Holy Places (Mecca and Medina), which he had conqurered in 1924. He would have 43 sons, and today's king, 81-year old Salman, is one of the last of them, and Abdulaziz would die in 1953. It should be noted that Saudi Arabia was independent of the Ottoman Empire, and was one of the few parts of the Muslim world that did not fall under the rule of a European power, along with Turkey, Persia/Iran, and Afghanistan.

In the early years, especially in the 1920s, he sought outside advice and support from the British, especially St-John Philby, the rival at Whitehall of T.E. Lawrence, and the first European to cross the Empty Quarter of the Arabian peninsula. Philby was especially helpful during the revolt by the combined forces of the Rashidi and the Ikhwan (Muslim Brotherhood) whom Abdulaziz managed to defeat in 1929, with the rebels pushing an ultra-fundamentalist line against Abdulaziz (an replay of this revolt occurred 50 years later in 1979, with the Ikhwan seizing control of the Grand Mosque in Mecca for a time). Philby would convert to Islam and take several wives. He was also the father of later Soviet spy, Kim Philby.

The first interest by anybody in the US came out of two agreements in 1928 and 1929, the Red Line Agreement that gave the territories of the former Ottoman Empire to a set of British and French companies, and then the As Is agreement of 1929 between Sir Henri Deterding of Royal Dutch Shell, Baron John Cadman of Anglo-Persian (now BP), and Walter Teagle of New Jersey Standard (now Exxon Mobil) at Deterding's Achnacarry Castle in Scotland. These agreements amounted to an early effort to divide up the oil producing world in a cartel. Out of this, Jersey Standard got Saudi Arabia, although at the time oil had not been discovered there. It would be in 1938 by geologists from Jersey Standard, and agreements for production with cash payments for Abdulaziz in gold bars were made. In 1948, Abdulaziz would become the first leader of an oil-producing nation to succeed in getting a 50-50 profit sharing agreement, and as oil production surged there in the 1950s and after, the money would begin to flow into Saudi Arabia providing the basis for its modernization, even as it retained its highly traditional and strict version of Wahhabist Islam and Hanbali shari'a law code.

While Saudi Arabia initially favored Nazi Germany at the beginning of World War II, much like Iran then, it gradually shifted to the Allied side, with FDR declaring the protection of Saudi oil reserves a US national interest in 1943, and the Saudis officially declaring war on Germany in early 1945. It is widely viewed in KSA that the alliance was sealed in 1945 when FDR was returning from Yalta shortly before his death and met briefly on a boat in the Suez Canal with King Abdulaziz, producing a famous photograph of the two of them smiling and shaking hands, shortly before FDR's death. And indeed, despite some ups and downs, the alliance has held since, with oil at its center.

Given that, the nature of the relationship has changed substantially over time. One major change, signaled initiallly by that 50-50 profit sharing agreement in 1948, was an increase in Saudi control over the oil aspect of it, with OPEC founded in 1960, which would impose a quadrupling of oil prices in 1973 in the wake of the Saudi oil export embargo against the US for the US supporting Israel in the Yom Kippur war of that year. Prior to that embargo, KSA had managed to nationalize ARAMCO, the Arabian-American Oil Company, which produced the oil in Saudi Arabia, the original owners of ARAMCO being Jersey Standard, New York Standard (Mobil, now merged with Exxon), Texaco, and California Standard (now Chevron). These companies, especially Exxon Mobil, continue to have an active relationship with ARAMCO, but the Saudis have been in control of their oil and their oil industry since the beginning of the 1970s. This shifted the relationship to being one more of the US becoming the protector of KSA, providing it with arms as the petrodollars poured in, and this aspect of the relationship has reached a new height with this latest visit and arms deal, arranged by former Exxon Mobil CEO and now SecState, Tillerson.

It is worth noting also that for most of the postwar period probably the major irritant in the Saudi-US relationship has been Israel, which even now KSA does not recognize, and Trump's flight from Riyadh to Tel Aviv was the first such direct flight on that route ever. Israel supporters for many years complained about "Arabists" in the US State Department who were more oriented to worrying US oil interests in the Middle East and especially in Saudi Arabia. But today there is now an alliance of convenience between KSA and Israel in their mutual dislike of Iran.

Which brings us to the current situation. I personally think that the current Saudi leadership has gone off the rails in their anti-Iran attitudes. The differences are both sectarian and ethnic, Sunni versus Shi'i Islam and Semitic Arabs versus Indo-European Iranians, with this manifesting itself in a regional power struggle. But this is a relatively recent conflict, only getting going since the 1979 Islamic Revolution in Iran, and only getting really hot with the overthrow of Saddam Hussein by the US under George W. Bush. It was the Saudis who convinced Bush's dad not to go to Baghdad to overthrow Saddam in the 1991 Gulf War, arguing that he kept a balance of power as a Sunni Arab leader against Iran. And they argued with Bush, Jr. not to go in for the same reason, although they would support the US effort modestly once it happened, even though it aggravated Osama bin Laden and al Qaeda against the Saudi monarchy for supporting the US so openly (even though the US had supported the decision by then Saudi intel chief, Turki bin Faisal, to send bin Laden to Pakistan to aid in the anti-Soviet campaign in Afghanistan). But the replacement of a Sunni-led regime in Iraq by a Shi'i led one supported by Iran has upset the Saudis greatly. They also do not like Iranian support of Assad in Syria, who appears to have won his war against largely Sunni rebels, many of them supported by KSA, and now the Saudis are bogged down in a war in Yemen against local Zaydi Shi'a, whom they claim (not with full credibility) are being supported by Iran. So they, and the Israelis, want the US to join them in an anti-Iran crusade.

I think we are at a dangerous moment here. The nuclear deal with Iran is the most importantdeal that Obama made, and even the Saudis and Israelis know it. What they do not like about it is that it meant that the economic sanctions on Iran were relaxed. But most of those sanctions were only put on to get Iran to the nuclear negotiating table. There is no way they can be reimposed without Iran returning to having a nuclear program. The most influential person in KSA now appears to be the son of King Salman, 31-year old Mohammed bin Salman, Deputy Crown Prince and Defense Minister, who gets lots of good press in the US. But for all the talk of reform, he has not moved to let women drive or to desegregate workplaces by gender. He seems to be a warmongering hothead who has pushed this so far fruitless and destructive war in Yemen, which has led to incipient famine in that nation as well as its likely falling apart into pieces. He has even talked about "taking the war to Iran," which we can only hope that he will not be tempted to do with all those fancy arms that he is buying from the US. Trump, or whoever is in charge of US foreign policy in the near term, will really have to both defend the nuclear deal with Iran and resist this warmongering push by our longtime erstwhile ally. Let us hope that this is done.

Barkley Rosser Posted by rosserjb@jmu.edu at Email This BlogThis! Share to Twitter Share to Facebook Share to Pinterest 6 comments:

Peter T said...
I'm not sure what the drivers of the US hate on Iran are, beyond beltway irritation at a smallish country that refuses to acknowledge US supremacy. War is, I think, unlikely - Iraq nearly broke the US army, and Iran would be much worse; Iran has an open backer in Russia, and a silent one in China, and reasonable relations with all its neighbours (so nowhere to base an invading force). It's also quite careful diplomatically - it does what it feels to be in its interests, but does not go out of its way to provoke.

KSA could panic as the Shi'a consolidate power in Iraq and Syria and their prestige rises across the Islamic world but, again, they lack the access, forces and local allies to do much - and can they afford a defeat?

btw, Iran did not have a nuclear weapons program, and is unlikely to start one even if the US reneges on the deal. Aside from religious objections, Russia and China would not approve, and it would deprive Iran of a chance to split the EU from the US.

All that said, Bush II was staffed by some of the dumbest fucking guys on the planet, and they were geniuses compared to Trump's picks.

May 24, 2017 at 6:14 AM
bbk said...
Good stuff. But while Ikhwan means "Brethren" or "Brotherhod" and the Muslim Brotherhood's name in Arabic contains the word "Ikhwan", I don't think the Saudi Ikhwan is related to the modern Muslim Brotherhood in any way other than both using the word in their name.

The Ikhwan was the part of the Al-Saud military forces in the early 20th century who eventually revolted against the Saudi regime when the Ikhwan felt the Saudi's had gone too "soft" in their religion and refused to spread the Wahhabi creed via Jihad to the Trans-Jordan, Kuwait, and other areas controlled by the British. When the Ikhwan raided British areas the Brits retaliated and the Saudis didn't want trouble with the British so they fought the Ikhwan with the help of the British. The Ikhwan were defeated with the help of British airplanes and military vehicles.

According to wikipedia the remnants of the Ikhwan formed what is today the Saudi Arabian National Guard which is apparently tasked with protecting the royal family and crushing internal dissent.

May 24, 2017 at 11:25 AM
rosserjb@jmu.edu said...
Actually they had a nuclear weapons program that dated to the time of the Shah and that was initially supported by, well, the US. It was shut down after the Islamic Revolution. Then it was started up again under Rafsanjani in the late 1990s, only to be shut down about the time the US invaded Iraq, arguably one of the few positive things to come out of that invasion. Official US National Intelligence Estimates (NIE)s after then agreed that there was no active Iranian nuclear weapons program. In effect what the Iran nuclear deal did was to scale back their capability to have one, although they still have such a capability, and, of course, they have a civilian nuclear power program that is very popular in Iran.
May 24, 2017 at 11:27 AM
Peter T said...

No argument - although I think the program under Rafsanjani was more exploration than active development. Iranians are touchy about the civil nuclear program because for them it's a touchstone for respect for their rights as an independent nation. In their view, they joined the IAEA, signed up to the NPT, abided by all the rules and got sanctions, theft of frozen money and threats.

If the US priority were fighting terrorism, then Iran (and even Syria) would be better allies than Saudi (or Pakistan). But history has its own inertia...

May 24, 2017 at 9:37 PM
Unknown said...
Total agreement with Peter T that if fighting terrorism is a priority, hostility to Iran makes little sense. All the major terror groups are Shia with the exception of Hezbollah, but it not a threat to the US or Europe.
May 25, 2017 at 8:22 AM
Elwailly said...
Unknown said...
... All the major terror groups are Shia with the exception of Hezbollah, but it not a threat to the US or Europe.

He means they are all Sunni with the exception of Hezbollah, which is Shia.

(In reality Hezbollah was never a terrorist group in the traditional sense of fostering attacks against civilians. Their sin was fighting the Israelis.)

May 25, 2017 at 6:07 PM

[Apr 18, 2017] PressTV-Saudis to shelve projects as cheap oil bites

Apr 18, 2017 | www.presstv.ir
Saudi Arabia has reportedly canceled or restructured economic and infrastructure projects worth billions of dollars.

Reuters in a report quoted government sources as saying that the Saudi government had ordered ministries and organizations to review the projects to either scrap or make them more efficient.

The report added that most of the projects that had been targeted were those that had been devised during lavish government spending buoyed by crude oil prices above $100 per barrel.

However, they would no longer be cost-efficient with oil at below $55 per barrel.

Riyadh's Bureau of Capital and Operational Spending Rationalization is now assessing the projects that are under 25 percent complete, the sources told Reuters.

"Some projects could be retendered so they can be executed in partnership with the private sector, possibly through build-operate-transfer (BOT) contracts," one source familiar with the plan told the agency.

"Other projects could be suspended if they do not meet the current economic objectives," the source said.

The finances of Saudi Arabia, the world's second largest crude producer after Russia and largest oil exporter, have been hit by a downturn in oil prices that were above $100 a barrel in 2014, but start to plunge to well below $40 in 2016.

The plunge in global oil prices prompted Riyadh to rein in public spending in a bid to save money. The kingdom's economic measures are being led by Salman's son, Deputy Crown Prince Mohammad bin Salman Al Saud.

Earlier last year, the Riyadh regime cancelled financial perks for public sector employees and slashed salaries of ministers and members of the Consultative Assembly of Saudi Arabia, also known as the Shura Council.

It further froze major building projects and made unprecedented cuts to fuel and utilities subsidies. Ren Lugay 18 hours ago Hmmm, no money to complete social infrastructure projects but always spare cash to buy cluster munitions from the Great Satan and Israel to bomb innocent civilians in Yemen.

[Apr 18, 2017] PressTV-Riyadh launches massive renewable energy plan

Apr 18, 2017 | www.presstv.ir
Saudi Arabia has launched a massive multi-billion-dollar plan which is expected to increase the kingdom's production of electricity from renewable sources by 10 percent within the next few years.

Reuters said in a report that the plan envisaged the construction of 30 solar and wind projects by 2023.

The projects – that would be meant to boost the kingdom's electricity generation and reduce crude oil burning – could generate 9.5 gigawatt of renewable energy.

The initiative involves investment estimated between $30 billion and $50 billion, Reuters reported.

On a related front, the news service said the Saudi Energy Minister Khalid al-Falih on Monday announced the beginning of the bidding for a project to produce 300 megawatt of solar power.

The project is expected to come online by 2018-2019.

"The energy mix to produce electricity will change, today the kingdom uses large quantities of oil liquids, including crude, fuel oil and diesel," Falih was quoted as saying.

"So the percentage of renewable energy by 2023 (will be) 10 percent of total installed capacity in the kingdom."

Based on an ambitious economic reform program launched last year, known as Vision 2030, Saudi Arabia is seeking to use non-oil means to generate much of its additional future energy needs to avoid running down oil resources and diversify its economy.

The kingdom is restructuring its energy sector as part of Vision 2030 and a focus on renewable projects is a pillar of this transformation as it would help develop the private sector and create thousands of jobs, Reuters added.

[Mar 05, 2017] Cooking The Books? Saudi Aramco Could Be Overvalued By 500 pecent

Mar 05, 2017 | peakoilbarrel.com
Boomer II says: 03/04/2017 at 5:53 pm
This article came out on February 28. I don't think it's been posted here.

Cooking The Books? Saudi Aramco Could Be Overvalued By 500% | OilPrice.com : "WoodMac puts Aramco's true value closer to $400 billion, eighty percent less than the Saudi estimate, and it arrived at the figure by considering future demand and the anticipated average price of oil (on which profits will depend), as well as Saudi Aramco's status as a state-run company.

WoodMac doesn't dispute the figure of 261 billion barrels lying under Saudi Arabia and just offshore; that figure has been confirmed by independent sources. Where things get complicated, though, is in the management and taxation of Saudi Aramco, which does not release financial statements."

clueless says: 03/04/2017 at 6:08 pm
Seems right to me. As I posted a short while back, in my opinion, no rational investor, today, would pay anything for production that might occur more than 20 years in the future. Therefore, only about 88 million bbl of reserves is in play. And those produced 20 years out [risked] have neglible net present value.
Survivalist says: 03/04/2017 at 9:32 pm
Does anybody know which independant sources confirmed the 261 billion barrels lying under Saudi Arabia? I was under the impression we were just taking their word for it. Who signed off on confirming it?
Watcher says: 03/04/2017 at 11:02 pm
Bingo. And VERY OMINOUS that a firm like WoodM would fall for the "independent audit" story.

Those auditors did not do core drilling. They did no exploration drilling. They took Aramco data, added it up (accountants add things up) and declared 261 billion barrels of reserves.

This is such silliness.

There is also the issue of who paid for the audit.

Caelan MacIntyre says: 03/05/2017 at 12:12 am

"There is also the issue of who paid for the audit." ~ Watcher

The Man With The Magic Wand?

We are in a model, Watcher.

[Dec 27, 2016] Low oil prices and an increasingly costly war in Yemen have torn a yawning hole in the Saudi budget

Dec 27, 2016 | economistsview.typepad.com

December 27, 2016 at 04:40 AM

Low oil prices and an increasingly costly war in Yemen have torn a yawning hole in the Saudi budget and created a crisis that has led to cuts in public spending, reductions in take-home pay and benefits for government workers and a host of new fees and fines. Huge subsidies for fuel, water and electricity that encourage overconsumption are being curtailed. ...

[Dec 26, 2016] One estimate for 2017 average oil price is 63 dollars. This still means huge Saudi definit of budget

Dec 26, 2016 | peakoilbarrel.com
AlexS says: 12/24/2016 at 1:14 pm
Saudi 2017 budget projects 46% rise in oil revenues, no details on fuel price hikes

London (Platts)–22 Dec 2016
http://www.platts.com/latest-news/oil/london/saudi-2017-budget-projects-46-rise-in-oil-revenues-21425903

Saudi Arabia expects to earn 46% more from oil revenues in 2017 compared to this year, with expectations of rising global demand combining with the OPEC-led global production cut to push prices higher.
In its annual budget unveiled Thursday, the kingdom said its oil revenues were projected to hit Riyals 480 billion ($128 billion) next year, up from Riyals 328 billion ($88 billion).
The budget did not reveal any details about Saudi Arabia's oil production plans or targets, nor does it say what price it expects to receive for its oil, though it cited the International Monetary Fund's estimate of 2017 oil prices at $50.60/b. Oil prices in 2016 averaged $43/b, the budget document said.
Overall revenues for 2017, including non-oil revenues, are expected to rise 31% from 2016 levels to Riyals 692 billion.
With the budget laying out an expenditure plan for Riyals 890 billion ($237 billion), an 8% increase over this year, this means the kingdom will be facing a deficit of 198 billion riyals ($53 billion), down 33% from this year, as Saudi Arabia has had to tap into its reserves to withstand the low oil price environment of the last two years.
"The 2017 budget was prepared in light of developments in the local and global economy, including the estimated price of oil," the budget document states, attributing the increases in projected revenues and expenditures to energy pricing reforms.
"As the kingdom's economy is strongly connected to oil, the decrease in oil prices over the past two years has led to a significant deficit in the government's budget and has impacted the kingdom's credit rating."
Total national debt for 2016 was about Riyals 316.5 billion ($84 billion), or 12.3% of projected GDP.

Fernando Leanme says: 12/25/2016 at 9:13 am
My estimate continues to be $63 per barrel Brent.

[Dec 26, 2016] Saudi Arabia fiscal balance suggests that the kingdom has a strong incentive to cut production to achieve a normalization of inventories, even if it requires a larger unilateral cut

Notable quotes:
"... Every OPEC nation is now producing at absolute maximum capacity. With the exception of the two countries, Libya and Nigeria, that have political production problems, they are all overproducing their reservoirs. They are doing this so when they are "forced" by OPEC to cut production, they can just cut back to normal production. ..."
"... People who still talk about "OPEC spare capacity" haven't a clue as to what the hell they are talking about. ..."
"... "Ultimately, our work on Saudi Arabia's fiscal balance suggests that the kingdom has a strong incentive to cut production to achieve a normalization of inventories, even if it requires a larger unilateral cut, consistent with comments last weekend by the energy minister," Goldman said in a note. ..."
Dec 24, 2016 | peakoilbarrel.com
Ron Patterson says: 12/24/2016 at 12:04 pm
Reservoir Damages May Stop OPEC From Cheating

OPEC oil production comes primarily from conventional reservoirs. These reservoirs require reservoir pressure management. Some have suggested that Saudi Arabia's rationale for cutting production was to reverse the reservoir damage that overproduction has, or may have, caused. Preservation of reservoir integrity may ultimately limit "immediate" increases to inventories from OPEC.

Okay, will someone please tell me how Saudi Arabia could have any "spare capacity" at all if their reservoirs have been damaged from overproduction? If they are overproducing their reservoirs now, then to produce even more "spare capacity", they would have to over-overproduce those reservoirs. That would be an absurd proposal.

Every OPEC nation is now producing at absolute maximum capacity. With the exception of the two countries, Libya and Nigeria, that have political production problems, they are all overproducing their reservoirs. They are doing this so when they are "forced" by OPEC to cut production, they can just cut back to normal production.

People who still talk about "OPEC spare capacity" haven't a clue as to what the hell they are talking about.

AlexS says: 12/24/2016 at 1:03 pm
Aramco IPO May Not Reveal Oil Reserves

December 20, 2016

http://www.energyintel.com/pages/worldopinionarticle.aspx?DocID=946738

One of the biggest obstacles to Saudi Arabia's planned initial public offering (IPO) for state oil giant Saudi Aramco has been the sensitive requirement to subject Saudi oil reserves to public regulatory scrutiny. But in an unconventional move, Riyadh is considering an approach to exclude reserves from any formal accounting of Aramco's assets, according to Petroleum Intelligence Weekly. Instead, it wants to value the company based on financial returns from production over a period of years or decades. While this approach risks lowering the valuation of the company and limiting the foreign exchanges where it could have a listing, it has the advantage of preserving an important state secret. The argument for this approach is that the state owns the reserves, not Saudi Aramco, which is the monopoly producer.

.

The reserves issue was always going to be thorny, and the current thinking is to derive the value of the IPO from the value created from each barrel produced, based on a revised tax and royalty scheme that the company has been working on for months, according to Saudi industry sources. Investors will be presented with details about Aramco's 12 million barrel per day production capacity, which for the time being will not be expanded, its average yearly production and profit per barrel - or "economic rent." Aramco will only provide the unaudited 261 billion barrels of reserves that it publishes in its annual reports, and uses in a bond prospectus, as it did in October.

The justification for this unusual approach to the IPO is that Aramco does not own the reserves, the state does. And while Aramco has a monopoly to produce those barrels, it does not have the right to reveal what are the kingdom's most important assets and a closely guarded secret. Inevitably, a decision to avoid vetting reserves will reinforce suspicions by those that already think Saudi Arabia has something to hide.

Ron Patterson says: 12/24/2016 at 8:52 pm
Inevitably, a decision to avoid vetting reserves will reinforce suspicions by those that already think Saudi Arabia has something to hide.

Why don't they tell us something that we didn't already know.

AlexS says: 12/24/2016 at 1:11 pm
KSA has a clear economic incentive to cut output: Goldman Sachs raises 2017 oil price forecast on compliance rethink

London (Platts)–16 Dec 2016 842 am EST/1342 GMT
http://www.platts.com/latest-news/oil/london/goldman-sachs-raises-2017-oil-price-forecast-26622256

Goldman Sachs raised Friday its oil price forecasts for 2017 after reassessing the likelihood that key global oil producers, led by Saudi Arabia, will stick to output cut pledges under OPEC's efforts to clear the oil market glut.

After analyzing Saudi Arabia's fiscal revenue outlook for 2017, the bank said it sees the motivation for an average 84% compliance with the announced collective OPEC and non-OPEC production cuts which it estimates at a total 1.6 million b/d.

"Ultimately, our work on Saudi Arabia's fiscal balance suggests that the kingdom has a strong incentive to cut production to achieve a normalization of inventories, even if it requires a larger unilateral cut, consistent with comments last weekend by the energy minister," Goldman said in a note.

Saudi energy minister Khalid al-Falih on Saturday said his country was prepared to slash production below 10 million b/d, after having previously agreed to cut down to 10.058 million b/d.

AlexS says: 12/24/2016 at 1:14 pm
Saudi 2017 budget projects 46% rise in oil revenues, no details on fuel price hikes

London (Platts)–22 Dec 2016

http://www.platts.com/latest-news/oil/london/saudi-2017-budget-projects-46-rise-in-oil-revenues-21425903

Saudi Arabia expects to earn 46% more from oil revenues in 2017 compared to this year, with expectations of rising global demand combining with the OPEC-led global production cut to push prices higher.

In its annual budget unveiled Thursday, the kingdom said its oil revenues were projected to hit Riyals 480 billion ($128 billion) next year, up from Riyals 328 billion ($88 billion).

The budget did not reveal any details about Saudi Arabia's oil production plans or targets, nor does it say what price it expects to receive for its oil, though it cited the International Monetary Fund's estimate of 2017 oil prices at $50.60/b. Oil prices in 2016 averaged $43/b, the budget document said.

Overall revenues for 2017, including non-oil revenues, are expected to rise 31% from 2016 levels to Riyals 692 billion.

With the budget laying out an expenditure plan for Riyals 890 billion ($237 billion), an 8% increase over this year, this means the kingdom will be facing a deficit of 198 billion riyals ($53 billion), down 33% from this year, as Saudi Arabia has had to tap into its reserves to withstand the low oil price environment of the last two years.

"The 2017 budget was prepared in light of developments in the local and global economy, including the estimated price of oil," the budget document states, attributing the increases in projected revenues and expenditures to energy pricing reforms.

"As the kingdom's economy is strongly connected to oil, the decrease in oil prices over the past two years has led to a significant deficit in the government's budget and has impacted the kingdom's credit rating."

Total national debt for 2016 was about Riyals 316.5 billion ($84 billion), or 12.3% of projected GDP.

[Dec 22, 2016] Saudis Forecast $51 Oil In 2017 Rising To $65 By 2019; Will Spend 20% Of Total Budget On Military Zero Hedge

Dec 22, 2016 | www.zerohedge.com
And while the Saudis believe the country's budget deficit will fall modestly next year even with an increase in spending , it is still set to be a painful 8% of GDP suggesting the Saudi cash burn will continue even with some generous oil price assumptions .

The budget deficit for 2017 is expected decline 33% to 198 billion riyals ($237 billion), or 7.7% of GDP, from 297 billion riyals or 11.5% of GDP in 2016 year and 362 billion riyals in 2015, the Finance Ministry said in a statement on its website on Thursday. In 2016, the finance ministry said its spending of 825 billion riyals ($220 billion) was under the budgeted 840 billion, and the 2016 budget deficit came to 297 billion, below the 362 billion in 2015.

[Dec 16, 2016] The Oil Mystery Behind Saudi Arabia's Production Cut OilPrice.com

Dec 16, 2016 | oilprice.com
The Oil Mystery Behind Saudi Arabia's Production Cut By Nick Cunningham - Dec 15, 2016, 4:56 PM CST Oil rigs Saudi Arabia surprised the world by helping to engineer an unexpectedly strong agreement from OPEC members to cut production by 1.2 million barrels per day, followed by additional cuts from non-OPEC members. While the two agreements incorporate cuts from a wide range of oil producers, Saudi Arabia will do much of the heavy lifting, cutting nearly 500,000 barrels per day and even promising to go further than that should the markets warrant steeper reductions.

Depending on one's perspective, Saudi Arabia demonstrated its diplomatic prowess and made OPEC relevant again, succeeding in talking up oil prices without sacrificing much. After all, Saudi Arabia often lowers production in winter months. Other analysts look at it a different way – Riyadh was actually pretty desperate for higher oil prices, given the toll that the two-year bust has taken on the country's economy. That led Saudi Arabia to shoulder most of the burden of adjustment, achieving only small concessions from other OPEC members, most notably Iran. Riyadh was the big loser of the deal, the thinking goes, but ultimately had no choice as the government needed higher oil prices.

There are arguments to made for both sides, but then there is a third possibility: Saudi Arabia was motivated to pullback because it was actually leaning on its oilfields too hard this year when it pushed output up to 10.7 million barrels per day, an output level that might have strained the reservoirs of some of its largest fields. Producing too aggressively can ultimately damage the long-term recovery of oil reserves. Reuters reports in an exclusive report that Saudi Aramco could have been pushing its oil fields to the limit this year, and had little choice to but to climb down from record high output levels.

[Dec 16, 2016] Saudi Arabia said it is ready to go above and beyond its pledge for the OPEC deal and cut production to below 10 million barrel per day

Notable quotes:
"... Saudi Arabia could produce more but it would likely come at the expense of optimal reservoir practices. They could certainly bring on new fields but this is a lengthy process (years) and expensive as well ..."
"... So far the kingdom is not adding any significant new producing capacity based on project announcements and rig activity but rather replacing the aforementioned 4 to 6 percent annual decline rate. ..."
"... As the chart below shows, in the past 2 years Saudi Arabia increased oil production by about 1 mb/d. The country was the main contributor to the current oil glut over that period. Now the Saudis pledge to remove from the market about half of this incremental supply. ..."
Dec 15, 2016 | peakoilbarrel.com
AlexS , 12/15/2016 at 1:53 pm
Article in Reuters explaining Saudi Arabia's shift from output maximization / market share defending to price support policy.
There are also estimates of Saudi oil production capacity.

Cost of pump-at-will oil policy spurred Saudi OPEC U-turn

Thu Dec 15, 2016
http://www.reuters.com/article/us-saudi-oil-capacity-exclusive-idUSKBN14417X

Saudi Arabia has long said it could produce as much as 12 million barrels per day (bpd) of oil if needed, but that pump-at-will claim – which would require huge capital spending to access spare capacity – has never been tested.

Sources say the kingdom may have stretched its current limits by extracting a record of around 10.7 million bpd this year, which could be one reason why Riyadh pushed so hard for a global deal to cut production.
..
With tight resources, Saudi Arabia found itself weighing the prospect of investing billions of dollars to raise oil output further if it wanted to gain more market share under a strategy adopted in 2014. Instead, cutting production amid a global glut and low prices to take the pressure off its oilfields, secure better reservoir management and save itself unnecessary expenses, seemed the perfect deal.

"You invest in raising your production when prices are high, not when they are low," a Saudi-based industry source said.

"Choices are tougher now. The question is, would the Saudi government with its tight budget put huge investment in raising production or put it somewhere else where it's needed more?"

Under the deal, Saudi Arabia, de facto leader of the Organization of the Petroleum Exporting Countries, will from January cut output to around 10 million bpd – well below the 12 million bpd that the state has affirmed it can produce.

Saudi-based industry sources and market insiders say the kingdom cannot sustain historically high output for long. State oil giant Saudi Aramco has never tested 12 million bpd and would find it hard to keep the needed investments flowing with current low oil prices, they said.

Aramco, responding to a Reuters request for comment, said only that the company does not comment on current production levels.

One source familiar with Aramco production management said the firm's capacity stood at 11.4 million bpd and it was still working to boost that figure to 12 million by 2018.

"Twelve million bpd has been planned since 2008-2010 and every annual budget worked towards that goal," the source told Reuters on condition of anonymity.

To achieve that goal, the company has annual operating expenses (opex) of $20 billion and capital expenditure (capex) at around $40 billion, the source said.

"When the 12 million bpd plan is achieved by 2018, the overall capex will fall to $20 billion," he added.

Aramco does not disclose its opex or capex figures.

SHIFT IN THINKING

In a note to clients in May, U.S. consultancy PIRA estimated Saudi Arabia's instantly available capacity at that time at 10.5 million bpd, after tracing expansion plans since 2008 and calculating an annual decline rate of 4 percent.

"Saudi Arabia could produce more but it would likely come at the expense of optimal reservoir practices. They could certainly bring on new fields but this is a lengthy process (years) and expensive as well," PIRA wrote.

"So far the kingdom is not adding any significant new producing capacity based on project announcements and rig activity but rather replacing the aforementioned 4 to 6 percent annual decline rate."

Saudi oil officials have said they can produce up to 12 million or even 12.5 million bpd if needed, particularly in the event of a sudden, global supply disruption.

Some say it is not a question of whether Saudi can do it, it is a matter of how soon. Former oil minister Ali al-Naimi had said that to reach 12 million, Saudi Aramco would need 90 days to move rigs from exploration work to drill new wells and raise production.

Saudi Arabia has been working for most of this year towards boosting prices, rather than leaving that job to market forces, a shift from the strategy it had championed since November 2014. The pain of cheap oil was enough to bring other producers to the negotiating table, but industry sources said the kingdom was also keen to seal a deal as it plans to offload a stake in Aramco by 2018.
-----------------
My comment:

According to OPEC agreement, the Saudis pledged to cut supply by 486 kb/d from a reference production level of 10,544 kb/d to 10,058 kb/d. According to Saudi official sources (shown as "direct communication' in OPEC's monthly report), the country's crude output reached record level of 10,720 kb/d in November. According to the IEA's estimate and Reuters survey, Saudi output was also higher in November vs. October. By contrast, estimates from "secondary sources" (also shown in OPEC's MOMR), indicate a slight decline to 10,512 kb/d.

In any case, important to note that in 2016, unlike the previous years, KSA's output has stayed at elevated levels in 4Q despite the usual seasonal decline in winter when domestic consumption of crude burning for power is less. Saudi crude exports have also been high in recent months. Earlier this month, KSA cut January oil price to Asia to four-month low to keep market share. It seems that the Saudis are trying to sell as much crude as they can before the planned cuts.

Meanwhile, Saudi Arabia has informed its clients in North America and Europe that their crude oil deliveries in January will be lower, to reflect the country's compliance with the production cut agreed by OPEC members.

https://www.bloomberg.com/news/articles/2016-12-09/saudi-aramco-makes-good-on-opec-promise-to-cut-january-supplies

Furthermore, Saudi Arabia said it is ready to go above and beyond its pledge for the OPEC deal and cut production to below 10 mb/d.

http://oilprice.com/Energy/Oil-Prices/Can-OPEC-Send-Oil-To-70.html

As the chart below shows, in the past 2 years Saudi Arabia increased oil production by about 1 mb/d. The country was the main contributor to the current oil glut over that period. Now the Saudis pledge to remove from the market about half of this incremental supply.

Saudi Arabia oil output and agreed production quota (mb/d)
source: OPEC Monthly Oil Market Report, December 2016

[Sep 16, 2016] Behind Saudi Arabias bluster is a country that feels under grave threat

John Jenkins conveniently forgot export of Islamic extremists from Saudi Arabia during Soviet occupation of Afghanistan and the USA and GB role in creation of political Islam. I can't see any neo-Westphalian pragmatism of the Saudi state in its actions in Syria and support of Turkey slide into islamization. But his point that Iran does not represent a secular state either is well taken. It's just Shias fundamentalism instead of Sunni fundamentalism.
Notable quotes:
"... There is no clear link between economic deprivation and radicalization. But the former doesn't help if it leads to idle hands and claims of social injustice. ..."
"... Sheikh Nimr advocated the destruction of the rulers of Saudi Arabia and Bahrain and the secession of the Eastern Province. His version of a righteous Islamic state is not a thousand miles from that of Abu Bakr al-Baghdadi (and a long way from the non-takfiri, non-caliphal, neo-Westphalian pragmatism of the Saudi state). He called for wilayat al-faqih, the heterodox Guardianship of the Jurisprudent espoused by Khomeini. ..."
"... The vengeful early years of the Islamic Republic, when clerics who previously would not have hurt a fly enthusiastically participated in the judicial murder of thousands in the name of righteousness, show some of the consequences. So does the arrest and humiliating mistreatment in 1982 of the venerable Ayatollah Shariatmadari, who stood up to Khomeini and dared to object to the implementation of any Islamic hudud punishments in the absence of the Hidden Imam. So does the continued rate of executions in Iran (nearly 700 by July last year, according to Amnesty International) and the Islamic Republic's own treatment of dissidents – and, indeed, of the ordinary protesters of 1999, 2009 and 2011. ..."
"... To Iran it was: Saudi citizens owe loyalty in tribal fashion to their king, not to foreign religious leaders or to some ideal of transnational Islamism, and we shall not tolerate interference. To the rest of the world it was: we shall not bend in the face of the storms raging round the region, if necessary alone. ..."
Jan 17, 2016 | www.newstatesman.com

Now the Saudis face a period of sustained low energy prices at a time when the costs of a newly interventionist and expeditionary foreign policy are rising dramatically and when the need to restructure the economy to create perhaps an extra four million new jobs by 2020 has become urgent. At the same time they know that a small but significant section of the Sunni population of the kingdom is vulnerable to the dark seductions of Islamic State, because they regard it as more legitimately Islamic, or as the only organized Sunni group pushing back against Iran, the Shia, or both. There is no clear link between economic deprivation and radicalization. But the former doesn't help if it leads to idle hands and claims of social injustice.

To cap it all, the Iranian nuclear deal angered the Saudis not because it was a nuclear deal but because it was simply a nuclear deal, failing in their view to address malign and subversive non-nuclear Iranian activities in Bahrain, Iraq, Syria, Lebanon and Yemen, and rewarding Iran prematurely. They have felt very abandoned by the US and other Western states. And they believe the apparent pragmatism of the Rowhani government is a façade, offering privileged access in return for the suspension of any critical faculty. That makes the issue of the Vienna peace talks on Syria secondary. There will certainly be an impact. Yet it is not as if the Saudis had disguised their deep scepticism. They had been pressured to sit with the Iranians, but they had also insisted on continuing to support opposition forces in the field and have not wavered in their insistence that Assad needs to go.

You might think this is all special pleading. But before you say that the matter is a straightforward one of a benighted justice system administering medieval punishments to dissidents, reflect on this. Sheikh Nimr advocated the destruction of the rulers of Saudi Arabia and Bahrain and the secession of the Eastern Province. His version of a righteous Islamic state is not a thousand miles from that of Abu Bakr al-Baghdadi (and a long way from the non-takfiri, non-caliphal, neo-Westphalian pragmatism of the Saudi state). He called for wilayat al-faqih, the heterodox Guardianship of the Jurisprudent espoused by Khomeini.

The vengeful early years of the Islamic Republic, when clerics who previously would not have hurt a fly enthusiastically participated in the judicial murder of thousands in the name of righteousness, show some of the consequences. So does the arrest and humiliating mistreatment in 1982 of the venerable Ayatollah Shariatmadari, who stood up to Khomeini and dared to object to the implementation of any Islamic hudud punishments in the absence of the Hidden Imam. So does the continued rate of executions in Iran (nearly 700 by July last year, according to Amnesty International) and the Islamic Republic's own treatment of dissidents – and, indeed, of the ordinary protesters of 1999, 2009 and 2011.

The signals the Saudi state sought to send by executing 43 Saudi Sunnis convicted of terrorism at the same time as Sheikh Nimr and his three fellow Shias reflected all of this.

John Jenkins is a former British ambassador to Saudi Arabia, Libya, Iraq, Syria and Burma. He is now executive director (Middle East) of the International Institute for Strategic Studies, and is based in Bahrain

[Aug 28, 2016] Saudi Arabia to exceed Russia, France in defense spending

www.almasdarnews.com
The Kingdom of Saudi Arabia (KSA) is expected to increase their defense spending from $48 billion last year to $52 billion by 2019, IHS Janes Defense analysts reported

[Aug 27, 2016] A Kingdom In Turmoil Saudi Societal Discontent Grows

Notable quotes:
"... its current Islamist King, Salman, has been more mired in political and economic turmoil than at any time in the desert kingdom's history. Domestically, the country is suffering from royal discord and economic hardships, due to the drastic decline in oil prices, which constitute more than 90% of the state's revenues. Regionally, Saudi Arabia is stuck in a consuming and costly war in Yemen, the continued occupation of Bahrain and dangerous events which the Saudis cannot control or stop, such as the recent superpowers' rapprochement with Iran, the destabilizing conflicts in Iraq and Syria and the loss of like-minded dictatorial allies in other Arab and Muslim countries. ..."
"... The West recognized that the fast and widely- spreading extremism and terrorism are inspired by the globally detested Saudi/ Wahhabi Sunni doctrine; therefore, continuing to rely on and to protect the Saudi rulers unconditionally are no longer in the best interest of Western societies. ..."
"... In reality, the West is playing Iran off against Saudi Arabia to protect Western interests. ..."
Aug 27, 2016 | www.zerohedge.com
E Tavares: Dr. Alyami, thank you for your being with us today. Last October we spoke about the socio-political situation in the Kingdom of Saudi Arabia ("KSA"), a hugely important country, and implications for the wider region. It seems very little has changed as far as policies and governance are concerned, other than perhaps the current rulers becoming more entrenched in power. Do you agree?

AA: Thank you for this opportunity and more so for your patriotism and understanding of the unprecedented Islamist ideological threats facing us and the international community, including the majority of Muslims. This is a fact that cannot be denied, ignored or belittled as the action of a few perverted groups.

Since our interview, Saudi Arabia under its current Islamist King, Salman, has been more mired in political and economic turmoil than at any time in the desert kingdom's history. Domestically, the country is suffering from royal discord and economic hardships, due to the drastic decline in oil prices, which constitute more than 90% of the state's revenues. Regionally, Saudi Arabia is stuck in a consuming and costly war in Yemen, the continued occupation of Bahrain and dangerous events which the Saudis cannot control or stop, such as the recent superpowers' rapprochement with Iran, the destabilizing conflicts in Iraq and Syria and the loss of like-minded dictatorial allies in other Arab and Muslim countries.

ET: Indeed, Iran is consolidating its influence across the region, much to the detriment of the KSA. Their alliance with Russia seems to be paying off in Syria, with the Islamic State ("ISIS") in retreat, arguably in Iraq as well. The Houthis, their allies in Yemen, are giving the Saudis a run for their money. The Iranian regime recently got a lot of money back as a result of the nuclear deal with the US, and quick on the heels of that it has been testing ballistic missiles and related defense systems.

AA: As mentioned above, the superpowers' reconciliation with the Persian theocracy in Tehran has given Iran more leverage regionally and globally, which the Iranians are using to strengthen their influence in the region, slowly stripping the Saudi oligarchs of their domination over US and western policies and economic interests in the Middle East. Notably, Western interest in reaching a nuclear deal with Iran is not limited to concerns about nuclear weapons.

The West recognized that the fast and widely- spreading extremism and terrorism are inspired by the globally detested Saudi/ Wahhabi Sunni doctrine; therefore, continuing to rely on and to protect the Saudi rulers unconditionally are no longer in the best interest of Western societies. Furthermore, the US and its Western allies may have concluded that it's only a matter of time before the Saudi autocratic ruling family faces the same fate as its counterparts in other Arab countries. This does not mean that the West is bolstering the Persian theocrats in Tehran to become the guardians of the Gulf's economic and strategic resources. In reality, the West is playing Iran off against Saudi Arabia to protect Western interests.

ET: However, that alliance of Iran and Russia is gaining prominence and effectively undermining US interests in the region. The latest "casualty" appears to be the once close relationship between the US and Turkey, with President Erdogan publicly courting Russia – quite an achievement after the two countries almost came to blows last year because of the downing of a Russian jet. In your opinion, is the US making the right moves in the region and how is this being perceived within the KSA?

AA: The recent rift between the US and Turkey is not the result of changes in US policy toward Turkey as much as it is due to the unpredictability and sudden turns by President Erdogan, who has been veering Turkey toward Islamist authoritarianism since his party acquired power in 2002. It's worth mentioning here that the US/Turkey relationship began to erode more rapidly after King Abdullah of Saudi Arabia visited Turkey in 2006 and committed to investing $400 billion in the Turkish economy, a commitment that was finalized in 2010. President Erdogan's recent visit to Russia to cultivate the goodwill of like-minded President Putin has very little to do with US policy moves and more to do with Erdogan's unpredictability and blackmailing habits, especially since the failed military coup against him and his unsuccessful demands that the US extradite the Turkish cleric who Erdogan blames for the coup.

In my opinion, continuing to support absolute dictators whose policies are posing imminent threats to our democracy and national security is neither feasible nor prudent, especially when the future of the Middle East is being determined by its diverse peoples. Our government's "hands off" policy in the region is based on two factors: one, very little can be done by outside military interventions and two, the American people will not tolerate sending hundreds of thousands of young men and women into an unwinnable war in a region most Americans loathe. The Saudi regime views the lack of deep US involvement in the Middle East as a betrayal of an historical relationship, especially the protection of the ruling family from external and internal threats.

ET: We often talk about the UK having a "special relationship" with the US. But some commentators argue that the world's only special relationship today is the one between the KSA and the US. For one, Obama would never dare to propose a domestic course of action (with an "or else" attached to it) in Saudi soil like he did in the UK regarding the BREXIT vote. In light of what you detailed above, what is the status of that relationship today and how critical is the forthcoming US election in that regard? It appears that the two main candidates have very different views on how that relationship should look like.

AA: I am not so sure that US/Saudi relations are that special. For one, it's based on a tit for tat arrangement, US access to oil in return for defending an absolute and reactionary system whose values are totally antithetical to everything America was founded on and stands for. The US/UK relationship is based on strategic, cultural, religious, ethnic, transparency and above all, democratic values, rule of law and freedom of all forms of expression. Due to this fact, US presidents can express their views publicly without fear of inciting British citizens to overthrow their government by force. I know for a fact that our presidents demand actions by the Saudis in private in order not to give the impression that the US is abandoning its commitment to protect the Saudi regime, especially from its oppressed population.

US/Saudi relations have been deteriorating since the September 2001 terrorist attacks on the US by mostly Saudi nationals on the watch of President George Bush, who responded forcefully both politically and militarily. However, Bush's rhetoric and actions wound down during his second term. President Obama's first term started with an apologetic and appeasing (humiliating, even) approach to the Saudis and the Muslim World in general. Conversely, Obama's second term can be characterized as the period in US/Saudi relations when the US has the upper hand economically, politically and strategically. Empowered by a recovering economy, falling oil prices (thanks to fracking) and shifting alliances, while the Saudis are weakened by domestic, regional and global events, Obama used America's strengthened position to put the Saudis in their place.

Given the current state of affairs in the Middle East, continued Saudi support for extremism and terrorism and increasing Islamic terror attacks on Europe and the US, US/Saudi relations will continue to deteriorate or remain in flux, regardless who wins the US Presidency in November 2016.

ET: As ISIS retreats in Syria and Iraq it is spreading into Afghanistan and many African countries, as well as increasingly resorting to terrorism across much of the West. There have been persistent rumors of Saudi and Turkish support to ISIS, a fact that has been confirmed by US Vice President Biden . Moreover, Christian and Yazidi women who were fortunate enough to escape their enslavement at the hands of ISIS reported being brutalized by Saudis . So the ties are there and at various levels. However, ISIS is now behind terrorist attacks in both those countries. Is this another example of " blowback "?

AA: It's no secret that ISIS is inspired by and based on the Saudi/Wahhabi doctrine and practices employed by the Saudi/Wahhabi allies, especially in the 18th to the 20th centuries. ISIS's objective is identical to that held by most Muslims, including former Saudi King Abdullah: spread Islam and the Shariah worldwide. Although the Saudis and the Turks have supported and used ISIS, especially in Syria and Iraq, ISIS is turning against the governments of Saudi Arabia and Turkey for two reasons: one, ISIS felt betrayed by the Saudis and Turks, whom ISIS considers proxies for the West, which is waging a war against the Caliphate State; and two, ISIS's immediate goal is to establish a Caliphate that includes all Muslims, headquartered in Islam's holiest site of Mecca, Saudi Arabia.

Those familiar with the perfidious practices and mindset of Arab and Muslim despots understand that by supporting ISIS, the Saudis and Turks expect the terrorist group to turn against them. This is a tactic these regimes use to empower themselves, suppress their populations and convince the West that they are likewise victims of terrorism when, in fact, they continue to support and use extremists and terrorists against each other and to extract concessions from the international community.

ET: What's happening around the KSA provides some context for what is happening internally. As far as human rights are concerned, it appears that things are getting worse, as recently evidenced by a courageous – and shocking – documentary by ITV in the UK . What do you make of this?

AA: After King Salman inherited the Saudi Crown in January 2015, my organization, the Center for Democracy and Human Rights in Saudi Arabia, wrote an analysis predicting human rights would suffer under the new King reign. Of all his predecessors (6 Saudi kings), Salman is notorious for his support of extremists in and outside the country and for his belief that the extremist Wahhabi interpretation of Islam and its arbitrary Shariah law is the true Islam . He considers the country his family's private property and opposes any political reforms including his predecessor's cosmetic gestures. Given these documented facts, it's not surprising that King Salman purged the government of all less rigid members of his family and replace them with his like-minded sons and nephews. Given the Saudi's economic hardships and the costly war engagement in Yemen, deteriorating situation in Syria, Iraq, continued occupation of Bahrain, frequent terrorist attacks in different parts of the country, human rights abuses in Saudi Arabia are likely to worsen.

ET: Another surprising fact is the abject poverty that many Saudis are living under. How is this possible given all the petrodollars floating around the country?

AA: All state revenues are controlled and treated as property of the royal family. Only the king and a few high-ranking royals have direct access to the state's income. Since there is no accountability, transparency or public scrutiny, this small clique of royals decides on the distribution of funds. The top spending priorities are internal security, namely the safety of the ruling family, stipends for the thousands of members of the extended royal family, the armed forces and maintaining the institutions of the religious establishment (universities, mosques, religious police and thousands of clerics.) Given this arrangement, little of the national revenues is spent on citizens.

It's estimated that between 30-40% of Saudis live at or below the UN designated poverty level. This is due to high unemployment, where it is estimated that between 70-80% of Saudi women and about 20-30% of Saudi men are unemployed. Given these numbers, it's culturally customary that those who work support those who don't.

ET: There are over 9 million immigrants living in the KSA , representing more than a third of the population. Those are not small figures. Yet many complain of abuse and violation of human rights. Why is this so?

AA: It's ironic that millions of Saudi men and women are unemployed, yet the public and private sectors import millions of expatriates to do jobs that the Saudi people need and could do if women were allowed to work and if the Saudis were paid decent salaries to feed their families. By importing poverty stricken laborers who are willing to live in appalling conditions, accept subsistence wages and have no benefits or rights under the Saudi judicial system, the Saudi employers make huge profits. The maltreatment of migrant workers by their Saudi employers has been compared to modern slavery by Amnesty International, Human Rights Watch and many governments' agencies, including our Department of State, have decried abuses of migrant workers in Saudi Arabia.

ET: Last time we spoke you mentioned that Saudi women are the most marginalized people on the planet. The KSA has contributed between $10-25m to the Clinton Foundation , possibly more. While we may never find out how much of that can actually influence US politics, as suggested by emails recently disclosed , if Hillary Clinton is elected US President can she do anything to truly help Saudi women as a result? There could be a conflict there, it seems (not that the men who preceded her have done much about it anyway).

AA: Despite her pronouncement that "women's rights are human rights," it's unlikely that Saudi women will fare any better under Hillary Clinton if she were elected President of the United States. Given the Saudis' generous gifts of $41 million to the Clinton Foundation and millions to various universities, including the University of Arkansas when Bill Clinton was President, Hillary Clinton is unlikely to deviate from the Saudi appeasing policies she pursued as a Secretary of State.

Although promoting Saudi women's rights is unlikely to occur under a President Hillary Clinton, empowering Saudi women not only promotes human rights, but would represent a major victory over extremism and terrorism. Even under their current oppressive and inhumane conditions, Saudi women are intensely engaged in fighting the zealot Saudi religious establishment. Empowering and liberating Saudi women from the constricting chains of religio-male guardian systems would resonate throughout the Muslim world, given Saudi Arabia's status as the birthplace of Islam and home to its holy shrines toward which 1.5 billion Muslims pray 5 times a day. Paul Kersey SmedleyButlersGhost Aug 27, 2016 7:22 PM Just wait until all those Saudi Salafis get control of tens of millions of dollars worth of weapons the US war profiteering contractors sold the Saudi Royals.

"Salafis are fundamentalists who believe in a return to the original ways of Islam. The word 'Salafi' comes from the Arabic phrase, 'as-salaf as-saliheen', which refers to the first three generations of Muslims (starting with the Companions of the Prophet), otherwise known as the Pious Predecessors."

The Salafis are not our good friends. Mustafa Kemal Aug 27, 2016 8:00 PM There was no discussion of the fall of SA, especially its main bank, and the petrodollar in relation to the improving relations between Russian, China and Iran, along with their gold purchasing and de-petrodollarization.

Its a bit of a double bind I think. dogismycopilot Aug 27, 2016 9:14 PM When ISIS took over Mosul, the place was full of White Toyotas with Saudi License plates. Saudi is the mother ship. It must be destroyed.

[Jul 19, 2016] Saudi have the best reservoir models in the world and will drill wells just to allow monitoring of the reservoir if needed

Notable quotes:
"... Actually the opposite is true, they carefully manage water injection so as not to bypass any oil and, for example, in the past would rest Al Abqaiq field without production to allow the water contact to level out (that field might now be close to exhaustion). They have the best reservoir models in the world and will drill wells just to allow monitoring of the reservoir if needed. ..."
peakoilbarrel.com
Ron Patterson , 07/13/2016 at 2:27 pm
I have no idea what you are talking about. I don't remember any such discussion and I have followed KSA production since about 2001. KSA has used water injection for way over half a century. That is the only way they can keep the pressure up. It does not damage their fields other than normal depletion.
Greenbub , 07/13/2016 at 10:14 pm
From the wiki page on Saudi oil reserves- "Simmons also argued that the Saudis may have irretrievably damaged their large oil fields by over-pumping salt water into the fields in an effort to maintain the fields' pressure and boost short-term oil extraction". It was a theory that I saw regurgitated when KSA was threatening to pump xx millions last year. Thought I saw it here; apologies if not.
George Kaplan , 07/13/2016 at 3:00 pm
Actually the opposite is true, they carefully manage water injection so as not to bypass any oil and, for example, in the past would rest Al Abqaiq field without production to allow the water contact to level out (that field might now be close to exhaustion). They have the best reservoir models in the world and will drill wells just to allow monitoring of the reservoir if needed.
Fernando Leanme , 07/14/2016 at 6:58 am
We usually inject salt water. I assume water being injected in Saudi Fields is mostly sea water. As long as the waters are compatible and the water is oxygen and bacteria free then there's no problem on the "chemistry" side.

Not knowing the detailed well layout and rock description it's hard for me to speculate with authority. The key in these fields is to pump water to sustain reservoir pressure slightly above the bubble point. Thus it's possible that an operator could inject too much, in the sense that pressure would be kept a bit too high. This in turn reduces recovery factor a small amount.

By the way, I've seen countries where regulations don't allow fine tuning pressure, and we are forced to operate at a pressure higher than optimum. The guys who wrote those regulations simply didn't understand the way Mother Nature works.

Greenbub , 07/15/2016 at 1:29 am
Thanks for the reply, Fernando.

[Jun 19, 2016] Kingdom cuts renewables target to 10 percent of energy mix from 50 percent

Notable quotes:
"... Saudi Arabia is curtailing renewable-power targets as the world's biggest oil exporter plans to use more natural gas, backing away from goals set when crude prices were about triple their current level, according to Energy Minister Khalid Al-Falih. ..."
"... "Our energy mix has shifted more toward gas, so the need for high targets from renewable sources isn't there any more," Al-Falih said. "The previous target of 50 percent from renewable sources was an initial target and it was built on high oil prices" near $150 a barrel, he said. ..."
"... Saudi Arabian Oil Co., the state-run producer, set up several ventures with international partners to explore for gas, but results were disappointing and most of the companies withdrew from their ventures. Production of dry gas, or fuel for use in power plants or factories, will rise to 17.8 billion cubic feet per day from 12 billion, according to the plan. ..."
"... "Gas currently makes up around 50 percent of the energy mix in Saudi Arabia, and we have an ambition to see this grow to 70 percent in the future, either from local sources or from abroad," Al-Falih said. ..."
"... The Persian Gulf nation has previously scaled back its ambitions for renewables. In January 2015, it delayed by nearly a decade the deadline for meeting its solar-capacity goal, saying it needed more time to assess technologies. The kingdom's earlier solar program forecast more than $100 billion of investment in projects aimed at generating 41 gigawatts of power by 2040. ..."
peakoilbarrel.com

AlexS , 06/16/2016 at 6:03 am

"At first glance it would seem that a country such as Saudi Arabia could go for solar"

from Bloomberg:

Saudi Arabia Scales Back Renewable Energy Goal to Favor Gas

http://www.bloomberg.com/news/articles/2016-06-07/saudi-arabia-scales-back-renewable-energy-target-to-favor-gas

Saudi Arabia is curtailing renewable-power targets as the world's biggest oil exporter plans to use more natural gas, backing away from goals set when crude prices were about triple their current level, according to Energy Minister Khalid Al-Falih.

The kingdom aims to have power generation from renewable resources like the sun make up 10 percent of the energy mix, a reduction from an earlier target of 50 percent.

"Our energy mix has shifted more toward gas, so the need for high targets from renewable sources isn't there any more," Al-Falih said. "The previous target of 50 percent from renewable sources was an initial target and it was built on high oil prices" near $150 a barrel, he said.

Saudi Arabia, which holds the world's second-largest crude reserves, will double natural gas production, according to Al-Falih, and the government will expand the distribution network to the western part of the nation. Generating more power from gas and renewables should make more crude available for export, which would otherwise be burned for electricity for domestic use.

Saudi Arabia has for years sought to develop gas resources to provide fuel for power plants and industries and to free up more oil to sell overseas. Saudi Arabian Oil Co., the state-run producer, set up several ventures with international partners to explore for gas, but results were disappointing and most of the companies withdrew from their ventures. Production of dry gas, or fuel for use in power plants or factories, will rise to 17.8 billion cubic feet per day from 12 billion, according to the plan.

"Gas currently makes up around 50 percent of the energy mix in Saudi Arabia, and we have an ambition to see this grow to 70 percent in the future, either from local sources or from abroad," Al-Falih said.

Achieving the targets will be a challenge, said Robin Mills, chief executive officer at consultant Qamar Energy in Dubai. Gas projects usually require a lead time of at least three to four years before production begins, said Mills, a fellow at the Brookings Institution in Doha.

Saudi Arabia is seeking to increase renewable-energy production to 9.5 gigawatts, according to a plan announced in April. Saudi Aramco has a 10-megawatt solar installation on the roof of a parking lot at its headquarters in Dhahran.

The Persian Gulf nation has previously scaled back its ambitions for renewables. In January 2015, it delayed by nearly a decade the deadline for meeting its solar-capacity goal, saying it needed more time to assess technologies. The kingdom's earlier solar program forecast more than $100 billion of investment in projects aimed at generating 41 gigawatts of power by 2040.

[Jun 15, 2016] In July 2014 Saudi Arabia used 900,000 bpd of oil JUST for electricity generation, which was 63 percent higher than the previous year

Notable quotes:
"... In July 2014 Saudi Arabia used 900,000 bpd of oil JUST for electricity, which was 63% higher than the previous year. In a weird twist a 2006 Royal Decree forced electricity generation from natural gas to oil. In 2007 nat gas accounted for 52% of electricity production, in 2012 it was down to 39% – all the rest is crude oil, fuel oil, and diesel. This change was the opposite of what I expected, and is a baffling policy decision… but it is Saudi Arabia, so maybe I shouldn't be surprised. ..."
"... Saudi uses a lot more oil to generate electricity than they used to because they simply do not have enough natural gas to run their power plants and desal plants on gas alone. When I was there in the early 80s natural gas was used almost exclusively to produce electricity and water. ..."
"... Rising Saudi electricity consumption and direct oil burn at power plants is mainly due to air conditioning during the Summer season ..."
peakoilbarrel.com

Brian Rose , 06/13/2016 at 11:35 am

I was curious how Ramadan impacts oil production and demand in the Middle East, so I did some loose research. As everyone here probably knows the Islamic calendar is based on the 29.5 day Lunar Cycle, so Ramadan is a few weeks "earlier" every year.

According to several articles I read electricity demand jumps by 50-60% during Ramadan especially when it occurs during the summer. A combination of higher A/C demand as people rest inside during the day-time fast and the lighting demand from nightly fast-breaking festivities drives this surge.

However Saudi Arabia is the only country that uses meaningful amounts of oil to produce electricity, so we can just focus on Saudi Arabia.

In July 2014 Saudi Arabia used 900,000 bpd of oil JUST for electricity, which was 63% higher than the previous year. In a weird twist a 2006 Royal Decree forced electricity generation from natural gas to oil. In 2007 nat gas accounted for 52% of electricity production, in 2012 it was down to 39% – all the rest is crude oil, fuel oil, and diesel. This change was the opposite of what I expected, and is a baffling policy decision… but it is Saudi Arabia, so maybe I shouldn't be surprised.

Saudi oil demand always spikes during the summer months, and Ramadan will combine with that to cause a huge spike in domestic oil demand for June.

I tried digging into how Ramadan may impact drilling projects, but could not find much on Saudi Arabia except an article that mentions the 2012 Saudi Aramco hack was made worse because most Saudi Aramco employees were on holiday for Ramadan. Various other Muslim nations reduce work hours for both Muslims and non-Muslims, and Algeria completely stops drilling during Ramadan. Long story short, I could not find anything too conclusive.

It would be difficult to tell if Ramadan has an impact on oil production in Muslim countries since it would be a delayed effect that doesn't sit squarely in a single month, and is drowned out by other political, seasonal, and economic changes. I'm still very curious if there is a relationship though.

Ron Patterson , 06/13/2016 at 12:20 pm

Ramadan moves forward an average of 11.6 days per year. Nothing much changes during Ramadan except Muslim workers don't work as hard or as long. But non-Muslim workers carry on as if nothing has happened. Well except that they, during daylight hours, cannot eat, drink or smoke in the presence of a Muslim.

Ramadan has little or no effect on the vacation of non-Muslim workers.

Saudi uses a lot more oil to generate electricity than they used to because they simply do not have enough natural gas to run their power plants and desal plants on gas alone. When I was there in the early 80s natural gas was used almost exclusively to produce electricity and water.

Their largest desal plants are evaporative plants though they do have a lot of reverse osmosis desal plants that serve smaller areas.

AlexS , 06/13/2016 at 12:11 pm

Rising Saudi electricity consumption and direct oil burn at power plants is mainly due to air conditioning during the Summer season

[Jun 08, 2016] Saudis will no longer be the world's "swing producer" and will no longer control prices by raising and lowering production through OPEC quotas

www.resilience.org

The Saudi's new energy minister, Khalid Al-Falih, told reporters in Vienna that the Kingdom currently can produce 12.5 million barrels of crude per day, but plans to keep some of this in reserve despite the privatization of a small part of the company by 2018. He also told the reporters that the Saudis will no longer be the world's "swing producer" and will no longer control prices by raising and lowering production through OPEC quotas.

The Saudis are preparing to borrow some $15 billion by July to cover state budget deficits that reached 15 percent last year. The government's new "National Transformation Plan" that will be unveiled shortly envisions cutting subsidies and other measures that will produce $100 billion in non-oil revenues. The Saudis are even talking about more women joining the work force – an anathema to religious conservatives.

Saudi Aramco is planning to increase its cross-country pipeline that can now move some 5 million b/d from the eastern oil fields to the west coast where it is planning to expand its refineries and petrochemical plants.

The Saudi's deputy crown prince and de facto ruler of Saudi Arabia will be visiting Washington in mid-June to discuss a number of growing frictions between the two countries.

[Jun 02, 2016] OPEC fails to agree policy but Saudis pledge no shocks

Notable quotes:
"... No producer can afford to increase production at $50/B. Operating costs are much different than drilling costs. Most production is on a decline now. There are no capital expenditures to increase production, only to maintain production. The hydraulic fracturing play will be first to resume drilling when prices gradually increase. ..."
"... Iranian production has not increased - they are simply shipping stock tank oil. To increase actual field production at $50 per barrel is not economical. ..."
"... The economics of hydraulic fracturing will control crude pricing into the future. ..."
finance.yahoo.com

Tom 3 hours ago

1) SA grossly misjudged the price reaction in raising production from 10 million to 10.3 million per day.

2) No producer can afford to increase production at $50/B. Operating costs are much different than drilling costs. Most production is on a decline now. There are no capital expenditures to increase production, only to maintain production. The hydraulic fracturing play will be first to resume drilling when prices gradually increase.

3) Iranian production has not increased - they are simply shipping stock tank oil. To increase actual field production at $50 per barrel is not economical.

4) The economics of hydraulic fracturing will control crude pricing into the future.

novus_ordo 17 minutes ago
US is concerned, Oil transactions are not being done by an OPEC {Petro-dollars} Member. Russia will NEVER join OPEC. The US should behave better with China, if the Chinese are pressed, the possibility of the Chinese calling in the US debt to it, would be devastasting. US cannot pay, and the Chinese know it. Result for USA would be similar to what happened when Wall St. called in the Argentine debt in the 70's. Skyrocketing Inflation the main feature.

novus_ordo

Russia and China to release world from dollar peg Russia has outmaneuvered the Saudis in fight for the Chinese oil market despite Western states' unity in sanctions opposition with Russia and conspiracy theory on the US oil deal with Saudi Arabia. In April China increased oil import from Russia 52%, while import from Saudi Arabia dropped 22%.
joe 5 hours ago
No outrage of human rights violations in Saudi Arabia because Congress, Billary Bamboozler and Puppet President are bought and paid for. Remember when US boycotted South Africa?
Raygun 10 hours ago
Saudi is infested with Wahhabis on jihad and the government of Iran funds Hezbollah an Islamic terror organization similar to Isis. When the oil runs out maybe this crazy totalitarian ideology will die out because it's no longer funded.

[Jun 02, 2016] US stabs Saudi ally in the back – again – with terror scapegoating by Finian Cunningham

Notable quotes:
"... 'The World Reaps What the Saudis Sow' ..."
"... "promoting Wahhabism, the radical form of Sunni Islam that inspired the 9/11 hijackers and that now inflames the Islamic State." ..."
"... "Saudi Arabia has frustrated American policy makers for years," ..."
"... In particular, the august US "newspaper of record", which can be taken as a barometer of official Washington thinking, accused Saudi Arabia and the other Persian Gulf monarchies of turning the Balkan country of Kosovo into a failed state. This was because the Saudis have sponsored "extremist clerics" who are "fostering violent jihad", thereby making it a "fertile ground for recruitment to radical ideology". ..."
"... "free riders" ..."
"... As for claims that the Saudis and other Persian Gulf states are sponsoring Islamic extremism, this conveniently obscures US covert policy since the 1970s and 80s in Afghanistan, when American planners like Zbigniew Brzezinski conceived of al Qaeda terrorist proxies to fight against the Soviet Union. ..."
"... The question is: how much can the strategic alliance between the US and its Saudi partner bear – before a straw breaks the camel's back? ..."
RT Op-Edge
For months now, US-Saudi relations have become increasingly strained. The latest American aggravation is blaming its Arab ally for turning Kosovo into an "extremist breeding ground". In an article by the New York Times' editorial board last week, entitled 'The World Reaps What the Saudis Sow' , the leading US publication castigated the Saudi rulers for "promoting Wahhabism, the radical form of Sunni Islam that inspired the 9/11 hijackers and that now inflames the Islamic State."

It was an astounding broadside of condemnation, articulated with palpable contempt towards the Saudi rulers. "Saudi Arabia has frustrated American policy makers for years," the editorial bitterly lamented.

In particular, the august US "newspaper of record", which can be taken as a barometer of official Washington thinking, accused Saudi Arabia and the other Persian Gulf monarchies of turning the Balkan country of Kosovo into a failed state. This was because the Saudis have sponsored "extremist clerics" who are "fostering violent jihad", thereby making it a "fertile ground for recruitment to radical ideology".

That Kosovo has become a hotbed of Islamic radicalism and a source of young militants going to Syria and Iraq to join the ranks of the Islamic State and other terrorist groups is not in dispute.

Nor is it in dispute that the Saudis and other Gulf Arab states have pumped millions of dollars into the Balkan territory to promote their version of Islamic fundamentalism – Wahhabism – which is correlated with extremist groups.

... ... ...

US President Barack Obama riled the already-irked Saudi rulers when he referred to them as "free riders" in a high-profile interview published in April, suggesting that the oil-rich kingdom was overly reliant on American military power. In the same interview, Obama also blamed Saudi Arabia for destabilizing Iraq, Syria and Yemen.

The Saudis reacted furiously to Obama's claims. The White House then tried to back-pedal on the president's criticisms, but it was noticeable that when Obama flew to Saudi Arabia for a summit with Persian Gulf leaders later that month, he received a chilly reception.

Since then, relations have only become even more frigid. The passage of a bill through Congress which would permit American citizens to sue the Saudi state over alleged terrorism damages from the 9/11 events has provoked the Saudi rulers to warn that they will retaliate by selling off US Treasury holdings.

Then there are strident calls by US politicians and media pundits for the declassification of 28 pages in a 2002 congressional report into 9/11, which reputedly indicate Saudi state involvement in financially supporting the alleged hijackers of the civilian airliners that crashed into public buildings in September 2001.

President Obama has said that he will veto the controversial legislation and publication of classified information. Nevertheless, the Saudi rulers are incensed by the moves, which they see as treacherous backstabbing by their American ally. An alliance that stretches back seven decades, stemming from FDR and the first Saudi king Ibn Saud.

As American writer Paul Craig Roberts has pointed out, the latest twists in the 9/11 controversy appear to be efforts by the US "deep state" to make the Saudis a convenient fall guy.

The same goes for Obama accusing Saudi Arabia for destabilizing Iraq, Syria and Yemen. Yes, sure, the Saudis are involved in fomenting violence and sectarianism in these countries and elsewhere. But, again, the bigger culprit is Washington for authoring the overarching agenda of regime change in the Middle East.

As for claims that the Saudis and other Persian Gulf states are sponsoring Islamic extremism, this conveniently obscures US covert policy since the 1970s and 80s in Afghanistan, when American planners like Zbigniew Brzezinski conceived of al Qaeda terrorist proxies to fight against the Soviet Union.

Blaming the Saudis over the failed state of Kosovo is but the latest in a long list of scapegoating by Washington. No wonder the Saudis are livid at this American maneuver to dish the dirt. Washington is setting the Saudi rulers up to take the rap for a myriad of evils that arguably it has much more responsibility for.

The question is: how much can the strategic alliance between the US and its Saudi partner bear – before a straw breaks the camel's back?

[Jun 02, 2016] Oil trading giant Gunvor handed its chief executive a $1bn dividend to fund a deal that helped the company distance itself from US sanctions against Russia.

Notable quotes:
"... Timchenko's exit was designed to quell any concerns about his role in the company, as he was due to be named in a list of people with alleged links to the Kremlin sanctioned by the US after Russia's invasion of Crimea. ..."
peakoilbarrel.com
likbez , 06/01/2016 at 9:25 am
This is from Guardian:

https://www.theguardian.com/business/2016/may/31/gunvor-oil-chief-dividend-russia-us-sanctions-tornqvist-timchenko

Oil trading giant Gunvor handed its chief executive a $1bn dividend to fund a deal that helped the company distance itself from US sanctions against Russia.

Torbjörn Törnqvist agreed to buy a 43% stake in the company, the fourth largest oil trader in the world, from co-founder Gennady Timchenko in 2014 for an undisclosed fee.

Timchenko's exit was designed to quell any concerns about his role in the company, as he was due to be named in a list of people with alleged links to the Kremlin sanctioned by the US after Russia's invasion of Crimea.

But the sheer size of Gunvor, which pulled in revenues of $64bn (£44bn) last year despite rock-bottom oil prices, meant Törnqvist could not fund the deal in one go.

The payment of a $1bn dividend, only part of which was used to fund the deal, allowed Törnqvist to settle his remaining debt to Timchenko.

[Jun 02, 2016] KSA is a volatile, unreliable, nutty dictatorship with very little idea of how to pull itself out of the overpopulation and religious nuttism it has been encouraging

Notable quotes:
"... 18 months of pain for the Saudis, knocking out production, exploration and development everywhere. ..."
"... They lack the ability to produce at a higher rate for a long time, therefore this wasn't about increasing market share. They didn't stop the Iranians and Russians in Syria, which may have been a reason for the price war. They lost a ton of cash flow, will lose more in the future. They caused unemployment in the USA. ..."
"... "As far as I can see KSA has a volatile, unreliable, nutty dictatorship with very little idea of how to pull itself out of the overpopulation and religious nuttism it has been encouraging" ..."
"... that is probably the best explanation for their policy I have heard because no other has made any sense. I read a article yesterday that for the first time they are entering the world bond market to raise at least $15 billion, I guess one might say they too are borrowing money to drill wells. ..."
peakoilbarrel.com

jed , 05/31/2016 at 10:19 pm

18 months of pain for the Saudis, knocking out production, exploration and development everywhere. They're still the major beneficiary at the end.
Fernando Leanme , 06/01/2016 at 5:05 am
Are you sure? They lack the ability to produce at a higher rate for a long time, therefore this wasn't about increasing market share. They didn't stop the Iranians and Russians in Syria, which may have been a reason for the price war. They lost a ton of cash flow, will lose more in the future. They caused unemployment in the USA.

As far as I can see KSA has a volatile, unreliable, nutty dictatorship with very little idea of how to pull itself out of the overpopulation and religious nuttism it has been encouraging. Their aims are being defeated, and they will be increasingly dangerous as a result.

texas tea , 06/01/2016 at 7:26 am
"As far as I can see KSA has a volatile, unreliable, nutty dictatorship with very little idea of how to pull itself out of the overpopulation and religious nuttism it has been encouraging"

that is probably the best explanation for their policy I have heard because no other has made any sense. I read a article yesterday that for the first time they are entering the world bond market to raise at least $15 billion, I guess one might say they too are borrowing money to drill wells.

[Jun 02, 2016] Medvedev to launch a new complex at Lukoil's oil refinery in Volgograd Russia Oil and Gas, Metals and Mining News

rusmininfo.com

​The new complex will allow to increase the output of diesel fuel of Euro-5 class.

The PM D. Medvedev will visit Volgograd on May 31st.

He will participate in the ceremony of start-up and commissioning works at the plant "Lukoil-Volgogradnetepererabotka".

The new complex of deep processing of vacuum gasoil with the capacity of 3,500 thousand tons a year is to become the largest one in Russia. The complex comprises: a unit of vacuum gasoil hyrocracking; a hydrogen production unit meant for hydrogen containing gas supply to the hydrocracking process; a combined sulfur unit used for utilization of hydrogen disulfide containing amine solution of the hydroracking process. With the putting of the complex into operation the output of diesel fuel of class-5 will grow by 1.8 mln tons a year, oil processing efficiency will reach 95%.

[May 30, 2016] Raymond James says Saudi Arabia is lying about their production capacity

peakoilbarrel.com

Ron Patterson , 05/26/2016 at 7:22 am

Raymond James says Saudi Arabia is lying about their production capacity.

Mystery: How much more oil can the Saudis really pump?

Mohammad Al Sabban, the former Saudi representative to OPEC until 2014, insists Saudi Arabia really has the ability to ramp up output to 12.5 million barrels a day.

Yet Al Sabban told Raymond James that only half of those barrels would be available immediately within days or weeks. The rest could take up to six months.

Raymond James thinks investors should take those claims with a grain of salt.

"We don't buy the Saudi excess capacity argument," the firm wrote.

Raymond James points to three reasons why they think Saudi is lying. I like #3 the best.

3.) Saudi rig counts are surging: There is a camp in the oil industry that believes Saudi Arabia's oilfields have gotten so old that they aren't as productive as they once were. For instance, the Ghawar field - the world's largest with an estimated 75 billion barrels of oil - is over 60 years old.

Skeptics point to the fact that rig counts in Saudi Arabia have tripled over the past decade - even though output hasn't gone up nearly as much. At the same time, Saudi stockpiles of oil have declined by around 30 million barrels since October 2015.

"If they only need to turn valves on to flood the market, why are Saudi oil inventories falling?" Raymond James asks.

[May 20, 2016] Looks like Saudi Arabia has peaked

Notable quotes:
"... "Saudi Arabia's crude oil stockpiles fell in March for the fifth month in a row reaching the lowest level in 18 months as the kingdom kept shipping crude to meet customer demand while keeping a lid on production." ..."
"... Sinking rig counts worldwide doesn't correspond to these fantastic planned production increases – if it was that easy to crank up production, why has everyone hasn't done it before? ..."
"... And opening the chokes, damaging the oilfield only works short term before new infills / CO2 or other expensive stuff is necessary. ..."
peakoilbarrel.com
George Kaplan , 05/19/2016 at 2:04 am
What does this say about Saudi spare capacity, the Doha meeting and future supply (if anything):

"Saudi Arabia's crude oil stockpiles fell in March for the fifth month in a row reaching the lowest level in 18 months as the kingdom kept shipping crude to meet customer demand while keeping a lid on production."

http://www.bloomberg.com/news/articles/2016-05-18/saudi-oil-stockpiles-hit-18-month-low-in-march-as-output-capped

Eulenspiegel , 05/19/2016 at 4:21 am
Sinking rig counts worldwide doesn't correspond to these fantastic planned production increases – if it was that easy to crank up production, why has everyone hasn't done it before?

And opening the chokes, damaging the oilfield only works short term before new infills / CO2 or other expensive stuff is necessary.

Frugal , 05/19/2016 at 7:42 am
….. keeping a lid on production."

To me this means that Saudi Arabia has peaked. And crown prince Mohammed bin Salman's plan to ween Saudi Arabia off oil is simply additional proof of this being the case.

[May 19, 2016] Are The Saudis Facing A Full-Blown Liquidity Crisis

Take everything with a grain of salt: Zerohedge is oil shorter...
OilPrice.com

What this means is simple: as a result of the budget imbalance driven by low oil prices, largely a Saudi doing, the kingdom is forced to give workers an implicit pay cut. It also means that since the government has to "pay" through the issuance of debt, that the liquidity crisis in the kingdom is far worse than many had anticipated.

Which brings up the question of devaluation: how long until the SAR has to follow the Yuan and see a substantial haircut. According to the market, 12 month SAR forward are now trading at a price which implies a 12% devaluation in the coming months.

When that happens is, of course, up to the King Salman.

What it also means is that as Saudi Arabia is now scrambling to generate any incremental cash, it too will be caught in the deflationary spiral of excess production as it will have no choice but to outsell its competitors, especially those rushing to grab Chinese market share such as Russia, as it seeks to make up with volume what it has lost due to lower prices. It also means that any hopes of a production freeze by Saudi Arabia - and thus OPEC - are hereby snuffed for the indefinite future.

[May 18, 2016] Russian Q1 GDP came in better

oilprice.com

Russian Q1 GDP came in better than expected but still showing contraction at -1.2 percent YoY (versus -2.1 percent expected). A piece in the Wall Street Journal today addresses the challenges experienced by Russia currently, as the government is considering raising taxes to help ease its budget deficit. As the chart below illustrates, Russia's reserve fund is being swiftly depleted – to levels not seen since the 2009 financial crisis – as the government tries to plug the gap left by lost revenue from lower oil prices:

[May 18, 2016] Russias oil policy is driven by economic considerations

Notable quotes:
"... Russia is diversifying oil and gas exports towards rapidly rising Asian markets due to economic and security considerations. But cutting oil exports to Europe, even for one month, would be inefficient and self-destroying. ..."
"... There are also serious logistical issues. Russia exports oil to Asia from the fields in Eastern Siberia and Far East. The fields in West Siberia, Volga-Urals and Timan-Pechora regions are not linked by pipelines with Russia's eastern borders and transportation costs in this case would be too high. ..."
"... Cutting energy supplies to Europe, even for a month, would destroy Russia's reputation as a reliable supplier and result in multiple lawsuits and potential multi-billion fines. Note that Russian oil companies own significant assets in Europe, including refineries, oil terminals, storage facilities, etc. ..."
"... However, if Russia (even for economic reasons) began diverting supplies to Asia via pipelines, wouldn't that mean there would be less for the West to buy? Due to the laws of mathematics? ..."
"... Try putting together a spreadsheet with sources and sinks. Use transport costs to link these two. When you do you'll see the only difference is to change transport costs and security. I used to work and live in Russia and I'm sure they are using models like we did to understand the best options to move Russian oil. I'm a bit outdated, but what we see is a need to refine oil for internal consumption with a better kit. They need to improve their refineries to grind oil molecules for real. ..."
"... This is a very questionable assumption. Supply/demand dynamics, especially reckless financing of shale in the USA was a factor (as in "crisis of overproduction" - if we remember classic Marxist term ;-), but this is only one and probably not decisive contributing factor. Paper oil, HFT, Saudis oil damping and Western MSM and agencies (Wild cries "Oil Glut !!!", "OMG Oil glut !!!" supported by questionable statistics from EIA, IEA and friends) were equally important factors. It you deny this you deny the reality. ..."
"... I agree, but this not the whole story. Western MSM went to crazy pitch trying to amplify Saudi animosities and to play "young reckless prince" card toward Iran and Russia. Do you remember the interview the prince gave to Bloomberg just before the freeze ? Do you think that this was accidental? ..."
"... definitely $50-$60 price band is not enough to revive the US shale. LTO is dead probably on any level below $80 and may be even above this level. That does not exclude "dead chicken bounce". Moreover LTO is already played card for financial industries. In reality it probably needs prices above $100 to fully recover. ..."
"... neoliberals still dominates in Russia. Especially oil and economics ministries. Reading interviews of Russian oil officials is pretty depressing. They swallow and repeat all the Western propaganda one-to-one. Unfortunately. In this area they have a lot to learn from Americans :-). ..."
"... At the same time, increasing the volume of high additional value products such as plastics, rubber, composites, etc is in best Russia's interest. It is difficult to achieve though. I think creating the ability to withhold substantial amount of oil from the markets for the periods of say 6 to 12 month is more important. And here they can get some help from OPEC members, Saudi be damned. ..."
"... This is a tricky balancing solution, but still this is some insurance against the price slumps like the current one, when Russia was caught swimming naked and did not have any viable game plan. It is unclear what is the optimal mix, but in no way this 100% or even 80% raw oil. ..."
peakoilbarrel.com
SatansBestFriend , 05/13/2016 at 6:32 pm
3) Russia's oil policy is driven by economic considerations. Cutting oil exports (and hence foreign currency revenues) in order to "punish" the West is like shooting yourself in the foot.

Aleks,

I agree that a sustained embargo on the West by Russia is not realistic economically. Cutting supplies for a month to send a message might be.

Or you could do something else…send your supplies via pipeline to Asia.
There by you get your money and decrease the supplies the West has access to.

Russia pipeline to India:

https://in.rbth.com/economics/cooperation/2015/12/21/gas-pipeline-to-india-being-considered_553397

Russia to China oil pipeline:

http://www.rferl.org/content/russia-china-pipeline-cnpc/27731340.html

Russia to Pakistan pipeline:

http://learningenglish.voanews.com/a/russia-to-spend-billions-on-gas-pipeline-in-pakistan/3193228.html

AlexS , 05/13/2016 at 7:55 pm
SatansBestFriend,

I am sorry, but what you and likbez are saying here sounds naïve.

Russia is diversifying oil and gas exports towards rapidly rising Asian markets due to economic and security considerations. But cutting oil exports to Europe, even for one month, would be inefficient and self-destroying.

1) European customers could easily find alternative sources of supply. Saudi Arabia and Iran would be happy to take Russia's share in the European market and it would be very difficult to take it back.

2) It is impossible to redirect all Russian oil exports to Asia. Nobody there expects sharply increased volumes of Russian oil. China has increased oil imports from Russia, but is not willing to depend entirely on Russian supplies. There are also serious logistical issues. Russia exports oil to Asia from the fields in Eastern Siberia and Far East. The fields in West Siberia, Volga-Urals and Timan-Pechora regions are not linked by pipelines with Russia's eastern borders and transportation costs in this case would be too high.

3) Contrary to what the western MSM is saying, Russia has never used energy exports as a political weapon. The episodes when Russia was cutting gas supplies to Ukraine were related with prolonged non-payments from that country. As soon as payments were resumed, Russia restarted gas supplies. Today, when relations between Russia and Ukraine are worse than ever, Russia is supplying gas to Ukraine as Ukraine is paying for it.

Cutting energy supplies to Europe, even for a month, would destroy Russia's reputation as a reliable supplier and result in multiple lawsuits and potential multi-billion fines. Note that Russian oil companies own significant assets in Europe, including refineries, oil terminals, storage facilities, etc.

In general, Russia and Europe are so interdependent in the energy sector, that any drastic steps there may have extremely negative consequences for both sides. Not surprisingly, the western sanctions against Russia did not include a ban on the imports of Russian oil and gas. Russia, on its side, will never cut its energy supplies to Europe.

SatansBestFriend , 05/13/2016 at 8:10 pm
"Russia is diversifying oil and gas exports towards rapidly rising Asian markets due to economic and security considerations. But cutting oil exports to Europe, even for one month, would be inefficient and self-destroying ".

Hey AlexS,

I think you are correct with the bolded part above.

However, if Russia (even for economic reasons) began diverting supplies to Asia via pipelines, wouldn't that mean there would be less for the West to buy? Due to the laws of mathematics?

Unless of course Russia's Oil/Gas production is growing to offset the diversion.

Also, please note that my couch potato analysis was meant to be considered under Peak Oil/ELM conditions. Not BAU as in today. I should have specified.

If there is anyone to trust on this point…It isn't me!!! LOL!

thanks for you analysis AlekS.

Fernando Leanme , 05/14/2016 at 11:10 am
No. Try putting together a spreadsheet with sources and sinks. Use transport costs to link these two. When you do you'll see the only difference is to change transport costs and security. I used to work and live in Russia and I'm sure they are using models like we did to understand the best options to move Russian oil. I'm a bit outdated, but what we see is a need to refine oil for internal consumption with a better kit. They need to improve their refineries to grind oil molecules for real.
likbez , 05/13/2016 at 10:16 pm
Alex,

The current oil price slump is due to supply/demand dynamics, not to western conspiracies

This is a very questionable assumption. Supply/demand dynamics, especially reckless financing of shale in the USA was a factor (as in "crisis of overproduction" - if we remember classic Marxist term ;-), but this is only one and probably not decisive contributing factor. Paper oil, HFT, Saudis oil damping and Western MSM and agencies (Wild cries "Oil Glut !!!", "OMG Oil glut !!!" supported by questionable statistics from EIA, IEA and friends) were equally important factors. It you deny this you deny the reality.

Remember the key Roman legal principle "cue bono". And who in this case is the prime suspect? Can you please answer this question.

And please remember that the originator of the word "conspiracies" was CIA (to discredit those who questioned the official version of JFK assassination).

2) The Doha deal was torpedoed by Saudi Arabia, primarily due to its conflict with Iran and the intention to defend market share.

I agree, but this not the whole story. Western MSM went to crazy pitch trying to amplify Saudi animosities and to play "young reckless prince" card toward Iran and Russia. Do you remember the interview the prince gave to Bloomberg just before the freeze ? Do you think that this was accidental?

BTW I agree that this was a huge win of Western diplomacy and "low oil price forever" forces.

An increase in oil prices well above $50 this year is not in Russia's or Saudi interest, as it could reverse the declining trend in LTO output.

Nonsense. First of all mankind now needs oil above $100 to speed up the switch to hybrid cars for personal transportation, and Russia and Saudi are the part of mankind.

It is also in best Russia's and Saudi economic interests, contrary to what you read on Bloomberg or similar rags. World oil production is severely damaged by low oil prices and 1MB/d that shale it can probably additionally produce in best circumstances is not that easy to achieve after this slump.

And definitely $50-$60 price band is not enough to revive the US shale. LTO is dead probably on any level below $80 and may be even above this level. That does not exclude "dead chicken bounce". Moreover LTO is already played card for financial industries. In reality it probably needs prices above $100 to fully recover.

For probably the next five-seven years everybody will be too shy in financing shale and other high risk oil production ventures. So the oil price will probably set a new record. After that we will have another round of "gold rush" in oil as institutional memory about the current oil price slump will gradually evaporate. Neoliberalism is an unstable economic system, you can bet on that.

Russia's oil policy is driven by economic considerations. Cutting oil exports (and hence foreign currency revenues) in order to "punish" the West is like shooting yourself in the foot.

Nonsense. No nation politics is driven only by economic consideration but Russia stupidly or not tried to play the role of stable, reliable oil and gas supplier to people who would betray you for a penny. And sometimes this desire to play nice with the West led to betraying its own national interests.

If I were Putin I would create strategic reserves and divert part of oil export to them to sell them later at higher prices. Buy low, sell high: is not this a good strategy :-)

Or play some other card by artificially restricting export of oil to Western Europe to refined products (and to please the USA, as it so badly wanted Russia to restrict supplies to EU to damage their long time strategic partner :-) and let the EU face consequences of their own polices.

But this is probably not a possibility as neoliberals still dominates in Russia. Especially oil and economics ministries. Reading interviews of Russian oil officials is pretty depressing. They swallow and repeat all the Western propaganda one-to-one. Unfortunately. In this area they have a lot to learn from Americans :-).

Exports are reliable hard currency stream. But it not a stable stream, as Russia recently discovered.

At the same time, increasing the volume of high additional value products such as plastics, rubber, composites, etc is in best Russia's interest. It is difficult to achieve though. I think creating the ability to withhold substantial amount of oil from the markets for the periods of say 6 to 12 month is more important. And here they can get some help from OPEC members, Saudi be damned.

Upgrading oil refining capacity means that Russian oil companies are able to increase the share of refined products in total exports at the expense of crude oil.

This is a tricky balancing solution, but still this is some insurance against the price slumps like the current one, when Russia was caught swimming naked and did not have any viable game plan. It is unclear what is the optimal mix, but in no way this 100% or even 80% raw oil.

[May 18, 2016] Moodys downgrades Saudi Arabia on lower oil prices

Notable quotes:
"... Moody's cut the country's long-term issuer rating one notch to A1 from Aa3 after a review that began in March. ..."
"... Moody's lowered Oman to Baa1 from A3 and Bahrain to Ba2 from Ba1. The ratings agency did not downgrade Kuwait, Qatar, the United Arab Emirates or Abu Dhabi, but it assigned a negative outlook to each. ..."
permianshale.com

...Moody's cut the country's long-term issuer rating one notch to A1 from Aa3 after a review that began in March.

...Moody's Investors Service said Saturday that it also downgraded Gulf oil producers Bahrain and Oman. It left ratings unchanged for other Gulf states including Kuwait and Qatar.

...Moody's lowered Oman to Baa1 from A3 and Bahrain to Ba2 from Ba1. The ratings agency did not downgrade Kuwait, Qatar, the United Arab Emirates or Abu Dhabi, but it assigned a negative outlook to each.

[May 15, 2016] Saudi reached a plateau for some time but it requires more drilling to maintain it.

Notable quotes:
"... There should be some overall increased recovery, but mostly these techniques push out the peak. Saudi are looking at Safaniya Phase III development, which might be their last option for the offshore fields; once ESPs are installed in new completions on old fields, as was done in the 2012 upgrades, then you are pretty close to sucking up the dregs. Similarly for intelligent completions – I have worked on fields with horizontal producers in water flood with much simpler methods then Saudi are using but once the water contact started to rise past the producers production dropped over 60% in two years. There was a much slower decline thereafter, in fact almost a plateau for some time but it took more drilling to maintain it. H/L doesn't work in such circumstances. ..."
peakoilbarrel.com
George Kaplan , 05/13/2016 at 12:59 pm
Using EOR methods such as artificial lift, as they have installed in Safaniya, and intelligent multilaterals, as in Ghawar, it is possible to significantly increase production (i.e. not only reduce decline rates but turn them into production acceleration and increased capture). But eventually it catches up and the rates will crash, as was seen with nitrogen injection EOR on Cantarell.

There should be some overall increased recovery, but mostly these techniques push out the peak. Saudi are looking at Safaniya Phase III development, which might be their last option for the offshore fields; once ESPs are installed in new completions on old fields, as was done in the 2012 upgrades, then you are pretty close to sucking up the dregs. Similarly for intelligent completions – I have worked on fields with horizontal producers in water flood with much simpler methods then Saudi are using but once the water contact started to rise past the producers production dropped over 60% in two years. There was a much slower decline thereafter, in fact almost a plateau for some time but it took more drilling to maintain it. H/L doesn't work in such circumstances.

[May 14, 2016] Russian oil exports are expected to shrink

Notable quotes:
"... This is a very questionable assumption. Supply/demand dynamics, especially reckless financing of shale in the USA was a factor (as in "crisis of overproduction" - if we remember classic Marxist term ;-), but this is only one and probably not decisive contributing factor. Paper oil, HFT, Saudis oil damping and Western MSM and agencies (Wild cries "Oil Glut !!!", "OMG Oil glut !!!" supported by questionable statistics from EIA, IEA and friends) were equally important factors. It you deny this you deny the reality. ..."
"... I agree, but this not the whole story. Western MSM went to crazy pitch trying to amplify Saudi animosities and to play "young reckless prince" card toward Iran and Russia. Do you remember the interview the prince gave to Bloomberg just before the freeze ? Do you think that this was accidental? ..."
"... definitely $50-$60 price band is not enough to revive the US shale. LTO is dead probably on any level below $80 and may be even above this level. That does not exclude "dead chicken bounce". Moreover LTO is already played card for financial industries. In reality it probably needs prices above $100 to fully recover. ..."
"... neoliberals still dominates in Russia. Especially oil and economics ministries. Reading interviews of Russian oil officials is pretty depressing. They swallow and repeat all the Western propaganda one-to-one. Unfortunately. In this area they have a lot to learn from Americans :-). ..."
"... At the same time, increasing the volume of high additional value products such as plastics, rubber, composites, etc is in best Russia's interest. It is difficult to achieve though. I think creating the ability to withhold substantial amount of oil from the markets for the periods of say 6 to 12 month is more important. And here they can get some help from OPEC members, Saudi be damned. ..."
"... This is a tricky balancing solution, but still this is some insurance against the price slumps like the current one, when Russia was caught swimming naked and did not have any viable game plan. It is unclear what is the optimal mix, but in no way this 100% or even 80% raw oil. ..."
peakoilbarrel.com

likbez , 05/13/2016 at 3:45 pm

Alex,

I doubt that Russian will so easily forgive the West the current price slump and sanctions. Remember it was Russia which was one on the main initiators of "freeze" the US and EU managed to derail.

My impression is that Russia wants to process most of its oil internally which will reduce the amount of oil available for export significantly. That's now semi-official policy.

Production figures are less meaningful in this context then export volumes and are like a smokescreen on the eminent move to oil shortages on world markets.

Yes, production might be stable or slowly declining. But exports will not be stable. They will be declining. Now what ?

AlexS , 05/13/2016 at 5:45 pm

nonsense.

1) The current oil price slump is due to supply/demand dynamics, not to western conspiracies. This is very well understood by Russian officials.

2) The Doha deal was torpedoed by Saudi Arabia, primarily due to its conflict with Iran and the intention to defend market share.

3) The output freeze deal was intended at changing the sentiment in the market and prevent further decline in oil prices. This objective was achieved: oil prices are up 70% from February lows, which is partly due to the talks between Russia, Saudi Arabia and others that started in February.

Nobody expected the Doha deal to help oil prices to return to $100 levels, as an output freeze is not an output cut. Besides, the agreement should have been non-binding and there was no mechanism to control its implementation.

An increase in oil prices well above $50 this year is not in Russia's or Saudi interest, as it could reverse the declining trend in LTO output. Russia's government officials, management of oil companies and experts generally think that rebalancing of the oil market should be left to market forces, and any attempts to artificially cut supply would be counter-productive. Therefore, nobody saw the failure of the Doha agreement as a tragedy, particulalry as prices are already at acceptable levels.

3) Russia's oil policy is driven by economic considerations. Cutting oil exports (and hence foreign currency revenues) in order to "punish" the West is like shooting yourself in the foot.

4) As Russian oil production was increasing in the past 15 years, and domestic demand remained relatively stable, the country has been ramping up exports of both crude oil and refined products. Upgrading oil refining capacity means that Russian oil companies are able to increase the share of refined products in total exports at the expense of crude oil.
This results in changing structure of liquid fuel exports, not in the decrease in its combined volume. In fact, the structure of petroleum exports depends on comparative profitability of crude and product exports. Sometimes it is more profitable to export crude rather than diesel or fuel oil.

likbez , 05/13/2016 at 10:16 pm
Alex,

The current oil price slump is due to supply/demand dynamics, not to western conspiracies

This is a very questionable assumption. Supply/demand dynamics, especially reckless financing of shale in the USA was a factor (as in "crisis of overproduction" - if we remember classic Marxist term ;-), but this is only one and probably not decisive contributing factor. Paper oil, HFT, Saudis oil damping and Western MSM and agencies (Wild cries "Oil Glut !!!", "OMG Oil glut !!!" supported by questionable statistics from EIA, IEA and friends) were equally important factors. It you deny this you deny the reality.

Remember the key Roman legal principle "cue bono". And who in this case is the prime suspect? Can you please answer this question.

And please remember that the originator of the word "conspiracies" was CIA (to discredit those who questioned the official version of JFK assassination).

2) The Doha deal was torpedoed by Saudi Arabia, primarily due to its conflict with Iran and the intention to defend market share.

I agree, but this not the whole story. Western MSM went to crazy pitch trying to amplify Saudi animosities and to play "young reckless prince" card toward Iran and Russia. Do you remember the interview the prince gave to Bloomberg just before the freeze ? Do you think that this was accidental?

BTW I agree that this was a huge win of Western diplomacy and "low oil price forever" forces.

An increase in oil prices well above $50 this year is not in Russia's or Saudi interest, as it could reverse the declining trend in LTO output.

Nonsense. First of all mankind now needs oil above $100 to speed up the switch to hybrid cars for personal transportation, and Russia and Saudi are the part of mankind.

It is also in best Russia's and Saudi economic interests, contrary to what you read on Bloomberg or similar rags. World oil production is severely damaged by low oil prices and 1MB/d that shale it can probably additionally produce in best circumstances is not that easy to achieve after this slump.

And definitely $50-$60 price band is not enough to revive the US shale. LTO is dead probably on any level below $80 and may be even above this level. That does not exclude "dead chicken bounce". Moreover LTO is already played card for financial industries. In reality it probably needs prices above $100 to fully recover.

For probably the next five-seven years everybody will be too shy in financing shale and other high risk oil production ventures. So the oil price will probably set a new record. After that we will have another round of "gold rush" in oil as institutional memory about the current oil price slump will gradually evaporate. Neoliberalism is an unstable economic system, you can bet on that.

Russia's oil policy is driven by economic considerations. Cutting oil exports (and hence foreign currency revenues) in order to "punish" the West is like shooting yourself in the foot.

Nonsense. No nation politics is driven only by economic consideration but Russia stupidly or not tried to play the role of stable, reliable oil and gas supplier to people who would betray you for a penny. And sometimes this desire to play nice with the West led to betraying its own national interests.

If I were Putin I would create strategic reserves and divert part of oil export to them to sell them later at higher prices. Buy low, sell high: is not this a good strategy :-)

Or play some other card by artificially restricting export of oil to Western Europe to refined products (and to please the USA, as it so badly wanted Russia to restrict supplies to EU to damage their long time strategic partner :-) and let the EU face consequences of their own polices.

But this is probably not a possibility as neoliberals still dominates in Russia. Especially oil and economics ministries. Reading interviews of Russian oil officials is pretty depressing. They swallow and repeat all the Western propaganda one-to-one. Unfortunately. In this area they have a lot to learn from Americans :-).

Exports are reliable hard currency stream. But it not a stable stream, as Russia recently discovered.

At the same time, increasing the volume of high additional value products such as plastics, rubber, composites, etc is in best Russia's interest. It is difficult to achieve though. I think creating the ability to withhold substantial amount of oil from the markets for the periods of say 6 to 12 month is more important. And here they can get some help from OPEC members, Saudi be damned.

Upgrading oil refining capacity means that Russian oil companies are able to increase the share of refined products in total exports at the expense of crude oil.

This is a tricky balancing solution, but still this is some insurance against the price slumps like the current one, when Russia was caught swimming naked and did not have any viable game plan. It is unclear what is the optimal mix, but in no way this 100% or even 80% raw oil.

[May 14, 2016] Russia is not planning to significantly ramp production capacity

Notable quotes:
"... Russia is not planning to significantly ramp production capacity. Energy Minister Novak said today that the country will be able to maintain long-term production levels within the range 525-545 million tons per year (10.5-10.9 mb/d). That's what Russian officials were saying earlier. ..."
"... According to the Saudi officials, planned expansion of the Khurais and Shaybah oil fields will only compensate for falling output at other fields. They claim that the country's "maximum sustainable output capacity is 12 million barrels per day and the nation's total capacity is 12.5 million bpd", but there are no plans to increase capacity and there is no evidence that this capacity really exists. ..."
peakoilbarrel.com
Hi Ron,

In your opinion will the Saudi's and Russians be able to significantly ramp further production capacity as they threaten?

AlexS , 05/13/2016 at 7:14 am
I'm not Ron, but this is my view:

Russia is not planning to significantly ramp production capacity. Energy Minister Novak said today that the country will be able to maintain long-term production levels within the range 525-545 million tons per year (10.5-10.9 mb/d). That's what Russian officials were saying earlier.

According to the Saudi officials, planned expansion of the Khurais and Shaybah oil fields will only compensate for falling output at other fields. They claim that the country's "maximum sustainable output capacity is 12 million barrels per day and the nation's total capacity is 12.5 million bpd", but there are no plans to increase capacity and there is no evidence that this capacity really exists.

I think that in reality Saudi Arabia is able to increase crude production from the current 10.2 mb/d to 10.5-10.6 mb/d during the peak season for local demand in the Summer, but not well above those levels.

Dennis Coyne , 05/13/2016 at 11:40 am
Hi John,

I agree with AlexS's assessment. In short, no not much further increase in output will come from Russia and Saudi Arabia, certainly not until oil prices rise above $70/b in 2018, and perhaps never.

The combined output of Russia and KSA will remain within +/- 2 Mb/d of 2015 C+C output levels until 2020 in my view.

likbez , 05/13/2016 at 3:47 pm
IMHO Alex missed the bigger picture. Exports will decrease. Might be significantly because more and more oil will be processed internally.

[May 12, 2016] Additional Evidence Emerges That US Officials Intentionally Whitewashed Saudi Role In 9-11

This might be a new factor in US-Saudi relations, which indirectly might affect the price of oil....
Notable quotes:
"... Rep. Brad Sherman (D-Calif.) is criticizing the Obama administration as having tried to strong-arm a former senator who is pushing to declassify 28 pages of the 9/11 report dealing with Saudi Arabia. He recounted how Rep. Gwen Graham (D-Fla.) and her father, former Senate Intelligence Committee Chairman Bob Graham (D-Fla.), were detained by the FBI in 2011 at Dulles International Airport outside Washington. The message from the agents, according to the Grahams, was to quit pushing for declassification of the 28 pages. The FBI "took a former senator, a former governor, grabbed him in an airport, hustled him into a room with armed force to try to intimidate him into taking different positions on issues of public policy and important national policy, and the fact that he wasn't intimidated because he was calm doesn't show that they weren't trying to intimidate him," Sherman said in an interview with The Hill's Molly K. Hooper. ..."
"... If a nation expects to be ignorant & free, in a state of civilization, it expects what never was & never will be. The functionaries of every government have propensities to command at will the liberty & property of their constituents. There is no safe deposit for these but with the people themselves; nor can they be safe with them without information. Where the press is free and every man able to read, all is safe. ..."
"... The reason I believe the "28 pages" are so important is because it unquestionably demonstrates that senior members of the U.S. government care more about the public perception of Saudi Arabia, and protecting its terrorist spawn, than cares about the public interest. Indeed, focus on these pages is already beginning to achieve just that. ..."
"... A former Republican member of the 9/11 commission, breaking dramatically with the commission's leaders, said Wednesday he believes there was clear evidence that Saudi government employees were part of a support network for the 9/11 hijackers and that the Obama administration should move quickly to declassify a long-secret congressional report on Saudi ties to the 2001 terrorist attack. ..."
"... "There was an awful lot of participation by Saudi individuals in supporting the hijackers, and some of those people worked in the Saudi government," Lehman said in an interview, suggesting that the commission may have made a mistake by not stating that explicitly in its final report. "Our report should never have been read as an exoneration of Saudi Arabia." ..."
"... The 9/11 commission chairman, former Republican governor Tom Kean of New Jersey, and vice-chairman, former Democratic congressman Lee Hamilton of Indiana, praised Saudi Arabia as, overall, "an ally of the United States in combatting terrorism" and said the commission's investigation, which came after the congressional report was written, had identified only one Saudi government official – a former diplomat in the Saudi consulate in Los Angeles – as being "implicated in the 9/11 plot investigation". ..."
"... "Only one Saudi government official." Can you believe this? Meanwhile, that official was merely deported from the U.S. without ever being charged with a crime. More proof that the Saudis and bankers have been granted their own separate "justice" system. ..."
"... In the interview Wednesday, Lehman said Kean and Hamilton's statement that only one Saudi government employee was "implicated" in supporting the hijackers in California and elsewhere was "a game of semantics" and that the commission had been aware of at least five Saudi government officials who were strongly suspected of involvement in the terrorists' support network. ..."
"... The commissioner said the renewed public debate could force a spotlight on a mostly unknown chapter of the history of the 9/11 commission: behind closed doors, members of the panel's staff fiercely protested the way the material about the Saudis was presented in the final report, saying it underplayed or ignored evidence that Saudi officials – especially at lower levels of the government – were part of an al-Qaida support network that had been tasked to assist the hijackers after they arrived in the US. ..."
"... Zelikow fired a staffer, who had repeatedly protested over limitations on the Saudi investigation, after she obtained a copy of the 28 pages outside of official channels. Other staffers described an angry scene late one night, near the end of the investigation, when two investigators who focused on the Saudi allegations were forced to rush back to the commission's offices after midnight after learning to their astonishment that some of the most compelling evidence about a Saudi tie to 9/11 was being edited out of the report or was being pushed to tiny, barely readable footnotes and endnotes. The staff protests were mostly overruled. ..."
"... Zelikow, the commission's executive director, told NBC News last month that the 28 pages "provide no further answers about the 9/11 attacks that are not already included in the 9/11 commission report". Making them public "will only make the red herring glow redder". ..."
"... This from the guy who led the charge to intentionally whitewash the Saudi role and intentionally deceive the American public. Yet these people call Edward Snowden a traitor. ..."
"... But Kean, Hamilton and Zelikow clearly do not speak for a number of the other commissioners, who have repeatedly suggested they are uncomfortable with the perception that the commission exonerated Saudi Arabia and who have joined in calling for public release of the 28 pages. ..."
"... It's impossible to read the above and not conclude that senior U.S. government officials were, and continue to be, more interested in protecting their Saudi "allies" than providing justice for the thousands of innocents killed on 9/11 ..."
May 12, 2016 | Zero Hedge

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

Rep. Brad Sherman (D-Calif.) is criticizing the Obama administration as having tried to strong-arm a former senator who is pushing to declassify 28 pages of the 9/11 report dealing with Saudi Arabia.

He recounted how Rep. Gwen Graham (D-Fla.) and her father, former Senate Intelligence Committee Chairman Bob Graham (D-Fla.), were detained by the FBI in 2011 at Dulles International Airport outside Washington. The message from the agents, according to the Grahams, was to quit pushing for declassification of the 28 pages.

The FBI "took a former senator, a former governor, grabbed him in an airport, hustled him into a room with armed force to try to intimidate him into taking different positions on issues of public policy and important national policy, and the fact that he wasn't intimidated because he was calm doesn't show that they weren't trying to intimidate him," Sherman said in an interview with The Hill's Molly K. Hooper.

– From last week's post: Disturbing Claim – FBI Interrogated Former Senator for Wanting "28 Pages" Declassified

Critics of my repeated focus on highlighting the Saudi role in 9/11 claim that anything revealed in the "28 pages" will be marginal at best, leaving many of the most important questions surrounding the attacks shrouded in secrecy. I agree. What I disagree with is the conclusion that aggressively pursuing a declassification of the 28 pages is therefore meaningless.

There's almost always a underlying reason behind my relentless pursuit of certain topics. One of the key purposes of this website is to chronicle the myriad examples of U.S. government lies, corruption and criminality on behalf of a handful of insiders at the expense of the citizenry. This is because I agree wholeheartedly with Thomas Jefferson when he wrote to Charles Yancey :

If a nation expects to be ignorant & free, in a state of civilization, it expects what never was & never will be. The functionaries of every government have propensities to command at will the liberty & property of their constituents. There is no safe deposit for these but with the people themselves; nor can they be safe with them without information. Where the press is free and every man able to read, all is safe.

The shadow government and its minions treat the general public as stupid malleable serfs, because for the most large part, they are. This unfortunate state of affairs has been achieved over the decades through absurd government propaganda slavishly peddled to the masses via mainstream media outlets. The internet has allowed tens of millions to wake up, but hundreds of millions are necessary in order to turn this thing around and bring forth an era of freedom, progress, creativity and spiritual renaissance. This will never happen until people start to question and confront the unimaginably maniacal status quo.

The reason I believe the "28 pages" are so important is because it unquestionably demonstrates that senior members of the U.S. government care more about the public perception of Saudi Arabia, and protecting its terrorist spawn, than cares about the public interest. Indeed, focus on these pages is already beginning to achieve just that.

As the Guardian reported earlier today:

A former Republican member of the 9/11 commission, breaking dramatically with the commission's leaders, said Wednesday he believes there was clear evidence that Saudi government employees were part of a support network for the 9/11 hijackers and that the Obama administration should move quickly to declassify a long-secret congressional report on Saudi ties to the 2001 terrorist attack.

The comments by John F Lehman, an investment banker in New York who was Navy secretary in the Reagan administration, signal the first serious public split among the 10 commissioners since they issued a 2004 final report that was largely read as an exoneration of Saudi Arabia, which was home to 15 of the 19 hijackers on 9/11.

"There was an awful lot of participation by Saudi individuals in supporting the hijackers, and some of those people worked in the Saudi government," Lehman said in an interview, suggesting that the commission may have made a mistake by not stating that explicitly in its final report. "Our report should never have been read as an exoneration of Saudi Arabia."

He was critical of a statement released late last month by the former chairman and vice-chairman of the commission, who urged the Obama administration to be cautious about releasing the full congressional report on the Saudis and 9/11 – "the 28 pages" , as they are widely known in Washington – because they contained "raw, unvetted" material that might smear innocent people.

The 9/11 commission chairman, former Republican governor Tom Kean of New Jersey, and vice-chairman, former Democratic congressman Lee Hamilton of Indiana, praised Saudi Arabia as, overall, "an ally of the United States in combatting terrorism" and said the commission's investigation, which came after the congressional report was written, had identified only one Saudi government official – a former diplomat in the Saudi consulate in Los Angeles – as being "implicated in the 9/11 plot investigation".

"Only one Saudi government official." Can you believe this? Meanwhile, that official was merely deported from the U.S. without ever being charged with a crime. More proof that the Saudis and bankers have been granted their own separate "justice" system.

Meanwhile, it's not even true…

In the interview Wednesday, Lehman said Kean and Hamilton's statement that only one Saudi government employee was "implicated" in supporting the hijackers in California and elsewhere was "a game of semantics" and that the commission had been aware of at least five Saudi government officials who were strongly suspected of involvement in the terrorists' support network.

The commissioner said the renewed public debate could force a spotlight on a mostly unknown chapter of the history of the 9/11 commission: behind closed doors, members of the panel's staff fiercely protested the way the material about the Saudis was presented in the final report, saying it underplayed or ignored evidence that Saudi officials – especially at lower levels of the government – were part of an al-Qaida support network that had been tasked to assist the hijackers after they arrived in the US.

In fact, there were repeated showdowns, especially over the Saudis, between the staff and the commission's hard-charging executive director, University of Virginia historian Philip Zelikow, who joined the Bush administration as a senior adviser to the secretary of state, Condoleezza Rice, after leaving the commission. The staff included experienced investigators from the FBI, the Department of Justice and the CIA, as well as the congressional staffer who was the principal author of the 28 pages.

Zelikow fired a staffer, who had repeatedly protested over limitations on the Saudi investigation, after she obtained a copy of the 28 pages outside of official channels. Other staffers described an angry scene late one night, near the end of the investigation, when two investigators who focused on the Saudi allegations were forced to rush back to the commission's offices after midnight after learning to their astonishment that some of the most compelling evidence about a Saudi tie to 9/11 was being edited out of the report or was being pushed to tiny, barely readable footnotes and endnotes. The staff protests were mostly overruled.

However, the commission's final report was still widely read as an exoneration, with a central finding by the commission that there was "no evidence that the Saudi government as an institution or senior Saudi officials individually" provided financial assistance to Osama bin Laden's terrorist network. The statement was hailed by the Saudi government as effectively clearing Saudi officials of any tie to 9/11.

Zelikow, the commission's executive director, told NBC News last month that the 28 pages "provide no further answers about the 9/11 attacks that are not already included in the 9/11 commission report". Making them public "will only make the red herring glow redder".

This from the guy who led the charge to intentionally whitewash the Saudi role and intentionally deceive the American public. Yet these people call Edward Snowden a traitor.

But Kean, Hamilton and Zelikow clearly do not speak for a number of the other commissioners, who have repeatedly suggested they are uncomfortable with the perception that the commission exonerated Saudi Arabia and who have joined in calling for public release of the 28 pages.

It's impossible to read the above and not conclude that senior U.S. government officials were, and continue to be, more interested in protecting their Saudi "allies" than providing justice for the thousands of innocents killed on 9/11 . It should make everyone infinitely more distrustful of our crooked government.

If that's all the "28 pages" drama achieves, I'd call that a success.

[May 11, 2016] Why on Earth Saudies are selling their strategic resource for peanuts

Notable quotes:
"... Something just does not make sense to me. They are saying that at current production levels, they can supply oil for the next 165 years. So why do they have to diversify? I can almost see it if they said that they wanted more citizens to be employed. But, they are diversifying into industrial jobs. Chemical plant joint ventures. Their huge shipbuilding effort to produce tanker and "oil rigs," etc. Those jobs will be filled largely by foreign workers and robots. ..."
"... IMHO this young prince currently in power is a typical adventurist. He is an excellent illustration of the danger of absolute monarchy or any too high concentration of power in single hands :-) ..."
"... If so, why on Earth they are selling their strategic resource for peanuts? Is this kind of madness or what? Unless their plan is to move royal family to France. And even in this case it is a stupid plan. ..."
peakoilbarrel.com
clueless , 05/11/2016 at 8:53 am
Something just does not make sense to me. They are saying that at current production levels, they can supply oil for the next 165 years. So why do they have to diversify? I can almost see it if they said that they wanted more citizens to be employed. But, they are diversifying into industrial jobs. Chemical plant joint ventures. Their huge shipbuilding effort to produce tanker and "oil rigs," etc. Those jobs will be filled largely by foreign workers and robots.

If they said that they were going to establish a "silicon valley" of the Mid-east, well, I could see that. Teach their kids high-tech skills.

Since they have already "found" the oil, and have the infrastructure in place, it would be highly likely that if the world reduced consumption to 10 million bbl/day, that it would all come from Saudi Arabia. Their costs would just always be far below anyone else.

Doug Leighton , 05/11/2016 at 9:23 am
World demand is currently nearly 96 million barrels (oil and liquid fuels) per day or say 35 billion barrels per year. Do you think it's likely world consumption can be reduced to 10 million bbl/day? And, perhaps Saudi pronouncements are best taken with a grain of sand, sorry, salt.
likbez , 05/11/2016 at 10:19 am
Saudi pronouncements are best taken with a grain of sand, sorry, salt.

IMHO this young prince currently in power is a typical adventurist. He is an excellent illustration of the danger of absolute monarchy or any too high concentration of power in single hands :-)

Other then religious tourism (which brings less then 10 billion a year) all their efforts are just reshuffling the chairs of the deck of Titanic. Remove oil and gas and they are bankrupt and probably will not last long as an independent nation.

If so, why on Earth they are selling their strategic resource for peanuts? Is this kind of madness or what? Unless their plan is to move royal family to France. And even in this case it is a stupid plan.

[May 09, 2016] Russian Oil Executives Not Optimistic About Oil Prices

Russia is bleeding hard currency but still its oil industry is the best shape among OPEC nations, despite low oil prices and sanctions. It might well be that Russia will preserve the level of oil production which it reached in 2015 in 2016.
OilPrice.com

While discussing major factors influencing the oil market at the Forum, the speakers agreed the geopolitics have become an essential factor, although the condition of the world economy and market forces along with the technological advancement seemed to still be taking a lead in driving oil prices.

"We must understand that the oil prices cannot change drastically because we are now reaching the projected output level that we set out to achieve with the investments that we historically made six, five, four years ago, and the production cannot be curtailed," said Vagit Alekperov, LUKoil's Chief Executive Officer. According to Alekperov, last year LUKoil spent 300 billion rubles on investments in the industry, and 112 billion rubles of investments in the first quarter of 2016.

Related: ISIS Working On Driverless Car Causes More Worry Than Necessary

Alekperov also said that the complex geopolitical situation in the Persian Gulf has caused the OPEC members from the Middle East to compete harder for their share of the oil market.

"What we see here, is that amidst the oil prices slump the Persian Gulf countries attempt to increase their production output to cover their budget deficits caused by slashed oil revenues, including compensating for the part of budget they need for procuring arms", Alekperov noted.

However, LUKoil's CEO believes oil prices are passed their lowest point, and the equilibrium price should fluctuate around $50 per barrel for the rest of 2016 and first half of 2017. Prices should then rise in the second half of 2017 as demand begins to exceed supply.

The Chairman of the Russian Union of Industrialists and Entrepreneurs, Alexander Shohin, described a litany of geopolitical issues affecting oil prices. "The fact that the Saudis rejected freezing the output blaming it on Iran's absence from the negotiations and its refusal to cooperate by announcing intention to raise the production back to pre-sanctions level of 5 million bpd plus a couple million bpd on top of that; turmoil in Libya's political situation, and a lack of a legitimate government there ; let alone the conspiracy plots that impact oil prices in countries that may be regarded as 'unfriendly'…all this definitely points to a high role of geopolitics in global oil market," he said.

[May 09, 2016] What OPEC Has To Fear From The New Saudi Oil Minister by Nick Cunningham

Some incoherent blah-blah-blah about Saudi "defending their market share" should be ignored, but new "Margaret Thatcher of Saudi Arabia" is a gambler that pursue very risky policies. He endanger his own county, by depleting currency reserved, he undermines OPEC. It is interesting what he is getting in return and from whom.
The new oil minister is another step is Prince Mohammed attempt to take the full control over Saudi oil
The elephant in the room is the level of depletion of Saudi oil reserves. land reserved probably are in terminal stages of depletion, but off-shore might still be not. Iran ayatollahs also pursue suicidal policy of oil production extraction despite low oil prices as if delay in six month really matter in the longer scheme of things. So Saudi-Iran reginal rivalty was experty played and due to stupidity of both sides that main winner is the USA, EU, China and Asian tigers.
Notable quotes:
"... Ali al-Naimi was also sympathetic to the concerns of other OPEC member nations in regards to low oil prices. Venezuela and Nigeria, among others, pressed hard for production cuts, or at a minimum, a freeze in output. Al-Naimi was open to this avenue, but Prince bin Salman is more hawkish, and seems to be much more content with a period of low oil prices. Naimi was able to countenance coordinated action with OPEC and non-OPEC producers, including Russia. The young prince is taking a tougher line, particularly when it comes to Iran. In fact, many view his opposition to a deal in Doha as at least in part motivated by the Saudi geopolitical rivalry with Iran. ..."
"... He doesn't feel the economic burden to have to cooperate with OPEC ..."
OilPrice.com

In a surprise move, Saudi Arabia sacked its long-time oil minister over the weekend, an event that illustrates the near-total control that the new young Saudi prince has obtained over the country's energy industry.

For many years, Ali al-Naimi, the outgoing Saudi oil minister, was the voice of Saudi Arabia's oil industry and policy. Even seemingly insignificant remarks from al-Naimi could move oil prices up or down. But the 80-year old oil minister has seen his power eclipsed by the 30-year old Deputy Crown Prince Mohammed bin Salman. In April, when al-Naimi was forced to backtrack on the Doha oil freeze deal, reportedly at the behest of the Deputy Crown Prince, it was clear that his time at the helm was coming to an end.

Over the weekend, al-Naimi was pushed out in favor of Khalid al-Falih, the head of the state-owned oil company Saudi Aramco. The swap was expected and had been previously announced, but the timing came as a surprise. The move leaves the Deputy Crown Prince with undisputed control over Saudi Arabia's energy strategy, as well as its broader economy.

... ... ...

Ali al-Naimi was also sympathetic to the concerns of other OPEC member nations in regards to low oil prices. Venezuela and Nigeria, among others, pressed hard for production cuts, or at a minimum, a freeze in output. Al-Naimi was open to this avenue, but Prince bin Salman is more hawkish, and seems to be much more content with a period of low oil prices. Naimi was able to countenance coordinated action with OPEC and non-OPEC producers, including Russia. The young prince is taking a tougher line, particularly when it comes to Iran. In fact, many view his opposition to a deal in Doha as at least in part motivated by the Saudi geopolitical rivalry with Iran.

"Mohammed bin Salman has changed everything," Helima Croft, head of commodities strategy at RBC Capital Markets, told the WSJ. "He doesn't feel the economic burden to have to cooperate with OPEC."

[May 09, 2016] Can Iran And Saudi Arabia's Production Claims Be Believed

Notable quotes:
"... From the Iranian side, I have no doubts that an increase of another 1m barrels a day is precisely what they hope will happen, but the reality will surely be different. For all oil production, whether it is from an independent oil company or a sovereign nation, capital expenditures will determine the increase or decrease that can be achieved. Iran has a decidedly arthritic oil infrastructure, slowed by the lack of Western technology and the impact of a decade of sanctions. Their own economy is too weak to generate anywhere near the capex required to increase another 1 million barrels in the next year, and their overtures to foreign oil companies for leases inside Iran has been met cooly by prime contenders Total (TOT) and Eni (E). There is a lagged amount of already developed barrels that Iran can push onto the global market – perhaps 300,000 barrels a day; but by my reckoning, already 150,000 of those barrels have been added – making their ultimate targets very unlikely indeed to be reached. ..."
"... It wouldn't be consistent to believe that for the last year and a half, the Saudis have been capable of increasing their production by another 20 percent, but have so far kept that potential under wraps. Instead, I am fully of the opinion that the Saudis are near, if not at their full production potential right now. ..."
"... The oil market seems to agree – in February, if the threat of another 3 million barrels of oil hitting the global market had been unleashed, oil might have reached below $20 a barrel; today, oil is getting very close to rallying towards $50 a barrel instead. ..."
OilPrice.com

In light of the missed opportunity at Doha to curb OPEC production, angry statements have emerged from both Iran and Saudi Arabia on oil production – the Iranians saying that they cannot be stopped in increasing their exports another 1m barrels a day in the next 12 months, the Saudi oil minister in turn threatening to increase production another 2m barrels a day. Both of these statements need to be taken with not a grain, but a 5-pound bag of salt.

From the Iranian side, I have no doubts that an increase of another 1m barrels a day is precisely what they hope will happen, but the reality will surely be different. For all oil production, whether it is from an independent oil company or a sovereign nation, capital expenditures will determine the increase or decrease that can be achieved. Iran has a decidedly arthritic oil infrastructure, slowed by the lack of Western technology and the impact of a decade of sanctions. Their own economy is too weak to generate anywhere near the capex required to increase another 1 million barrels in the next year, and their overtures to foreign oil companies for leases inside Iran has been met cooly by prime contenders Total (TOT) and Eni (E). There is a lagged amount of already developed barrels that Iran can push onto the global market – perhaps 300,000 barrels a day; but by my reckoning, already 150,000 of those barrels have been added – making their ultimate targets very unlikely indeed to be reached.

The Saudis do not have any of the capex or technology problems that plague the Iranians. But the question of how much capacity the Saudis actually do have comes into play when they threaten to increase production by another 2 million barrels. For my entire career in oil, there has always been a dark question on Saudi 'spare capacity' – How much could the Saudis ultimately pump, if they were willing to open the spigots up fully? For years, the speculation from most oil analysts was near to 7.5m or 8m barrels a day – a number that was blown out in the last two years as Saudi production rocketed above 10m barrels a day.

But the strategy the Saudis have pursued has been clear – they have been working towards full production and an aggressive fight for market share since the failure of the Vienna OPEC meeting in November of 2014. It is very difficult to believe that the Saudis have had much, if any, remaining capacity to easily put on the market since that time, or if any spare capacity could be developed at all. It wouldn't be consistent to believe that for the last year and a half, the Saudis have been capable of increasing their production by another 20 percent, but have so far kept that potential under wraps. Instead, I am fully of the opinion that the Saudis are near, if not at their full production potential right now.

The oil market seems to agree – in February, if the threat of another 3 million barrels of oil hitting the global market had been unleashed, oil might have reached below $20 a barrel; today, oil is getting very close to rallying towards $50 a barrel instead.

[Apr 30, 2016] It seems Saudi Vision for 2030 is mostly smoke and mirrors

peakoilbarrel.com

likbez , 04/29/2016 at 8:15 pm

It seems Saudi "Vision for 2030" is mostly smoke and mirrors
http://oilprice.com/Latest-Energy-News/World-News/The-2-Trillion-Gamble-That-Saudi-Arabia-Cannot-Win.html

Prince Muhammad Bin Salman, 30, the deputy crown prince of Saudi Arabia laid out his vision for Saudi Arabia on Monday in a plan called "Vision 2030." He wants to get Saudi Arabia off its oil dependence in only 4 years, by 2020, and wants to diversify the economy into manufacturing and mining.

…As long as Saudi Arabia produces so much petroleum, it is unclear how it can industrialize in the sense of making secondary goods.

…It ran a $100 bn. budget deficit in 2015. Saudi Arabia has big currency reserves, but I doubt it can go on like this more than five or six years.

…So it seems to me that the Vision for 2030 is mostly smoke and mirrors… Saudi Arabia probably cannot replace the money it will lose if oil goes out of style and so is doomed to downward mobility and very possibly significant instability. It has been a great party since the 1940s; it is going to be a hell of a hangover.

[Apr 30, 2016] The two trillion gamble that Saudi Arabia Cannot Win

oilprice.com
By Juan Cole

26 April 2016 | OilPrice.com
Prince Muhammad Bin Salman, 30, the deputy crown prince of Saudi Arabia laid out his vision for Saudi Arabia on Monday in a plan called "Vision 2030." He wants to get Saudi Arabia off its oil dependence in only 4 years, by 2020, and wants to diversify the economy into manufacturing and mining.

In an interview with Al Arabiya, the prince said the future of the kingdom would be based on:

1. Its possession of the Muslim shrine cities of Mecca and Medina and the "Arab and Muslim depth" that position gave the kingdom

2. The kingdom's geographical centrality to world commerce, with 30 percent of global trade passing through the 3 major sea routes that Saudi Arabia bestrides (not sure what the third is, after the Red Sea and the Persian Gulf).

3. The creation of a $2 trillion sovereign wealth fund through a sale of 5 percent of shares in Aramco, the world's largest oil company.

Prince Muhammad said Monday that he thought these assets would allow the kingdom to cease its dependence on petroleum in the very near future.

CNBC summarized other planks of his platform this way:

"The planned economic diversification also involved localizing renewable energy and industrial equipment sectors and creating high-quality tourism attractions. It also plans to make it easier to apply for visas and hoped to create 90,000 job opportunities in its mining sector."

Related: Despite Claims, Ukraine Not Free Of Russian Energy Dependence

Saudi Arabia's citizen population is probably only about 20 million, so it is a small country without a big domestic market. It is surrounded in the general region by huge countries like Egypt (pop. 85 million), Iran (pop. 75 million) and Turkey (75 million), not to mention Ethiopia (pop. 90 million) Without petroleum, it is difficult to see what would be distinctive about Saudi Arabia economically.

The excruciatingly young prince, who was born in 1985, has a BA in Law from a local Saudi university and his way of speaking about the elements of the economy is not reassuring. Take his emphasis on the maritime trade routes that flow around the Arabian Peninsula. How exactly does Saudi Arabia derive a dime from them? The only tolls I can think of are collected by Egypt for passage through the Suez Canal. By far the most important container port in the region is Jebel Ali in the UAE, which dwarfs Jedda. His estimate of 30 percent of world trade going through these bodies of water strikes me as exaggerated. Only about 10 percent of world trade goes through the Suez Canal.

As for tourism, in a country where alcohol is forbidden and religious police report to the police unmarried couples on dates, that seems to me a non-starter outside the religious tourism of pilgrimage to Mecca. The annual pilgrimage brought in $16.5 billion or 3 percent of the Saudi GDP four years ago, but that number appears to be way down the last couple of years. Unless the prince plans to highly increase the 2-3 million pilgrims annually, religious tourism will remain a relatively small part of the economy.

He also spoke about the new bridge planned from Saudi Arabia to Egypt as likely to drive trade to the kingdom and to make it a crossroads. But the road would go through the Sinai Peninsula, which is highly insecure and in the midst of an insurrection. And where do you drive to on the other side? You could maybe take fruits and vegetables by truck from Egypt to countries such as Qatar and the United Arab Emirates. Would Saudi Arabia collect tariffs on these transit goods? I can't see how that generates all that much money. The big opportunity for overland transport would be to link Egypt to a major market like Iran (pop. 77 million), and via Iran, Pakistan and India. But Prince Muhammad and his circle are hardliners against Iran and unlikely to foster trade with it.

Related: It Isn't Just ISIS that Is Destabilizing Iraq

Saudi Arabia suffers from the Dutch disease, i.e. its currency is artificially hardened by its valuable petroleum assets. They may eventually not be worth anything if hydrocarbons are replaced by green energy or even outlawed. But in 2016, they are still valuable, and they make the riyal expensive versus other currencies. The result is that anything made in Saudi Arabia would be unaffordably expensive in India (the rupee is still a soft currency). As long as Saudi Arabia produces so much petroleum, it is unclear how it can industrialize in the sense of making secondary goods.

As for the sovereign wealth fund, let's say the ARAMCO partial IPO actually realizes $2 trillion. Let's say it gets 5 percent on its investments after overhead and that all $2 trillion are invested around the world. That would be $100 billion a year, or 1/6 of Saudi Arabia's GDP last year. It doesn't replace the oil.

Saudi Arabia's Gross Domestic Product in 2014 was $746 bn., of which probably 70 percent was petroleum sales. In 2015 it was only $653 bn., causing it to fall behind Turkey, the Netherlands and Switzerland. It will be smaller yet in 2016 because of the continued low oil prices.

All this is not to reckon with the profligate spending in which the kingdom is engaged, with a direct war in Yemen and a proxy war in Syria, neither cheap. (Both wars are pet projects of Prince Muhammad bin Salman). It also has a lot of big weapons purchases in the pipeline, one of the reasons for President Obama's humiliating visit last week. It ran a $100 bn. budget deficit in 2015. Saudi Arabia has big currency reserves, but I doubt it can go on like this more than five or six years.

Yemen in particular has proved to be a quagmire, and the Houthi rebels still hold the capital of Sanaa. The only new initiative is that Saudi and local forces have kicked al-Qaeda in the Arabian Peninsula out of the port of Mukalla. This campaign shows a sudden interest in defeating al-Qaeda, which had been allowed to grow in Yemen while the main target was the Shiite Houthis, which Riyadh says are allied with Iran (the links seem minor).

So it seems to me that the Vision for 2030 is mostly smoke and mirrors.... Saudi Arabia probably cannot replace the money it will lose if oil goes out of style and so is doomed to downward mobility and very possibly significant instability. It has been a great party since the 1940s; it is going to be a hell of a hangover.

By Juan Cole via Juancole.com

[Apr 30, 2016] 2020 might be it for Saudis assuming that Ghawar is 90% depleted

peakoilbarrel.com

George Kaplan , 04/30/2016 at 6:47 am

Based on OPEC figures Saudi had produced 136.5 billion through 2014, so about 142 to date and, assuming no decline, 160 by the end of 2020. Obviously their reserves are unknown outside a select few, but news does get out including upgrades on existing fields, some new non-associated gas fields coming on line, development of shale gas, offshore exploration and some minor discoveries. But never reported is a major new oil field discovery or development. Pretty much all onshore areas have been fully explored, only deep sea remains, which appears to have been a disappointment from initial results.

From wiki and other places the URR for their giant fields (Ghawar, Safaniya, Shaybah, Abqaiq, Berri, Manifa, Abu-Sa'fah, Khurais, Neutral Zone) is 190 billion barrels; if true they could be up to 75% through, and should be well past peak, but are managing to retain a plateau. I think that Matt Simmons got things mostly right that there would be a collapse, but missed their ability (technically and economically with oil at $100 plus) and need to keep pushing the peak out.

So for Ghawar that would involve continuing with multilateral, intelligent wells, re-completions, possibly tertiary EOR methods, and new drilling up-dip where needed etc. Assume Ghawar is 90% depleted and its infrastructure suddenly disappeared, there would still be 7 to 10 billion barrels left, probably still representing one of the more attractive development opportunities around.

For Safaniyah there was a major upgrade project in 2012 with a new platform, wellhead upgrades, ESPs etc. Manifa is a complicated reservoir bought fully on line a few years ago. All the reservoirs have the best available models to allow optimum management.

There may be minor declines in their main fields, but not what would be expected given their age and depletion. They are expanding al Shaybah and Khurais by a total of 550,000 bpd over 4 to 5 years to 2018, which would compensate for 1 to 1.5% overall decline; to compensate for the rest would have to come from field management (e.g. using the intelligent wells) and in fill drilling. Between 2005 and 2014 they averaged 434 well completions per year, compared to 280 the previous 10 years, which is probably connected with this. (Note Kuwait went from 120 in 2000 through 2010 to 560 average since 2010, I'm not sure what that represents).

Eventually they are going to run out of options, the more they push things out the faster the crash is going to be. The signals seem to be that 2020 might be it.

[Apr 26, 2016] Weakened Saudi Arabia Could See Social Unrest After Economic Shakeup

Notable quotes:
"... "There is a realization among many Saudis that the economic challenges that the kingdom is facing are daunting," said Fahad Nazer, who worked at the Saudi embassy in Washington and is now a political analyst at JTG Inc. "Given the fact that some 70 percent of Saudis are under the age of 30, Prince Mohammed's penchant for making quick decisions and holding officials accountable for their performance – or lack thereof - does have wide support among Saudis. ..."
"... "The foremost challenge Mohammed bin Salman faces over time is the inevitable need to restructure the Al Sauds' relationship with the Wahhabis," ..."
"... "Within Saudi Arabia, the main challenges MbS will face will involve not the substance of oil policy but rather resistance within the royal family to so much power being concentrated in the hands of one prince of his generation," he said. ..."
OilPrice.com
After decades of talk of diversification, more than 70 percent of Saudi government revenue came from oil in 2015 and the state still employs two-thirds of Saudi workers. Foreigners account for nearly 80 percent of the private-sector payroll.

"The issue really is how to get the Saudi private sector to hire locals, how to make the numbers on that right, since so much of the Saudi private sector has had business models based on lower-wage foreign labor," said Gause.

In response to the country's weakened fiscal position, Prince Mohammed's plan is to raise non-oil revenue by $100 billion by 2020. The government announced cuts in utility and gasoline subsidies in December. Including future reductions, authorities expect the restructuring to generate $30 billion a year by 2020.

"There is a realization among many Saudis that the economic challenges that the kingdom is facing are daunting," said Fahad Nazer, who worked at the Saudi embassy in Washington and is now a political analyst at JTG Inc. "Given the fact that some 70 percent of Saudis are under the age of 30, Prince Mohammed's penchant for making quick decisions and holding officials accountable for their performance – or lack thereof - does have wide support among Saudis."

Past rulers of Saudi Arabia have largely avoided seeking additional revenue from their citizens. As water prices surged after the reduction in subsidies, Saudis turned to social media to express their anger at the government. King Salman fired the water minister on Saturday.

Saudi leaders also have unique social challenges that other nations implementing economic changes didn't have to manage. While steps have been taken to get women into the workforce, the kingdom still prohibits them from driving. The country's feared religious police, despite having their powers to arrest curbed this month, still enforce gender segregation and prayer times.

"The foremost challenge Mohammed bin Salman faces over time is the inevitable need to restructure the Al Sauds' relationship with the Wahhabis," said James Dorsey, a senior fellow in international studies at Nanyang Technological University in Singapore. "This restructuring is inevitable both to be able to truly reform the economy and because the increasing toll identification with the puritan sect is taking on Saudi Arabia's international reputation."

His efforts to shake up the economy come against the backdrop of mounting domestic security threats and regional turmoil, with the Sunni-ruled kingdom bogged down in a war in Yemen against Shiite rebels it says are backed by Iran. He has also consolidated more power than anyone in his position since the founding of the kingdom.

"Within Saudi Arabia, the main challenges MbS will face will involve not the substance of oil policy but rather resistance within the royal family to so much power being concentrated in the hands of one prince of his generation," he said.

So perhaps the spiking money-market rates are more indicative of the potential for social unrest?

[Apr 26, 2016] Crown Prince Mohammed bin Salman is preparing his citizens for the day of reckoning

Notable quotes:
"... To me it sounds like Crown Prince Mohammed bin Salman is preparing his citizens for the day of reckoning. Why is bringing up this topic right now - probably because Saudi oil production is peaking right now. And whatever "transforming the economy away from oil" entails, the Saudi population won't like it. ..."
"... Well if KSA were going to sell wall-to-wall carpet for all these decades, maybe they can start selling the vacuum cleaners for it… and continue to put disaster capitalism to work for the kings and princes… ..."
"... "Here at Your Kingdom of Saudi Arabia™, we have just the right kind of nice soft sand for your sea-level-rise beach-replenishment projects. We also offer special discounts for all our low-lying island archipelago customers. Let us help you fill the holes that you dig yourselves out of. Wallahi, let it be YKSA." ..."
peakoilbarrel.com

Frugal ,

04/25/2016 at 8:24 pm
Saudi unveils far-reaching plan to move away from oil

Riyadh (AFP) – Saudi Arabia said Monday it would create the world's largest sovereign investment fund and sell shares in state energy giant Aramco under a vast plan unveiled to transform its oil-dependent economy.

"We will not rest until our nation is a leader in providing opportunities for all through education and training, and high quality services such as employment initiatives, health, housing and entertainment," Mohammed wrote in an 84-page booklet outlining the plan.

If it works, Saudi Arabia "can live without oil by 2020".

To me it sounds like Crown Prince Mohammed bin Salman is preparing his citizens for the day of reckoning. Why is bringing up this topic right now - probably because Saudi oil production is peaking right now. And whatever "transforming the economy away from oil" entails, the Saudi population won't like it.

Silicon Valley Observer , 04/25/2016 at 10:20 pm
You nailed it.
Caelan MacIntyre , 04/25/2016 at 10:44 pm
Well if KSA were going to sell wall-to-wall carpet for all these decades, maybe they can start selling the vacuum cleaners for it… and continue to put disaster capitalism to work for the kings and princes…

"Here at Your Kingdom of Saudi Arabia™, we have just the right kind of nice soft sand for your sea-level-rise beach-replenishment projects. We also offer special discounts for all our low-lying island archipelago customers. Let us help you fill the holes that you dig yourselves out of. Wallahi, let it be YKSA."

Silicon Valley Observer , 04/26/2016 at 8:15 am
LMAO!

I love this part:

"We will not rest until our nation is a leader in providing opportunities for all through education and training*, and high quality services such as employment initiatives**, health, housing and entertainment***,"

* except for women and shiites
** for imported Indian and Pakistanis who live in slave-like conditions
*** And DON'T forget the entertainment! Maybe they could introduce NASCAR.

Doug Leighton , 04/26/2016 at 9:22 am
LOL

My wife, teaching a course in mathematical physics in a Swedish university, tossed a pair of Saudi students out of her class (permanently) owing to their utter disrespect: constant disruptive and insulting comments. In the end the Saudi embassy tried to intervene but the university stood firm. The incident might have adversely affected Swedish-Saudi relations for awhile but the fact remains: respect for women by Saudis doesn't exist; even a modicum of respect for a female teacher is an impossible concept for them.

Fred Magyar , 04/26/2016 at 7:39 am
And whatever "transforming the economy away from oil" entails, the Saudi population won't like it.

Methinks his royal highness is just telling his people to "Go pound sand!" :-)

[Apr 25, 2016] A 30-year-old prince's bold vision for Saudi Arabia

Notable quotes:
"... He's also grated a lot of people in the family who see him as abrasive, inexperienced, undisciplined, impulsive ..."
www.cnbc.com
About 70 percent of the population of Saudi Arabia is under 30, and more than 30 percent of that is unemployed. Five million new jobs would mean one new job for roughly every six people in the country.

Riedel said he expects to see just the outline of a plan. "They will announce a cautious series of reforms, including opening up Aramco a little bit. They will announce probably some cutbacks in subsidies." He said it's unclear whether there will be any further detail on the sovereign wealth fund yet.

... ... ...

Since the sharp drop in oil prices, Saudi Arabia has been running deficits and has dipped into its foreign reserves to cover shortfalls. It has also floated debt, and this week it borrowed $10 billion from a consortium of global banks in its first international loan deal in a quarter century. The bank deal was seen as a step toward an international bond deal. Prior to the oil price collapse, Saudi Arabia needed about $100 a barrel to meet its budget, and that number has only dipped slightly.

Read More Saudi Arabia borrows $10 billion

Bin Salman has a great deal invested in the plan to broaden the kingdom's revenue base while reducing unemployment and curbing subsidies. Second in line to the throne, he has been seen as a rival to his cousin, Crown Prince Muhammad bin Nayef, the heir apparent to 80-year-old King Salman.

"I think about this transformation plan. It makes him the center of everything. It really does make him the most powerful person in that country," Croft said.

Read More Saudis threaten $750 billion asset sale, but experts question it

Bin Salman has been seen as acquiring more power than his cousin, but he's viewed as unpredictable.

"I think the longer this goes on, the more time he has to entrench himself, the more power he amasses, the more he becomes inevitable. I find his political skill craft genius. Just the sheer ability to consolidate power with tremendous speed. He's like Frank Underwood on steroids," said Croft, referring to the central figure in Netflix's "House of Cards," who schemed his way into the presidency.

Bin Salman is different than other Saudi leaders in that he was educated in the kingdom. He wears traditional dress and is popular with young Saudis.

"They see in Mohammad bin Salman someone of their own generation moving up the ladder very quickly. He has a certain degree of popularity. He's also grated a lot of people in the family who see him as abrasive, inexperienced, undisciplined, impulsive," said Riedel. "In the long run, the way Saudi Arabia works is it's more important to be important in the family than it is in the street. This is an absolute monarchy."

... ... ...

Oppenheimer energy analyst Fadel Gheit said he is skeptical that investors will see the transparency they would like when Aramco ultimately comes to market. "It's going to be an enigma surrounded by secrecy," he said. "Why would I invest in Aramco, if I could buy Shell, BP where there's democracy, transparency." Gheit said he doubts much information on Aramco compensation or capital spending authorization would become public.

"The reason they want to do this IPO is it will give them another window in the global capital markets," he said. "I do not take this as a sign of a healthy economy."

The kingdom has named JP Morgan and Michael Klein as advisors on the Aramco deal.

[Apr 25, 2016] Prince Mohammed bin Salman Naive, arrogant Saudi prince is playing with fire by Patrick Cockburn

Notable quotes:
"... The interview was presumably meant to be reassuring to the outside world, but instead it gives an impression of naivety and arrogance. There is also a sense that Prince Mohammed is an inexperienced gambler who is likely to double his stake when his bets fail. This is the very opposite of past Saudi rulers, who had always preferred, so to speak, to bet on all the horses. ..."
"... This is the second area in which Prince Mohammed's interview suggests nothing but trouble for the Saudi royal family. He suggests austerity and market reforms in the Kingdom, but in the context of Middle East autocracies and particularly oil states this breaches an unspoken social contract with the general population. People may not have political liberty, but they get a share in oil revenues through government jobs and subsidised fuel, food, housing and other benefits. Greater privatisation and supposed reliance on the market, with no accountability or fair legal system, means a licence to plunder by those with political power. ..."
"... This was one of the reasons for the uprising in 2011 against Bashar al-Assad in Syria and Muammar Gaddafi in Libya. So-called reforms that erode an unwieldy but effective patronage machine end up by benefiting only the elite. ..."
9 January 2016 | The Independent

German intelligence memo shows the threat from the kingdom's headstrong defence minister

At the end of last year the BND, the German intelligence agency, published a remarkable one-and-a-half-page memo saying that Saudi Arabia had adopted "an impulsive policy of intervention". It portrayed Saudi defence minister and Deputy Crown Prince Mohammed bin Salman – the powerful 29-year-old favourite son of the ageing King Salman, who is suffering from dementia – as a political gambler who is destabilising the Arab world through proxy wars in Yemen and Syria.

Spy agencies do not normally hand out such politically explosive documents to the press criticising the leadership of a close and powerful ally such as Saudi Arabia. It is a measure of the concern in the BND that the memo should have been so openly and widely distributed. The agency was swiftly slapped down by the German foreign ministry after official Saudi protests, but the BND's warning was a sign of growing fears that Saudi Arabia has become an unpredictable wild card. One former minister from the Middle East, who wanted to remain anonymous, said: "In the past the Saudis generally tried to keep their options open and were cautions, even when they were trying to get rid of some government they did not like."

The BND report made surprisingly little impact outside Germany at the time. This may have been because its publication on 2 December came three weeks after the Paris massacre on 13 November, when governments and media across the world were still absorbed by the threat posed by Islamic State (IS) and how it could best be combatted. In Britain there was the debate on the RAF joining the air war against IS in Syria, and soon after in the US there were the killings by a pro-IS couple in San Bernardino, California.

It was the execution of the Shia cleric Sheikh Nimr al-Nimr and 46 others – mostly Sunni jihadis or dissenters – on 2 January that, for almost the first time, alerted governments to the extent to which Saudi Arabia had become a threat to the status quo. It appears to be deliberately provoking Iran in a bid to take leadership of the Sunni and Arab worlds while at the same time Prince Mohammed bin Salman is buttressing his domestic power by appealing to Sunni sectarian nationalism. What is not in doubt is that Saudi policy has been transformed since King Salman came to the throne last January after the death of King Abdullah.

The BND lists the areas in which Saudi Arabia is adopting a more aggressive and warlike policy. In Syria, in early 2015, it supported the creation of The Army of Conquest, primarily made up of the al-Qaeda affiliate the al-Nusra Front and the ideologically similar Ahrar al-Sham, which won a series of victories against the Syrian Army in Idlib province. In Yemen, it began an air war directed against the Houthi movement and the Yemeni army, which shows no sign of ending. Among those who gain are al-Qaeda in the Arabian peninsula, which the US has been fruitlessly trying to weaken for years by drone strikes.

None of these foreign adventures initiated by Prince Mohammed have been successful or are likely to be so, but they have won support for him at home. The BND warned that the concentration of so much power in his hands "harbours a latent risk that in seeking to establish himself in the line of succession in his father's lifetime, he may overreach".

The overreaching gets worse by the day. At every stage in the confrontation with Iran over the past week Riyadh has raised the stakes. The attack on the Saudi embassy in Tehran and its consulate in Mashhad might not have been expected but the Saudis did not have to break off diplomatic relations. Then there was the air strike that the Iranians allege damaged their embassy in Sana'a, the capital of Yemen.

None of this was too surprising: Saudi-Iranian relations have been at a particularly low ebb since 400 Iranian pilgrims died in a mass stampede in Mecca last year.

But even in the past few days, there are signs of the Saudi leadership deliberately increasing the political temperature by putting four Iranians on trial, one for espionage and three for terrorism. The four had been in prison in Saudi Arabia since 2013 or 2014 so there was no reason to try them now, other than as an extra pinprick against Iran.

Saudi Arabia has been engaging in something of a counter attack to reassure the world that it is not going to go to war with Iran. Prince Mohammed said in an interview with The Economist: "A war between Saudi Arabia and Iran is the beginning of a major catastrophe in the region, and it will reflect very strongly on the rest of the world. For sure, we will not allow any such thing."

The interview was presumably meant to be reassuring to the outside world, but instead it gives an impression of naivety and arrogance. There is also a sense that Prince Mohammed is an inexperienced gambler who is likely to double his stake when his bets fail. This is the very opposite of past Saudi rulers, who had always preferred, so to speak, to bet on all the horses.

A main reason for Saudi Arabia acting unilaterally is its disappointment that the US reached an agreement with Iran over Tehran's nuclear programme. Again this looks naive: close alliance with the US is the prime reason why the Saudi monarchy has survived nationalist and socialist challengers since the 1930s. Aside from the Saudis' money and close alliance with the US, leaders in the Middle East have always doubted that the Saudi state has much operational capacity. This is true of all the big oil producers, whatever their ideological make-up. Experience shows that vast oil wealth encourages autocracy, whether it is in Saudi Arabia, Iraq, Libya or Kuwait, but it also produces states that are weaker than they look, with incapable administrations and dysfunctional armies.

This is the second area in which Prince Mohammed's interview suggests nothing but trouble for the Saudi royal family. He suggests austerity and market reforms in the Kingdom, but in the context of Middle East autocracies and particularly oil states this breaches an unspoken social contract with the general population. People may not have political liberty, but they get a share in oil revenues through government jobs and subsidised fuel, food, housing and other benefits. Greater privatisation and supposed reliance on the market, with no accountability or fair legal system, means a licence to plunder by those with political power.

This was one of the reasons for the uprising in 2011 against Bashar al-Assad in Syria and Muammar Gaddafi in Libya. So-called reforms that erode an unwieldy but effective patronage machine end up by benefiting only the elite.

Oil states are almost impossible to reform and it is usually unwise to try. Such states should also avoid war if they want to stay in business, because people may not rise up against their rulers but they are certainly not prepared to die for them.

Read more

[Apr 25, 2016] German spy agency warns of Saudi shift to impulsive policies

Notable quotes:
"... Since King Salman succeeded to power in January, Saudi Arabia has orchestrated a military coalition to intervene in neighbouring Yemen to limit Iranian influence, increased support for Syrian rebels and made big changes in the royal succession. ..."
"... Germany's BND pointed to efforts by the two rivals to shape events in Syria, Lebanon, Bahrain and Iraq, with Saudi Arabia increasingly prepared to take military, political and financial risks to ensure it does not lose influence in the region. ..."
"... Iran, a major ally of Assad, denies having expansionist aims and accuses Saudi Arabia of undermining regional stability through its backing of Syrian rebels and intervention in Yemen. ..."
"... It pointed to risks stemming from the concentration of power in Prince Mohammad, who it said could get carried away with efforts to secure the royal family succession in his favour. ..."
"... Saudi Arabia faces a budget deficit that economists estimate could total $120 billion or more this year. This has led the Finance Ministry to close its national accounts a month early to control spending. ..."
"... Prince Mohammed, who is second-in-line to rule, is also the Saudi defence minister and head of a supercommittee on the economy. The young prince has enjoyed a dizzying accumulation of powers since his father became king and placed him in the line of succession ahead of dozens of cousins. ..."
www.yahoo.com

BERLIN (Reuters) - Germany's BND foreign intelligence agency, in an unusual public statement issued on Wednesday, voiced concern that Saudi Arabia was becoming impulsive in its foreign policy as powerful young Deputy Crown Prince Mohammad bin Salman asserts himself.

The BND also said that with Saudi Arabia - the world's No. 1 oil exporter - losing confidence in the United States as a guarantor of Middle East order, Riyadh appeared ready to take more risks in its regional competition with Iran.

Since King Salman succeeded to power in January, Saudi Arabia has orchestrated a military coalition to intervene in neighbouring Yemen to limit Iranian influence, increased support for Syrian rebels and made big changes in the royal succession.

Riyadh has long viewed Iran as aggressive and expansionary and regarded its use of non-state proxies such as Lebanon's Hezbollah and Iraqi Shi'ite militias as aggravating sectarian tensions and destabilising the region. But under Salman, it has moved more assertively to counter its regional foe.

Germany's BND pointed to efforts by the two rivals to shape events in Syria, Lebanon, Bahrain and Iraq, with Saudi Arabia increasingly prepared to take military, political and financial risks to ensure it does not lose influence in the region.

"The thus far cautious diplomatic stance of the elder leaders in the royal family is being replaced by an impulsive interventionist policy," the BND said, adding the Saudis remain committed to the removal of Syrian President Bashar al-Assad.

Iran, a major ally of Assad, denies having expansionist aims and accuses Saudi Arabia of undermining regional stability through its backing of Syrian rebels and intervention in Yemen.

The BND issued the 1-1/2 page report, entitled "Saudi Arabia - Sunni regional power torn between foreign policy paradigm change and domestic policy consolidation", to some German media. Reuters also obtained a copy.

It pointed to risks stemming from the concentration of power in Prince Mohammad, who it said could get carried away with efforts to secure the royal family succession in his favour.

The BND said there was a risk he would irritate other royal family members and the Saudi people with reforms, while undermining relations with friendly, allied states in the region.

Saudi Arabia faces a budget deficit that economists estimate could total $120 billion or more this year. This has led the Finance Ministry to close its national accounts a month early to control spending.

Prince Mohammed, who is second-in-line to rule, is also the Saudi defence minister and head of a supercommittee on the economy. The young prince has enjoyed a dizzying accumulation of powers since his father became king and placed him in the line of succession ahead of dozens of cousins.

(Reporting by Andreas Rinke; Writing by Paul Carrel; Editing by Noah Barkin/Mark Heinrich)

[Apr 25, 2016] Prince of Araby The reckless power behind the Saudi throne

Notable quotes:
"... bête noire ..."
"... The Economist ..."
"... Daily Telegraph ..."
"... , ..."
Informed Comment
By contributors | Jan. 13, 2016 | By Susan de Muth | ( OpenDemocracy) | – –

King Salman's son Mohammad seems to be piloting Saudi Arabia into a series of ever more risky adventures.

In the past year, the Kingdom of Saudi Arabia has abandoned the cautious fence-sitting that long characterised its diplomatic style in favour of an unprecedented, hawkish antagonism. That this transformation coincides with the meteoric rise of a previously little known prince – 30 year-old Mohammad bin Salman – is no accident; it seems that the prince is now the power behind the throne.

Since the death of the first king of modern Saudi Arabia, Abdulaziz, in 1953, the kingdom has been ruled by an increasingly elderly succession of six of his 45 sons; the last incumbent, Abdullah, died last January aged 90 and was replaced by the present king, Salman, who is 81 and rumoured to be suffering from dementia. The youthful, sabre-rattling Prince Mohammad, insiders say, is Salman's favourite son by his third and favourite wife, Fahda.

Salman has one remaining brother – 75 year-old Muqrin – who would normally have been next in line for the throne. Whether alone, or at the instigation of others, Salman removed Muqrin from the succession three months after he became king. Prince Mohammad now moved up the line of succession to become 'deputy Crown Prince', with only his 56 year-old cousin, Mohammad bin Nayef between him and the throne.

King Salman then bestowed an astonishing array of portfolios and titles on his inexperienced son, making him Defence Minister and Deputy Prime Minister – the very same posts Salman himself occupied prior to inheriting the throne – as well as head of the Economic Guidance Council and Chief of the Royal Court. Within weeks, bin Nayef's court was merged with the Royal Court, now supervised by Prince Mohammad, and one of his closest advisers was removed from the ruling cabinet.

No wonder Prince Mohammad feels mandated to pilot the kingdom into a series of ever more risky adventures, earning himself the unofficial nickname 'Reckless' and unfavourable comparisons with his highly intelligent half-brother, 56 year-old Prince Sultan bin Salman, who became the first Arab astronaut in 1986 and is currently languishing in obscurity as head of the Saudi Tourist Board.

At the heart of all Sunni Saudi Arabia's current woes is its longstanding sectarian and political rivalry with the Shi'a republic of Iran. The toppling of the Shah by the 1979 Islamic revolution struck fear into the Saudi royals' hearts and consolidated Riyadh's political and military dependence on the west.

Just as King Salman got comfortable on the throne, everything started to go wrong.

Until very recently, Iran was isolated and under heavy sanctions, the bête noire of the west, harbouring nuclear ambitions and an aggressive attitude towards 'the great Satan', America, and its client state, Israel. Meanwhile, Saudi Arabia could do no wrong – despite its appalling human rights record, oppression of women and rampant corruption. Pliable and passive in its regional politics, Washington's willing ally eagerly swapped billions of petro-dollars for sophisticated military hardware, aircraft and weapons. Margaret Thatcher had a special department for pushing through the al-Yamamah arms deal which involved record amounts of dollars and corruption. This 'special relationship' endured: the flag over Buckingham Palace flew at half-mast when King Abdullah passed on in January last year and David Cameron, Barack Obama and François Hollande were among many world leaders who travelled to Riyadh for the late monarch's memorial.

But just as King Salman got comfortable on the throne, everything started to go wrong for the desert kingdom.

First, the west suddenly woke up to how deeply entrenched the Islamic State (IS) had become on both sides of the Iraq/Syria border as it set about building its 'Caliphate'; this problem now replaced the removal of Syrian President Bashar al-Assad as regional priority number one. Before this complication, alignment in Syria had been relatively simple and along sectarian fault lines: the Alawite (a branch of Shi'ism) Assad regime was backed by Iran, Iraq, Russia and China, while the mainly Sunni opposition was championed by Saudi Arabia, most Gulf states, Turkey, the US, UK and several European countries.

Recognising the growing predominance of Islamic extremists within the opposition (a situation actively fostered by Saudi Arabia) the west now preferred a political solution to the Syrian civil war and reluctantly conceded – largely under Russian pressure – that this could not be achieved without Iran. Furthermore, it looked increasingly likely that IS could not be defeated without the co-operation of the Syrian army, transforming Assad – temporarily at least – from the problem to part of the solution.

To the dismay of the Saudis, Washington began to court Tehran, creating a vehicle for rapprochement by bump-starting the nuclear limitation agreement which had been stalled for thirteen years but now accelerated to the finishing line in a matter of months. Concluded in July, it was finally signed by President Obama in October last year and Tehran was invited to the Vienna conference on Syria the same month. In addition, Iranian assets were unfrozen and sanctions lifted.

Not only did the Saudis feel betrayed, but they now faced another problem as a result. Since November 2014, they had been exerting their considerable influence on OPEC to keep pumping oil at levels above the agreed ceiling, despite falling prices. Ostensibly aimed at pricing the American fracking industry out of the market, it was also political, intended to harm the economies of oil-rich Iran and Russia – both under international sanctions at the time. Tehran now called Saudi Arabia's bluff, announcing that as soon as sanctions were lifted it would pump a million extra barrels a day. Suddenly the tables were turned and it was the Saudi economy that was at risk, with the IMF warning in October 2015 that the nation would bankrupt itself within five years – despite its gargantuan sovereign funds ­– if it did not reverse its policy.

Nor is this the only drain on Saudi finances. Since March it has been bombarding the Iranian-backed Houthi rebels in Yemen, presumably at the instigation of Prince Mohammad (with his defence minister hat on). Saudi Arabia has no history or experience of unilateral armed intervention – it sent 3,000 soldiers to each of the major Arab-Israeli wars and a few more to the first Gulf War – yet the prince believed that the Houthis would be defeated in a matter of days. Ten months on, with no plan B and no exit strategy, nothing has been achieved but the devastation of the poorest country in the Middle East and the deaths of thousands of innocent civilians. Analysts estimate that the financial cost of this adventure has already topped $60 billion. With oil revenues at rock bottom, the Saudi treasury has sold billions of dollars' worth of European stocks to meet the ongoing costs of this unwinnable war.

The question is why, when the world stands at the brink of a catastrophic conflict, take any side at all?

Things took an even more hawkish turn last week when the Saudi regime took the decision to behead a well-known dissident Shi'a cleric, Sheikh Nimr al-Nimr. There were riots in Tehran where the Saudi Embassy was set on fire; Riyadh immediately cut all diplomatic ties with Iran and shortly afterwards a Saudi airstrike damaged the Iranian embassy in Sanaa, Yemen. The resulting tension has sent shock-waves through the region, with many fearing a war between the two powers as the Saudis seek to enlist the support of fellow Sunni nations.

With the headstrong Prince Mohammad at the helm, backing down does not appear to be an option… and if the war-chest runs out, contingencies are in place. In an interview last week with The Economist, Prince Mohammad revealed a plan to float Aramco – the trillion dollar nationalised oil company and the country's most valuable asset – on the international markets and sell billions worth of nationally-owned prime land for private development. In addition, subsidies for the needy will be slashed and the education and healthcare systems privatised, putting them out of reach for the poorest members of society.

In Gulf countries, autocratic systems are generally tolerated due to an unspoken contract between government and the people that everyone benefits from the nation's wealth (albeit extremely unequally); Prince Mohammad's Thatcherite vision, if implemented, risks widespread civil unrest. In addition, the restive Shi'a population in the east is sitting on top of the country's largest oil fields and distribution centres.

Saudi influence abroad has always been predicated on its wealth and can be expected to diminish along with its coffers. Nevertheless, Prince Mohammad adopted the diplomatic style of George W. Bush in his search for allies: 'Who's not with us is against us'. The right wing press has apparently already made its decision: the Daily Telegraph declared that "Britain Must Side With Saudi Arabia", while Roger Boyes in The Times opined "execution by sword is brutal but Riyadh remains our best hope for peace in the Middle East"… well that's not what they say about the Islamic State. In fact, the past year saw a record number of beheadings in Saudi Arabia and 157 executions in all.

None of this is to say that Iran is any better – both theocracies are intolerant, oppressive and cruel. The question is why, when the world stands at the brink of a catastrophic conflict, take any side at all? Shouldn't Britain and America, supposedly 'developed' countries claiming to be beacons of progress and democracy, be brokering the rapprochement between these two extremist regimes that is key to regional peace, and a political solution to the Syrian crisis? Shouldn't the west be exercising the undoubted influence it still possesses in the Royal Palace to urge more caution, more debate?

If the west persists, instead, in following a deluded prince into an unwinnable battle against a fabricated monster, it might as well champion Don Quixote tilting at windmills and declaring "a righteous war and the removal of so foul a brood from off the face of the earth is a service God will bless".

Via OpenDemocracy.net

[Apr 24, 2016] A famous 3 am call did take place in Doha on Sunday. The young Salman called the Saudi delegation and told them the deal was off

Notable quotes:
"... So, if true, it looks like somebody played young gambler prince card again to prevent/slow down the process of normalization of oil prices. ..."
"... That makes it more difficult to deny that the collapse of oil prices was not, at least in part, an engineered event. ..."
peakoilbarrel.com

Greenbub, 04/24/2016 at 2:36 pm

Something to watch:

"Crude power: The oil game uncovered"

http://www.aljazeera.com/programmes/countingthecost/2016/04/crude-power-oil-game-uncovered-160424061941330.html

likbez , 04/24/2016 at 3:26 pm
Compare with Pepe Escobar views at http://www.informationclearinghouse.info/article44510.htm
Greenbub , 04/24/2016 at 4:33 pm
From your article:

"As the source close to Riyadh advances, "the real nuclear option for the Saudis would be to cooperate with Russia in a new alliance to cut back oil production 20% for all of OPEC, in the process raising the oil price to $200.00 a barrel to make up for lost revenue, forced on them by the United States." This is what the West fear like the plague. And this is what the perennial vassal, the House of Saud, will never have the balls to pull off. "

He sounds like he works for Pravda.

likbez , 04/24/2016 at 5:21 pm
Greenbub,
He sounds like he works for Pravda.

That's silly. He is definitely a leftee, but, in case you do not know, Pravda no longer exists.

And that does not disqualifies him any more then Bloomberg shilling for Saudi and all other disingenuous "low oil price forever" MSM. We should be able to filter out outright propaganda, aren't we?

I am more interested in new facts that he reports and which might well be true, like

A famous 3 am call did take place in Doha on Sunday. The young Salman called the Saudi delegation and told them the deal was off. Every other energy market player was stunned by the reversion.

So, if true, it looks like somebody played young gambler prince card again to prevent/slow down the process of normalization of oil prices.

That makes it more difficult to deny that the collapse of oil prices was not, at least in part, an engineered event.

[Apr 24, 2016] In riposte to Riyadh, Russia says ready to ramp up oil output

Notable quotes:
"... "They (Saudis) have the ability to raise output significantly. But so do we," Russian Energy Minister Alexander Novak told journalists on the sidelines of an international energy conference in Moscow. ..."
"... He said Russia was "in theory" able to raise production to 12 or even 13 million bpd from current record levels of close to 11 million bpd. ..."
"... Russian oil output has repeatedly surprised on the upside over the past decade, rising from as low as 6 million bpd at the turn of the millennium. Oil experts have repeatedly predicted an unavoidable decline but it has yet to happen. ..."
"... we are headed for some incredibly rough times. We need for oil to be just like Goldilock's porridge, not to hot, not too cold, not too plentiful and cheap, not too scarce and expensive, for at least another couple of decades. ..."
peakoilbarrel.com

AlexS , 04/20/2016 at 11:16 am

A war of words:

In riposte to Riyadh, Russia says ready to ramp up oil output

Apr 20, 2016
http://www.reuters.com/article/us-opec-russia-idUSKCN0XH1ST

Russia said on Wednesday it was prepared to push oil production to new historic highs, just days after a global deal to freeze output levels collapsed and Saudi Arabia threatened to flood markets with more crude.

The deal had been meant to help the market rebalance by removing a large chunk of oversupply and a stockpile glut.

But Saudi Arabia said it could jack up output instead – by as much as 2 million barrels per day (bpd) to over 12 million, which would allow it to overtake Russia as the world's largest producer.

"They (Saudis) have the ability to raise output significantly. But so do we," Russian Energy Minister Alexander Novak told journalists on the sidelines of an international energy conference in Moscow.

He said Russia was "in theory" able to raise production to 12 or even 13 million bpd from current record levels of close to 11 million bpd.

Russian oil output has repeatedly surprised on the upside over the past decade, rising from as low as 6 million bpd at the turn of the millennium. Oil experts have repeatedly predicted an unavoidable decline but it has yet to happen.

Silicon Valley Observer , 04/20/2016 at 1:47 pm
I'll believe it when I see it.
Oldfarmermac , 04/20/2016 at 1:05 pm
"Oil experts have repeatedly predicted an unavoidable decline but it has yet to happen."

This is a "WHEN" question, rather than an "if" question. Let's hope and pray to the Sky Daddy or Sky Mommy of our choice that the supply of oil holds up well enough, long enough, for the renewables and electric car industries to grow up.

Otherwise, we are headed for some incredibly rough times. We need for oil to be just like Goldilock's porridge, not to hot, not too cold, not too plentiful and cheap, not too scarce and expensive, for at least another couple of decades.

[Apr 24, 2016] Saudis To Kerry We Created ISIS

Notable quotes:
"... It was US intervention in the Middle East, say the Saudis, that led us to create first al-Qaeda and then ISIS. The US attack on Iraq tipped the balance in the region in favor of Iran and counter-measures needed to be taken. ..."
"... This is nothing new. The CIA helped create and back the Mujahideen in Afghanistan to counter the 1979 Soviet invasion. And the CIA knew about (at the least) Saudi plans to counter Iran's rise in the region and the uncertainty produced by US-instigated "Arab Spring" beginning in 2011. ..."
The Ron Paul Institute for Peace & Prosperity.

It was US intervention in the Middle East, say the Saudis, that led us to create first al-Qaeda and then ISIS. The US attack on Iraq tipped the balance in the region in favor of Iran and counter-measures needed to be taken.

This is nothing new. The CIA helped create and back the Mujahideen in Afghanistan to counter the 1979 Soviet invasion. And the CIA knew about (at the least) Saudi plans to counter Iran's rise in the region and the uncertainty produced by US-instigated "Arab Spring" beginning in 2011. The lesson? Interventionism has consequences, some intended and some unintended. Usually counter to the stated objectives. Trying to order the world, the central planners have only created chaos.

[Apr 24, 2016] Why Obama paid a visit to Riyadh

Blast from the past (this article was published in april 2014 -- two years ago)
Notable quotes:
"... To decrease oil and gas prices significantly, which would be a serious blow to Russia's state treasury, and to achieve substantial reductions in the consumption of Russian oil and gas by the West. ..."
"... However, the rulers of the KSA want much more, and above all, they want Assad's regime to be destroyed, and American help in order to stop the growing influence of Iran, as well as to form a "Shiite Arc" in the region. Only then can Riyadh recover from the strongly shaken position of the kingdom in the Islamic world. And the overthrow of Assad and capturing Damascus by the pro-Saudi Islamist opposition in Damascus are the only things that can strengthen the position of Saudi Arabia as a leader among the Arab states. This would allow the implementation of its plans for further regional expansion – from establishing a Jordanian-Palestinian federation to the formation of an anti-Shiite league from the Arabian Peninsula to India. ..."
"... Thus, while B. Assad stays in power, the construction of the gas pipeline from Qatar to the Mediterranean coast of Syria is impossible. Energy experts calculated back in 2009-2010, that if Sunnis came to power in Syria, instead of the Alawite regime of Bashar Assad, the gas pipeline 'Qatar – Saudi Arabia – Jordan – Syria – Turkey' would be built in two years. This would result in huge financial losses for Russia, whose gas cannot compete with Qatari gas, due to the extremely low cost of the latter. Hence, Saudi Arabia is trying to subdue Qatar, through a conflict within the GCC, in order to cut off another option – the construction of a gas pipeline from Iran (South Pars) through Iraq and Syria, which could be a joint project with Russia. Doha would play only a secondary, supporting role, being dependent on Tehran. ..."
"... Earlier, American billionaire George Soros said that the U.S. strategic oil reserves are more than twice larger than the required level, and the sale of a part of these reserves would allow exerting pressure on Russia. That is, the blows would hit Moscow from two directions – from the United States and from the Persian Gulf. However, later on, the U.S. Secretary of Energy denied this possibility. ..."
"... However, there is the question: Did the U.S. President manage to agree with Saudi Arabia to increase oil supplies to the world market to bring down prices? Does the KSA have a possibility to offer significant volumes of oil on the world market, for example up to 3-4 million b/d? ..."
"... The fact is that the price of $110 per barrel is just the thing that Saudi Arabia needs, because the leadership of the kingdom has extensive socio-economic obligations. And if the standard of living of the Saudis decreases somewhat, due to the fall in oil prices and due to the fall of oil income, the country would be very much at risk to fall into the situation of the "Arab Spring", like it was the case in Tunisia, Libya, Egypt. And the Saudis are afraid of a repetition of the Arab revolutions ..."
"... Alexander Orlov, political scientist, expert in Oriental Studies, exclusively for the online magazine "New Eastern Outlook" . http://journal-neo.org/2014/04/02/rus-zachem-obama-priezzhal-v-e-r-riyad/ ..."
Apr 02, 2014 | New Eastern Outlook

The deterioration of the situation in Ukraine made substantial changes in the agenda of talks of U.S. President Obama with Saudi leadership in Riyadh on March 28 this year. The main subject of the discussion included the situation around Ukraine, possible joint steps to decrease energy prices, in order to weaken Russia's economy, promotion of Iran's moving to a more pro-Western position, to weaken Tehran's cooperation with Moscow, and only then about Syria and the situation in the GCC. Obama's support of the coup in Ukraine and the tough American opposition towards Russia in Ukrainian affairs, led to Washington developing the idea of urgent mobilization of the resources of its rich Arab allies – to oppose Moscow. This is because it turned out that the U.S. and its allies in NATO and the EU had no financial or political leverage, for exerting pressure on Russia.

That is why the White House's decision, urgently to revive its relations with those major Arab partners, with whom they have not been good recently, seems logical. The more so that, although Riyadh and Washington had differences in the approaches to some international and regional issues, the two countries reduced neither their energy nor military cooperation, as well as intelligence interaction was not stopped in the war being conducted by the United States and the Kingdom of Saudi Arabia against Iran and Syria. In addition, the White House decided to try to form a united front with the leading country in the Arab world against Moscow, and to neutralize Tehran at the same time.

As it became known, in the course of the conversation, Obama suggested that the ruling Saudi dynasty "take vengeance" on Russia for Crimea, by making strikes on three fronts. In Syria, in order to take it out of the orbit of influence of Moscow and Tehran, and to put the whole Levant under the U.S. and Saudi control. To provide financial assistance to the new government in Kiev, in order to make Ukraine an outpost of anti-Russian activities in Eastern Europe. To decrease oil and gas prices significantly, which would be a serious blow to Russia's state treasury, and to achieve substantial reductions in the consumption of Russian oil and gas by the West.

Washington is well aware that Obama cannot act in any of these areas without Riyadh, especially in terms of using the "energy weapon" against Moscow. In exchange, Obama offered to "give a free hand" to the KSA in the Middle East and the Persian Gulf. The more so, that Riyadh has been granted the right to build a special relationship with Egypt, after the overthrow of Mursi's government. In general, the U.S. and the West have turned a blind eye to the harsh crushing of the protests of Shiites in Bahrain and the Eastern Province of the KSA. The Saudis received the right to carry out an operation to "subdue" Qatar and to defeat the Muslim Brotherhood. Moreover, the White House has admitted Riyadh to work on the question that is the most important issue for it and Israel, i.e., the Israeli-Palestinian settlement, by giving the Saudis a "green light" to work with Jordan, which now has a special role in the new scheme to settle the Palestinian issue.

However, the rulers of the KSA want much more, and above all, they want Assad's regime to be destroyed, and American help in order to stop the growing influence of Iran, as well as to form a "Shiite Arc" in the region. Only then can Riyadh recover from the strongly shaken position of the kingdom in the Islamic world. And the overthrow of Assad and capturing Damascus by the pro-Saudi Islamist opposition in Damascus are the only things that can strengthen the position of Saudi Arabia as a leader among the Arab states. This would allow the implementation of its plans for further regional expansion – from establishing a Jordanian-Palestinian federation to the formation of an anti-Shiite league from the Arabian Peninsula to India.

In addition, the Saudis have their own logic here – since Syria can play a key role in supplying Qatari gas to Europe. In 2009-2011, Damascus was the main obstacle to the implementation of a project for the construction of a pipeline from Qatar's North Field to the EU, which would have allowed a strike at "Gazprom", via a sharp increase in supplies of cheap Qatari gas to Europe. For various reasons, Damascus did not consent to laying of a gas pipeline through its territory from Qatar to Turkey and the Mediterranean coast of the SAR for further transit to the EU. Thus, while B. Assad stays in power, the construction of the gas pipeline from Qatar to the Mediterranean coast of Syria is impossible. Energy experts calculated back in 2009-2010, that if Sunnis came to power in Syria, instead of the Alawite regime of Bashar Assad, the gas pipeline 'Qatar – Saudi Arabia – Jordan – Syria – Turkey' would be built in two years. This would result in huge financial losses for Russia, whose gas cannot compete with Qatari gas, due to the extremely low cost of the latter. Hence, Saudi Arabia is trying to subdue Qatar, through a conflict within the GCC, in order to cut off another option – the construction of a gas pipeline from Iran (South Pars) through Iraq and Syria, which could be a joint project with Russia. Doha would play only a secondary, supporting role, being dependent on Tehran.

Therefore, in Obama's negotiations with the Saudi rulers, the latter sought U.S. consent to a large increase in the comprehensive assistance provided to Syrian rebels. In particular, to supply heavy weapons and man-portable air defense systems (MANPADS), which would reduce to naught the superiority of the Syrian government forces in terms of firepower, and its complete superiority in the air, and thereby change the military balance in favor of "the anti-Assad opposition". After that, it would be possible to act under the tested scheme: the creation of no-fly zones near Turkish and Jordanian borders, turning this area into a stronghold of militants, supplying arms and sending large mercenary forces there and the organization of a march on Damascus. In this case, according to the logic of the Saudis, Iran would be forced to move to a strategic defense, which would satisfy Riyadh at this stage, before the next move – arranging a coalition aimed at stifling the Islamic regime in Tehran. Obama asked the Saudis to give $15 billion, in return for all that, in order to support current Ukrainian authorities, explaining that the KSA would be compensated for these financial costs and a temporary drop in oil prices later, by the energy "isolation" of Russia and Iran.

The more so, that there was a precedent for this, when President Reagan and Saudi King caused a sharp decline in oil prices by the dumping of Saudi oil on the world market in the mid-1980s, because Soviet troops were sent into Afghanistan, which ultimately led to the disintegration of the Soviet Union, because of the subsequent economic problems. Today, a much smaller decrease in oil prices – from the current $107 per barrel to around 80-85 dollars – would be enough to make Russia suffer huge financial and economic damages. This would allow the U.S. president not only to get revenge for Crimea, but also to undermine significantly the economy of the Russian Federation, which would be followed by negative domestic political consequences for the current Russian government.

Earlier, American billionaire George Soros said that the U.S. strategic oil reserves are more than twice larger than the required level, and the sale of a part of these reserves would allow exerting pressure on Russia. That is, the blows would hit Moscow from two directions – from the United States and from the Persian Gulf. However, later on, the U.S. Secretary of Energy denied this possibility.

However, there is the question: Did the U.S. President manage to agree with Saudi Arabia to increase oil supplies to the world market to bring down prices? Does the KSA have a possibility to offer significant volumes of oil on the world market, for example up to 3-4 million b/d?

The fact is that the price of $110 per barrel is just the thing that Saudi Arabia needs, because the leadership of the kingdom has extensive socio-economic obligations. And if the standard of living of the Saudis decreases somewhat, due to the fall in oil prices and due to the fall of oil income, the country would be very much at risk to fall into the situation of the "Arab Spring", like it was the case in Tunisia, Libya, Egypt. And the Saudis are afraid of a repetition of the Arab revolutions. Apparently, the Saudis are not going to offer additional oil on the market in order to bring down the price, just due to the hatred of the United States for the Russian Federation – as this is not profitable for them at all. They could agree on other things, including Qatari gas, Syria and Iran. In addition, the available production capacity of the KSA is not engaged now. This is about 4 million barrels per day. However, it would be impossible to do this quickly. It could take up to one month to increase the production. This is about as much as Iran produced at one time. However, now Iran is going to increase its production, due to lifting a part of the sanctions, and the Saudis are likely not to increase, but to reduce their production to keep oil prices high. And the prices will remain within the range they have been for quite a long time already. They will be in the range from 100 to 110, as this is the most comfortable range for both consumers and producers. Many countries, especially those that can influence the prices, via some manipulations with supply, are extremely interested in having high level of prices. Socio-economic programs are carried out in Venezuela at a price level of about $120 per barrel. In Iran, this figure is 110, and the same in Saudi Arabia. Thus, no one is interested in bringing down prices.

As for Iran, only one thing is clear for the time being: President Barack Obama has reassured Saudi King Abdullah that he would not agree to a "bad deal" with Iran on the nuclear issue. That is, Riyadh did not get what it wanted even on the Iranian issue. After the two leaders discussed their "tactical disagreements", they both agreed that their strategic interests coincide, said an administration official. The statement of the White House on the results of the two-hour talks reads that Obama reaffirmed the importance for Washington of strong ties with the world's largest oil exporter. At the same time, the administration official said that the parties had no time to discuss the situation with human rights in Saudi Arabia during their negotiations. In addition, a trusted source in the U.S. State Department said that Washington and Riyadh also discussed the conflict in Syria. According to him, the two countries carried out good joint work aimed at reaching a political transition period, and the support of moderate factions of the Syrian opposition. As for a possible supply of man-portable air defense systems to opposition militants, an informed source in Washington said that the U.S. still was concerned regarding the provision of such weapons to the rebels. However, there is information that Obama's administration is considering the possibility of lifting the ban on the supply of MANPADS to the Syrian opposition. According to this source, the recent successes of the Syrian Army against the opposition forces may force the U.S. president to change his point of view.

Apparently, Obama and King Abdullah failed to reach clear and specific agreements on all issues on the agenda. There are differences, and the financial and economic interests are more important to Saudi Arabia than helping Washington in implementing its "revenge" on Russia for Crimea. Riyadh is well aware that Moscow and its partners on energy matters have things with which to respond to Saudi Arabia if the kingdom is blindly led on a string by the White House. And it is aware even more that Moscow has levers of political influence in the Middle East and the Persian Gulf. The U.S., in turn, is not ready to resume its confrontation with Iran, especially when Tehran is fulfilling agreements to freeze its nuclear uranium enrichment program. In addition, Washington cannot work actively on Syrian affairs now, in the conditions of ongoing tensions in Ukraine. In addition, the chemical arsenal of the SAR has been half destroyed. And, apparently, Obama saw for himself during his, albeit short, stay in the kingdom that great changes are coming there, associated with the upcoming replacement of the current elderly generation of rulers by another one, which might be accompanied by unpredictable internal perturbation in the KSA. Hence, there is almost complete absence of victorious statements about the "historical" success of the U.S. President's visit to Saudi Arabia.

Alexander Orlov, political scientist, expert in Oriental Studies, exclusively for the online magazine "New Eastern Outlook".
http://journal-neo.org/2014/04/02/rus-zachem-obama-priezzhal-v-e-r-riyad/

[Apr 24, 2016] Fear and Loathing in the Arabian Nights

Notable quotes:
"... A famous 3 am call did take place in Doha on Sunday. The young Salman called the Saudi delegation and told them the deal was off. Every other energy market player was stunned by the reversion. ..."
April 23, 2016 | www.informationclearinghouse.info

US President Barack Obama landed in Saudi Arabia for a GCC petrodollar summit and to proverbially "reassure Gulf allies" amidst the oiliest of storms.

The Doha summit this past weekend that was supposed to enshrine a cut in oil production by OPEC, in tandem with Russia – it was practically a done deal – ended up literally in the dust.

The City of London – via the FT – wants to convey the impression to global public opinion that it all boiled down to a dispute between Prince Mohammed bin Salman – the conductor of the illegal war on Yemen - and Saudi Oil Minister Ali Al-Naimi. The son of - ailing - King Salman has been dubbed "the unpredictable new voice of the kingdom's energy policy."

A famous 3 am call did take place in Doha on Sunday. The young Salman called the Saudi delegation and told them the deal was off. Every other energy market player was stunned by the reversion.

Yet the true story, according to a financial source with very close links to the House of Saud, is that "the United States threatened the Prince that night with the most dire consequences if he did not back down on the oil price freeze."

So – predictably - this goes way beyond an internal Saudi matter, or the Prince's "erratic" behavior, even as the House of Saud is indeed racked by multiple instances of fear and paranoia, as I analysed here .

As the source explains, an oil production cut would have "hindered the US goal of bankrupting Russia via an oil price war, which is what this is all about. Even the Prince is not that erratic."

Iran had made it more than clear that after the lifting of sanctions it does not have any reason to embark on a production cut. On the contrary; oil contributes to 23% of Iran's GDP. But as far as the House of Saud is concerned – feeling the pain of a budget deficit of $98 billion in 2015 - a moderate cut was feasible, along with most of OPEC and Russia, as Al-Naimi had promised.

Another key variable must also be taken into account. Not only the whole saga goes way beyond an internal Saudi dispute; no matter what Washington does, the oil price has not crashed as expected. This would indicate that the global surplus of oil has been largely sopped up by falling supply and increasing demand.

As a GCC-based oil market source reveals, "have you noticed how much attention Kerry and Obama have been giving Saudi Arabia out of all proportion to the past to keep that oil price down? Yet WTI is up and holding over $40.00 a barrel. That's because oil demand and supply is tightening." The oil market source notes, "oil surplus is now probably less than a million barrels a day." So the only way, in the short to medium term, is up.

Blowback from His Masters' Voice?

The House of Saud, by flooding the market with oil, believed it could accomplish three major feats.

1) Kill off competition – from Iran to the US shale oil industry.

2) Prevent the competition from stealing market share with key energy customer China.

3) Inflict serious damage to the Russian economy. Now it's blowback time – as it could come from none other than His Masters' Voice.

The heart of the whole matter is that Washington has been threatening Riyadh to freeze Saudi assets all across the spectrum if the House of Saud does not "cooperate" in the oil price war against Russia.

That reached the tipping point of the Saudis shaking the entire turbo-capitalist financial universe by issuing their own counter threat ; the so-called $750 billion response.

The - burning - issue of freezing all Saudi assets across the planet has come up with the US Congress considering a bill exposing he Saudi connection to 9/11.

The declassification and release of those notorious 28 pages would do little to rewrite recent history; 9/11 – with no serious investigation - was blamed on "Islamic terror", and that justified the invasion of Afghanistan and the bombing/invasion/occupation of Iraq, which had no connection to 9-11 nor any weapons of mass destruction.

The 28 pages did intimidate the House of Saud and Saudi intelligence though. Especially because the odd sharp brain in Riyadh could make the connection; the 28 pages were being paraded around in Western corporate media before the OPEC meeting to keep the Saudis in line on the oil war against Russia. That may have been yet another Mafia-style "offer you can't refuse"; if the House of Saud cuts oil production, then it will be destroyed by the release of the 28 pages.

So we are now deep into Mutually Assured Threat (MAT) territory, more than Mutually Assured Destruction (MAD).

No one really knows how much Saudi Arabia has tied up in US Treasuries – except for a few insiders in both Riyadh and Washington, and they are not talking. What is known is that the US Treasury bundles Riyadh's holdings along with other GCC petrodollar monarchies. Together, that amounted to $281 billion two months ago.

Yet the Saudis are now saying they would get rid of a whopping $750 billion. A New York investment banker advances that "six trillion dollars would be more like it." Earlier this year, I revealed on Sputnik how the House of Saud was busy unloading at least $1 trillion in US securities on the market to balance its increasingly disastrous budget. The problem is no one was ever supposed to know about it.

The fact is the US and the West froze $80 billion in assets that belonged to the deposed head of the Egyptian snake, Mubarak. So a freeze tied up with framing Saudi Arabia for terrorism would not exactly be a hard sell.

The nuclear option

For all the pledges of eternal love, it's an open secret in the Beltway that the House of Saud is the object of bipartisan contempt; and their purchased support, when push comes to shove, may reveal itself to be worthless.

Now picture a geopolitical no exit with a self-cornered House of Saud having both superpowers, the US and Russia, as their enemies.

Obama's visit is a non-event. Whatever happens, Washington needs to sell the fiction that the House of Saud is always an ally in the "war on terra", now fighting ISIS/ISIL/Daesh (even if they don't.) And Washington needs Riyadh for Divide and Rule purposes – keeping Iran in check. This does not mean that the House of Saud may not be thrown under the bus in a flash, should the occasion arise.

As the source close to Riyadh advances, "the real nuclear option for the Saudis would be to cooperate with Russia in a new alliance to cut back oil production 20% for all of OPEC, in the process raising the oil price to $200.00 a barrel to make up for lost revenue, forced on them by the United States." This is what the West fear like the plague. And this is what the perennial vassal, the House of Saud, will never have the balls to pull off.

[Apr 24, 2016] King Salman consolidates the Al- Sudayri "palace coup" By Stig Stenslie

Notable quotes:
"... Historically, feuding within the royal family has weakened its grip on power, and it was familial infighting that caused the second Saudi state's collapse in the late 1800s. ..."
"... The prince – whose age seems to be a well protected state secret, but lies somewhere between 27 and 34 years – has few merits. Through the appointment, Salman violates a number of key royal norms: all previous kings have promoted their own sons in terms of power and wealth, but within reasonable limits. ..."
"... Salman's tough and militaristic foreign policy – known as the "Salman Doctrine" – can be seen in light of his consolidation of power. ..."
"... The decision to bomb the Huthis was arguable partly driven by the king's desire to consolidate the position of Muhammad bin Salman, who, besides being deputy crown prince, is the world's youngest minister of defence. ..."
www.peacebuilding.no

May 2015

Executive summary

On April 29th 2015 the official Saudi Press Agency announced a royal decree stating that the king's half-brother, Muqrin, had been replaced as the new heir apparent by Muhammad bin Nayif, the king's nephew and interior minister. At the same time Muhammad bin Salman, son of King Salman, was appointed deputy crown prince, while Foreign Minister Prince Sa'ud al-Faysal was replaced by Adil al-Jubayr, the Saudi ambassador to the U.S. King Salman's reshuffling will arguably not bring more stability to Saudi Arabia, but rather increase the long-term risk of political instability. It underpins the notion that the Al-Sudayri clan of the royal family has carried out a "palace coup". The survival of a dynastic regime like the Al-Sa'ud depends on unity within the elite. Because of Salman's reshuffling of key positions the Sudayris are now on their own at the helm of the kingdom. The new king's ultimate goal seems to be to consolidate the succession within his branch of the family and for his favourite son. Salman's recent appointments will probably trigger considerable dissatisfaction within the royal family, and nurture future rivalry and potential conflicts among the various family factions. In particular, the appointment of Muhammad bin Salman is likely to be a source of discord.

On April 29th 2015 the official Saudi Press Agency announced a royal decree stating that the king's half-brother, Muqrin, had been replaced as the new heir apparent by Muhammad bin Nayif, the king's nephew and interior minister. Salman relieved Crown Prince Muqrin of his post reportedly "upon his own request". This is the first time that a grandson of the founder of the modern kingdom, King 'Abd al-'Aziz (Ibn Sa'ud) rather than a son has been appointed crown prince, marking a generational change at the top of the ruling house. At the same time Muhammad bin Salman, King Salman's son, was appointed deputy crown prince, while Foreign Minister Prince Sa'ud al-Faysal, who had held this important ministerial post since 1975, was replaced by Adil al-Jubayr, who is not a member of the royal family, but has served as the Saudi ambassador to the U.S.

King Salman's reshuffling of top posts might increase the long-term risk of political instability in Saudi Arabia. It underpins the notion that the Al-Sudayri clan of the royal family has carried out a "palace coup". Although none of the members of the family has aired any discontent publicly, with the exception of a single tweet by the notorious loose cannon Prince Talal, it is highly likely that King Salman's recent moves have created considerable tension within the royal family. The reshuffling alters the balance between the various family fractions. Historically, feuding within the royal family has weakened its grip on power, and it was familial infighting that caused the second Saudi state's collapse in the late 1800s.

It is not surprising that Muqrin was deposed as crown prince – given that he has a weak personal power base and that his mother was a concubine of Yemeni descent. The need for King 'Abd Allah to explicitly stipulate in the decree appointing Muqrin that the decision could not be altered or changed in the future by any party clearly indicates that the late king was aware that the appointment of his half-brother would be met with resistance from within the family. That said, Salman's prompt decision to sideline Muqrin challenges established norms within the royal house: it is neither common that a new king sets aside the heir apparent appointed by his predecessor nor that he overrules a royal decree issued by the late king. Neither did it come as a surprise that Muhammad bin Nayif was promoted to crown prince, although his appointment as deputy crown prince in January was controversial within the royal family. He is one of the seniors among Ibn Sa'ud's grandsons and has a reputation as a skilled leader. However, what came as a surprise was the appointment of the young wunderprince Muhammad bin Salman as deputy crown prince. The prince – whose age seems to be a well protected state secret, but lies somewhere between 27 and 34 years – has few merits. Through the appointment, Salman violates a number of key royal norms: all previous kings have promoted their own sons in terms of power and wealth, but within reasonable limits.

In 1964 King Sa'ud was deposed by his own brothers partly because he sought to amass power in the hands of himself and his sons at the expense of other powerful members of the royal family. Age, experience and kingly qualities have always been the basis for the choice of a successor to the throne. According to the "Basic Law", which is the closest Saudi Arabia comes to a constitution, each of Ibn Sa'ud's grandsons has the right to be king, and they number around 200. By appointing his own son Salman has bypassed numerous other royals who are both older and far more experienced. After Salman became king 'Abd Allah's family branch and the former king's allies have lost political influence. Khalid al-Tuwaijri, the former head of the royal court, was the first one to be deposed. Two sons of 'Abd Allah, who were deposed as governors of the key provinces of Riyadh and Mecca, followed him. Currently Mitab bin 'Abd Allah, who is minister and commander of the Saudi Arabian National Guard, is the only one among the late king's sons who has retained an important position, and it will not come as a huge surprise if he too has his political wings clipped. Muqrin, the now-deposed crown prince, was also among the late king's closest aides.

One should not read too much into the replacement of Sa'ud al-Faysal, who was first appointed in 1975, making him the world's longest-serving foreign minister, and who has struggled with health problems. Faysal "asked to be relieved of his duties due to his health conditions", said the royal decree, which may well be correct. However, it is known that there was disagreement between Faysal and the younger princes Muhammad bin Nayif and Muhammad bin Salman over the decision to bomb the Huthi rebels in Yemen, with Faysal arguing for a diplomatic rather than a military approach. Salman's tough and militaristic foreign policy – known as the "Salman Doctrine" – can be seen in light of his consolidation of power.

The decision to bomb the Huthis was arguable partly driven by the king's desire to consolidate the position of Muhammad bin Salman, who, besides being deputy crown prince, is the world's youngest minister of defence. Throughout the military campaign Saudi media loyal to the king have painted a picture of the young prince as a decisive military commander. In Saudi Arabia rumours are saying that Prince 'Abd al-'Aziz bin Salman, the fourth son of King Salman, could soon replace the current oil minister, 79-year-old technocrat 'Ali al-Na'imi. If this happens, the prince, who was promoted from assistant oil minister to deputy oil minister earlier this year, would be the first member of the royal family to run this important ministry – another move that arguably would strengthen the king's line.

Former kings have appointed non-royals to this ministerial post to avoid creating the notion that one family branch controls the country's main source of income and the source of the royal family's wealth. The survival of a dynastic regime like the Al-Sa'ud depends on unity within the elite. King Salman and former king 'Abd Allah were known for having a rather bad relationship on a personal level. Because of Salman's reshuffling of key positions the Sudayris are now on their own at the helm of the kingdom. The new king's ultimate goal seems to be to consolidate the succession within his branch of the family and for his favourite son. Salman's recent moves to enhance the power of his own line will probably trigger considerable dissatisfaction within the royal family, and nurture future rivalry and potential conflicts among the various family factions. In particular, the appointment of Muhammad bin Salman is likely to be a source of discord, and he will find it very difficult to become a respected and unifying figure within the family. Time will show how long it will take for a backlash to occur, which might be when the king and his Sudayri companions are facing such a dire situation that they will need the support of the rest of the Al-Sa'ud.

The royal decree that announced the promotion of Muhammad bin Salman underlines the young prince's qualifications, the needs of the state and the support of the majority of the members of the Allegiance Council, in addition to the granting of a month's extra pay to all military and civilian security personnel. The fact that these details are included probably reflects some anticipation by King Salman that the appointment might be met with scepticism both within and outside the royal elite. In February and March there was a drop of as much as $36 billion dollars in the kingdom's net foreign currency reserves, equivalent to around 5% of the total, the largest recorded two-month decline ever, which was partly due to the extra pay. Besides "buying the support" of the people, the king has sought backing from conservative elements within the clergy – who were sidelined by late king 'Abd Allah – by appointing conservative clerics to important positions and reinvigorating his predecessor's efforts to crush the Muslim Brotherhood in Egypt. Finally, it is ironic that Salman is the one making these controversial appointments, which eventually might upset the stability of Saudi Arabia.

For five decades – when he was governor of Riyadh Province – Salman played an important role in terms of maintaining unity within the royal family; it was often him the royals turned to when they needed to resolve family conflicts or deal with other family matters.

Stig Stenslie is assistant deputy general and head of the Asia Division of the Norwegian Defence Staff. He has held visiting fellowships at, among others, the Norwegian Institute for Defence Studies in Oslo, the National University in Singapore and Columbia University in New York. He holds a doctorate on royal family politics in Saudi Arabia from the University of Oslo. He is the author of several publications on the contemporary Middle East and China, the most recent being, with Marte Kjær Galtung, 49 Myths about China (Rowman & Littlefield, 2014), Regime Stability in Saudi Arabia: The Challenge of Succession (Routledge, 2011) and, with Kjetil Selvik, Stability and Change in the Modern Middle East (IB Tauris, 2011). Disclaimer The content of this publication is presented as is. The stated points of view are those of the author and do not reflect those of the organisation for which he works or NOREF. NOREF does not give any warranties, either expressed or implied, concerning the content. THE AUTHOR The Norwegian Peacebuilding Resource Centre Norsk ressurssenter for fredsbygging Email: info@peacebuilding.no - Phone: +47 22 08 79 32 The Norwegian Peacebuilding Resource Centre (NOREF) is a resource centre integrating knowledge and experience to strengthen peacebuilding policy and practice. Established in 2008, it collaborates and promotes collaboration with a wide network of researchers, policymakers and practitioners in Norway and abroad. Read NOREF's publications on www.peacebuilding.no and sign up for notifications. Connect with NOREF on Facebook or @PeacebuildingNO on Twitter

[Apr 23, 2016] Defending Democracy To the Last Drop of Oil by Eric Margolis

April 23, 2016 | Information Clearing House

Poor President Barack Obama flew to Saudi Arabia this past week but its ruler, King Salman, was too busy to greet him at Riyadh's airport.

This snub was seen across the Arab world as a huge insult and violation of traditional desert hospitality. Obama should have refused to deplane and flown home.

Alas, he did not. Obama went to kow-tow to the new Saudi monarch and his hot-headed son, Crown Prince Muhammed bin Nayef. They are furious that Obama has refused to attack Iran, Hezbollah in Lebanon, and Syria's Assad regime.

They are also angry as hornets that the US may allow relatives of 9/11 victims to sue the Saudi royal family, which is widely suspected of being involved in the attack.

Interestingly, survivors of the 34 American sailors killed aboard the USS Liberty when it was attacked by Israeli warplanes in 1967, have been denied any legal recourse.

The Saudis, who are also petrified of Iran, threw a fit, threatening to pull $750 billion of investments from the US. Other leaders of the Gulf sheikdoms sided with the Saudis but rather more discreetly.

Ignoring the stinging snub he had just suffered, Obama assured the Saudis and Gulf monarchs that the US would defend them against all military threats – in effect, reasserting their role as western protectorates. So much for promoting democracy.

Saudi Arabia and the Gulf states have been de facto US-British-French protectorates since the end of World War II. They sell the western powers oil at rock bottom prices and buy fabulous amounts of arms from these powers in exchange for the west protecting the ruling families.

As Libya's late Muammar Kadaffi once told me, "the Saudis and Gulf emirates are very rich families paying the west for protection and living behind high walls."

Kadaffi's overthrow and murder was aided by the western powers, notably France, and the oil sheiks. Kadaffi constantly denounced the Saudis and their Gulf neighbors as robbers, traitors to the Arab cause, and puppets of the west.

Many Arabs and Iranians agreed with Kadaffi. While Islam commands all Muslims to share their wealth with the needy and aid fellow Muslims in distress, the Saudis spent untold billions in casinos, palaces and European hookers while millions of Muslims starved. The Saudis spent even more billions for western high-tech arms they cannot use.

During the dreadful war in Bosnia, 1992-1995, the Saudis, who arrogate to themselves the title of 'Defenders of Islam" and its holy places, averted their eyes as hundreds of thousands of Bosnians were massacred, raped, driven from their homes by Serbs, and mosques blown up.

The Saudi dynasty has clung to power through lavish social spending and cutting off the heads of dissidents, who are routinely framed with charges of drug dealing. The Saudis have one of the world's worst human rights records.

Saudi's royals are afraid of their own military, so keep it feeble and inept aside from the air force. They rely on the National Guard, a Bedouin tribal forces also known as the White Army. In the past, Pakistan was paid to keep 40,000 troops in Saudi to protect the royal family. These soldiers are long gone, but the Saudis are pressing impoverished Pakistan to return its military contingent.

The US-backed and supplied Saudi war against dirt-poor Yemen has shown its military to be incompetent and heedless of civilian casualties. The Saudis run the risk of becoming stuck in a protracted guerilla war in Yemen's wild mountains.

The US, Britain and France maintain discreet military bases in the kingdom and Gulf coast. The US Fifth Fleet is based in Bahrain, where a pro-democracy uprising was recently crushed by rented Pakistani police and troops. Reports say 30,000 Pakistani troops may be stationed in Kuwait, the United Arab Emirates and Qatar.

Earlier this month, the Saudis and Egypt's military junta announced they would build a bridge across the narrow Strait of Tiran (leading to the Red Sea) to Egypt's Sinai Peninsula. The clear purpose of a large bridge in this remote, desolate region is to facilitate the passage of Egyptian troops and armor into Saudi Arabia to protect the Saudis. Egypt now relies on Saudi cash to stay afloat.

But Saudi Arabia's seemingly endless supply of money is now threatened by the precipitous drop in world oil prices. Riyadh just announced it will seek $10 billion in loans from abroad to offset a budget shortfall. This is unprecedented and leads many to wonder if the days of free-spending Saudis are over. Add rumors of a bitter power-struggle in the 6,000-member royal family and growing internal dissent and uber-reactionary Saudi Arabia may become the Mideast's newest hotspot.

Eric S. Margolis is an award-winning, internationally syndicated columnist. His articles have appeared in the New York Times, the International Herald Tribune the Los Angeles Times, Times of London, the Gulf Times, the Khaleej Times, Nation – Pakistan, Hurriyet, – Turkey, Sun Times Malaysia and other news sites in Asia. http://ericmargolis.com

[Apr 23, 2016] The Arabian peninsula now accounts for nearly 30 percent of all active rigs outside North America, up from less than 18 percent when the slump began

Notable quotes:
"... the Arabian peninsula now accounts for nearly 30 percent of all active rigs outside North America, up from less than 18 percent when the slump began ..."
"... Does this not sound exactly like the red queen situation? I think it completely supports Ron's contention that they are producing flat out - and having trouble keeping their current production level up. ..."
peakoilbarrel.com
Silicon Valley Observer , 04/22/2016 at 9:50 am
http://www.reuters.com/article/us-arabia-oil-kemp-idUSKCN0XA1LA

"The rig count has increased by 50 since oil prices started to fall in mid-2014 and has almost doubled over the last five years"

"As a result, the Arabian peninsula now accounts for nearly 30 percent of all active rigs outside North America, up from less than 18 percent when the slump began "

Does this not sound exactly like the red queen situation? I think it completely supports Ron's contention that they are producing flat out - and having trouble keeping their current production level up.

[Apr 23, 2016] Saudis oil deposits are extremely depleted and they definitely entered the phase of Red Queen Race

Saudi Arabia single-handedly ruined the Doha meeting, knowing beforehand that Iran would not participate. The Russians and others agreed to proceed without Iran, planning to include them at a later date. Why did the Saudi's take a huge risk of alienating from Russia and the OPEC community?
Was it simply stupid yong gambler at the help? Or was it hostility toward Iran?
Notable quotes:
"... saudi arabia has 268 billion barr ..."
"... Nothing is proven in this figure. The real figure is a state secret. Most probably this estimate is a plain vanilla propaganda like a lot of other Saudi statistics. Saudis oil deposits are extremely depleted and they definitely entered the phase of Red Queen Race, when they need to drill more and more wells just to keep the output from falling. With this new reckless young prince they also depleted their currency reserves. That's why they are now talking about converting their economy away from oil. One of the key problems with the absolutism that one misfit on the throne can take the country down, unless promptly deposed or killed. Saudi oil sector now is facing deep uncertainty in the wake of sweeping changes to the governance of the oil ministry and the state energy company Saudi Aramco by King Salman, who ascended to the throne in January, 2015 and delegated much of his power on his 30 year old son Prince Mohammed Bin Salman: Naive, Arrogant Saudi Prince Is playing With Fire ( http://www.mintpressnews.com/prince-mohammed-bin-salman-naive-arrogant-saudi-prince-is-playing-with-fire/212660/ ) ..."
"... My impression is that all this talk about lessening KSA dependence of oil is a pipe dram: KAS is built on oil and will not be able to restructure on something else without dramatic drop of standard of living and elimination of Saudi monarchy. ..."
www.nakedcapitalism.com
likbez , April 23, 2016 at 10:36 am

kimyo,

saudi arabia has 268 billion barrels of 'proved' reserves.
Nothing is proven in this figure. The real figure is a state secret. Most probably this estimate is a plain vanilla propaganda like a lot of other Saudi statistics. Saudis oil deposits are extremely depleted and they definitely entered the phase of Red Queen Race, when they need to drill more and more wells just to keep the output from falling. With this new reckless young prince they also depleted their currency reserves. That's why they are now talking about converting their economy away from oil. One of the key problems with the absolutism that one misfit on the throne can take the country down, unless promptly deposed or killed. Saudi oil sector now is facing deep uncertainty in the wake of sweeping changes to the governance of the oil ministry and the state energy company Saudi Aramco by King Salman, who ascended to the throne in January, 2015 and delegated much of his power on his 30 year old son Prince Mohammed Bin Salman: Naive, Arrogant Saudi Prince Is playing With Fire ( http://www.mintpressnews.com/prince-mohammed-bin-salman-naive-arrogant-saudi-prince-is-playing-with-fire/212660/ )
At the end of last year the BND, the German intelligence agency, published a remarkable one-and-a-half-page memo saying that Saudi Arabia had adopted "an impulsive policy of intervention". It portrayed Saudi defence minister and Deputy Crown Prince Mohammed bin Salman – the powerful 29-year-old favourite son of the ageing King Salman, who is suffering from dementia – as a political gambler who is destabilising the Arab world through proxy wars in Yemen and Syria.
My impression is that all this talk about lessening KSA dependence of oil is a pipe dram: KAS is built on oil and will not be able to restructure on something else without dramatic drop of standard of living and elimination of Saudi monarchy. Despite BBC claims:

"But talk of the collapse of the House of Saud seems premature. It is after all a huge structure, with an estimated 7,000 princes."

[Apr 23, 2016] Saudies are bluffing with thier investment fund and thier desire to set thier economy from oil is mostly pipe dream

Notable quotes:
"... An unresolved question remains whether a listing will include the division of Aramco that includes its vast reserves of crude oil. It manages, but doesn't own, the kingdom's 260 billion barrels of reserves, the most in the world. ..."
"... I don't think it will ever happen, not even 5%. 5% of ARAMCO would have to include 5% of reserves. And there would have to be confirmation that those reserves actually exist. And of course they do not exist, not 266 billion barrels of reserves anyway. ..."
"... I have had exactly the same thought. How can KSA "cash in" on ARAMCO without the public disclosure required? But maybe they will find a way. Maybe they can sucker investors into believing their reserve numbers? Maybe they can do their offering in a country with less stringent regulations? I don't know much about how that works and I could be way off base, but I do know that where there's a will (and tons of money) there often is a way. And KSA has a BIG TIME desire to cash in, which should tell anyone all they need to know about the state of their economy. ..."
"... Bloomberg does seem rather cozy with the Saudis lately. ..."
"... Smoke and mirrors … they are burning massive amounts of money today, they have about 3-4 years left at the current burn rate. And Saudi invests have been such great things as growing wheat in the desert, destroying their aquifers. ..."
peakoilbarrel.com
simon oaten , 04/21/2016 at 9:06 pm
still no mention of "if" any partial float would include reserves ?
potentially – this could enable the game to be played a little longer ?

Saudi Aramco IPO Could Be 5% of Value

22/04/2016 03:05AM AEST

PARIS-Saudi Arabian Oil Co., the largest energy firm in the world, is considering listing up to 5% of its value on a stock exchange in New York within the next year, a top Saudi oil official said Thursday.

By listing even a tiny fraction of the company, known as Saudi Aramco, the offering would create one of the world's most valuable energy firms. Estimates of Saudi Aramco's value have varied, but using a conservative number of $2.5 trillion, a 5% listing would give it a potential value of $125 billion-bigger than BP PLC and French oil titan Total SA.

The Saudis are considering listing Aramco at a time when the kingdom is trying to raise cash during a period of sharply lower oil prices and transition to a world that is less dependent on oil. Deputy Crown Prince Mohammed bin Salman is overseeing a "National Transformation Plan" to promote private-sector growth and reduce government reliance on petroleum revenues.

New York has emerged as the leading place for an Aramco listing, but London and Hong Kong are also being considered, said Ibrahim Muhanna, a top adviser at the Saudi oil ministry. Mr. Muhanna said the kingdom wouldn't list the company only on Saudi Arabia's bourse, the Tadawul, because it was too small.

"The Saudi market cannot take a company like this," Mr. Muhanna said on the sidelines of a conference in Paris.

He didn't disclose which firms were working on the listing for Aramco. He said a price for the stock was still being determined and that it may take another year for a listing to be completed.

Pricing "has to be decided by international markets," Mr. Muhanna said. "It has to be competitive."

An unresolved question remains whether a listing will include the division of Aramco that includes its vast reserves of crude oil. It manages, but doesn't own, the kingdom's 260 billion barrels of reserves, the most in the world.

Saudi Aramco Chairman Khalid al-Falih has sent conflicting signals about whether the reserves will be include. Mr. Muhanna didn't address the issue.

A number of Saudi experts and insiders have said Saudi Arabia wouldn't include its production assets in any listing. Aramco is essentially an instrument of state policy, and its methods and reserves tantamount to state secrets.

The company produces more than 10% of the world's oil supply every day and controls a large chain of refineries and petrochemical facilities to complement its exploration and production operations.

Summer Said in Dubai contributed to this article.

Write to Benoit Faucon at benoit.faucon@wsj.com

(END) Dow Jones Newswires

April 21, 2016 13:05 ET (17:05 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.

Ron Patterson , 04/21/2016 at 9:22 pm
I don't think it will ever happen, not even 5%. 5% of ARAMCO would have to include 5% of reserves. And there would have to be confirmation that those reserves actually exist. And of course they do not exist, not 266 billion barrels of reserves anyway.

Therefore it will never happen.

TechGuy , 04/21/2016 at 11:41 pm
Ron Wrote:
"I don't think it will ever happen, not even 5%. 5% of ARAMCO would have to include 5% of reserves. And there would have to be confirmation that those reserves actually exist. And of course they do not exist, not 266 billion barrels of reserves anyway."

I think they will fangle a way around the reserve reporting problem. Didn't Brazil's Petrobras over state its reserves, yet was able to raise over $100 billions in capital.

Petrobras slashes oil reserves to lowest level in 14 year
http://www.reuters.com/article/brazil-petrobras-reserves-idUSL2N15D165

Jan 29, 2016:
"Brazil's state-controlled oil producer Petrobras slashed its oil and natural gas reserves 20 percent on Friday, hit by a plunge in energy prices, a heavy debt load, high costs and a corruption scandal."

if Petrobras can lie, so can SA.

Silicon Valley Observer , 04/22/2016 at 9:38 am
I have had exactly the same thought. How can KSA "cash in" on ARAMCO without the public disclosure required? But maybe they will find a way. Maybe they can sucker investors into believing their reserve numbers? Maybe they can do their offering in a country with less stringent regulations? I don't know much about how that works and I could be way off base, but I do know that where there's a will (and tons of money) there often is a way. And KSA has a BIG TIME desire to cash in, which should tell anyone all they need to know about the state of their economy.

There are people with money willing to believe just about anything.

aws. , 04/21/2016 at 10:19 pm
The $2 Trillion Project to Get Saudi Arabia's Economy Off Oil

Eight unprecedented hours with "Mr. Everything," Prince Mohammed bin Salman.

Peter Waldman, Bloomberg, April 21, 2016

For two years, encouraged by the king, the prince had been quietly planning a major restructuring of Saudi Arabia's government and economy, aiming to fulfill what he calls his generation's "different dreams" for a postcarbon future .

Greenbub , 04/22/2016 at 12:31 am
VERY interesting, aws.

from your link: "The likely future king of Saudi Arabia says he doesn't care if oil prices rise or fall. If they go up, that means more money for nonoil investments, he says. If they go down, Saudi Arabia, as the world's lowest-cost producer, can expand in the growing Asian market."

Greenbub , 04/22/2016 at 12:51 am
Bloomberg does seem rather cozy with the Saudis lately.
Eulenspiegel , 04/22/2016 at 4:12 am
Smoke and mirrors … they are burning massive amounts of money today, they have about 3-4 years left at the current burn rate. And Saudi invests have been such great things as growing wheat in the desert, destroying their aquifers.

[Apr 23, 2016] Saudis entered Red Queen race with the number of drilled wells

peakoilbarrel.com
Silicon Valley Observer, 04/22/2016 at 9:50 am
http://www.reuters.com/article/us-arabia-oil-kemp-idUSKCN0XA1LA

"The rig count has increased by 50 since oil prices started to fall in mid-2014 and has almost doubled over the last five years"

"As a result, the Arabian peninsula now accounts for nearly 30 percent of all active rigs outside North America, up from less than 18 percent when the slump began"

Does this not sound exactly like the red queen situation? I think it completely supports Ron's contention that they are producing flat out - and having trouble keeping their current production level up.

[Apr 21, 2016] An Awkward Silence in Riyadh

This is a typical Council of Foreign Relations propaganda. Omissions (Yemen problem, oil price problems for the US shale industry were not even mentioned), foreign policy recommendations has definite neocon focus... As Daniel Larison aptly said on April 21, 2016, 3:16 PM "Keeping the Saudis happy isn't worth the price of enabling war crimes and implicating the U.S. in the senseless devastation and starvation of an entire country (Yemen)." Compare with "the lowbrow whores at the Brookings Institute are always willing to take Gulf money" - Mr. Obama goes to Riyadh: Why the United States and Saudi Arabia still need each other
The Saudis are the major money behind the war on Syria. They are building ISIS and Al-Qaeda not only in Syria but also in Yemen and elsewhere. A former Saudi foreign minister, quoted in in yesterdays Financial Times (see here), admitted this fact: "Saud al-Feisal, the respected Saudi foreign minister, remonstrated with John Kerry, U.S. secretary of state, that "Daesh [ISIS] is our [Sunni] response to your support for the Da'wa" - the Tehran aligned Shia Islamist ruling party of Iraq." See also America's War for the Greater Middle East A Military History Andrew J. Bacevich
Notable quotes:
"... The Saudis would like a commitment from Obama to defang Iran, change the balance of power in the Syrian civil war to the detriment of Bashar Assad and resolve the Israeli-Palestinian conflict. ..."
"... Beyond that, Obama comes armed with no real new U.S. Middle East policy, apart from the latest developments in the Iran nuclear deal-which is not anything the Tehran-phobic Saudis want to talk about. ..."
"... America has no desire for nation-building even among nations it helped to destroy such as Iraq and Libya. ..."
"... As far as containing Iran, while America may not go as far as resuming ties with Iran as the Gulf regimes fear, it is not beyond reaching tactical accommodations with Tehran in places such as Iraq and on issues such as dealing with the Islamic State. ..."
"... Ray Takeyh is a Senior Fellow at the Council on Foreign Relations and the co-author of The Pragmatic Superpower: Winning the Cold War in the Middle East. ..."
POLITICO Magazine

Barack Obama traveled to Saudi Arabia on Tuesday in what could be his last-and likely most futile-visit as president. It's not just that there's bad blood over Congress' effort to make Riyadh liable for lawsuits from the families of 9/11 victims. These days, when the United States and Saudi Arabia look at the region, they see two completely different landscapes and conflicting sets of interests. Riyadh sees a series of conflicts that the United States must resolve and a series of failing states that it must rehabilitate. The Saudis would like a commitment from Obama to defang Iran, change the balance of power in the Syrian civil war to the detriment of Bashar Assad and resolve the Israeli-Palestinian conflict.

... ... ...

Beyond that, Obama comes armed with no real new U.S. Middle East policy, apart from the latest developments in the Iran nuclear deal-which is not anything the Tehran-phobic Saudis want to talk about. Obama, who recently expressed his pique over U.S. allies he called "free riders," plainly is not eager to get any more embroiled in the region than he already is; he has expressed a vague desire that Iran and Saudi Arabia should "share the neighborhood" without saying how he hopes that will be accomplished. And after much investment, the administration seems disinclined to resume its peacemaking efforts between Israel and the Palestinian entity. America has no desire for nation-building even among nations it helped to destroy such as Iraq and Libya.

As far as containing Iran, while America may not go as far as resuming ties with Iran as the Gulf regimes fear, it is not beyond reaching tactical accommodations with Tehran in places such as Iraq and on issues such as dealing with the Islamic State. For the Obama administration, its nuclear agreement with Iran is truly a landmark achievement, testifying to benefits of reaching out to an ideologically implacable adversary. It is perhaps the first time that America does not seem to object to the Islamic Republic's aggrandizement in the strategically vital Persian Gulf.

... ... ...

The Saudis see in the latest congressional effort to grant the families of 9/11 victims the opportunity to sue the kingdom as another indication that Washington no longer values the alliance (despite a veto threat from the White House). By threatening to withdraw their assets from the United States in retaliation they are sending their own message that they will be prone to act in a manner that shows as little disregard for the alliance as that they feel America is demonstrating.

Ray Takeyh is a Senior Fellow at the Council on Foreign Relations and the co-author of The Pragmatic Superpower: Winning the Cold War in the Middle East.

[Apr 17, 2016] Russia as an energy exporting country

Notable quotes:
"... There is a LOT of food for thought in it. Russia may soon peak as as oil producer, but gas production is another story. Russia may now turn out to be the swing producer in some respects. ..."
"... I read that the Russian government is selling a 19.5% stake in Rosneft and looking for a "non-greedy" partner for the interest. Russia also says do not expect prices to rise after Doha meeting. I believe we discussed this back in February. The goal is not necessarily to return prices back to 2011-14 levels, but to stop the speculators driving the prices into the $20s and below. ..."
"... I wish they shale guys would say they need $70 to survive. Then OPEC and Russia would be ok with $60, and $60 WTI would be just fine by us for quite awhile. ..."
"... Wait, you're playing the speculator card? I thought those HFT engines were all that was putting it at $110. ..."
peakoilbarrel.com
Oldfarmermac , 04/15/2016 at 7:03 am
This link is a longer one ( not for sound bite fans ) going into some substantial detail concerning Russia as an energy exporting country, and what it means to the rest of the world politically and economically.

Read it for insight. There is a LOT of food for thought in it. Russia may soon peak as as oil producer, but gas production is another story. Russia may now turn out to be the swing producer in some respects.

Russia can sell pipeline gas cheaper than we yankees can sell LNG overseas for instance.

http://www.huffingtonpost.com/the-conversation-us/russia-a-global-energy-po_b_9693032.html

shallow sand , 04/15/2016 at 7:20 am
I read that the Russian government is selling a 19.5% stake in Rosneft and looking for a "non-greedy" partner for the interest. Russia also says do not expect prices to rise after Doha meeting. I believe we discussed this back in February. The goal is not necessarily to return prices back to 2011-14 levels, but to stop the speculators driving the prices into the $20s and below.

I wish they shale guys would say they need $70 to survive. Then OPEC and Russia would be ok with $60, and $60 WTI would be just fine by us for quite awhile.

Watcher , 04/15/2016 at 1:43 pm
Wait, you're playing the speculator card? I thought those HFT engines were all that was putting it at $110.

[Apr 17, 2016] Disinformation and bluffing from Saudies suggest desperation

Notable quotes:
"... He is bluffing. His remarks are aimed at financiers of higher cost non-conventional production. Saudis and Russians are not afraid of other conventional producers they are terrified by the possibility of higher cost non-conventional oil flooding the market using debt-fueled growth. ..."
"... In order to keep banks in check, Prince takes to the media to warn of consequences, but in essence he is bluffing. Saudis cannot increase and sustain production above current levels. ..."
"... Saudi Arabia has told the Obama administration and members of Congress that it will sell off hundreds of billions of dollars' worth of American assets held by the kingdom if Congress passes a bill that would allow the Saudi government to be held responsible in American courts for any role in the Sept. 11, 2001, attacks. ..."
peakoilbarrel.com
Amatoori, 04/16/2016 at 11:24 am
The KSA prince say they could increase output to 11.5 million barrels a day immediately and go to 12.5 million in six to nine months "if we wanted to".

Is he:
1. Dreaming
2. Confused
3. Just playing around and bs everyone
4. Thinking it can be done
5. Don't know the what the hell he is talking about

I know there as been dissuasion here on how the actual reserves look like.
Whats your thoughts?

http://uk.reuters.com/article/us-oil-meeting-idUKKCN0XD0OV

Watcher , 04/16/2016 at 11:26 am
4
Dan , 04/16/2016 at 2:50 pm
He is bluffing. His remarks are aimed at financiers of higher cost non-conventional production. Saudis and Russians are not afraid of other conventional producers they are terrified by the possibility of higher cost non-conventional oil flooding the market using debt-fueled growth.

In order to keep banks in check, Prince takes to the media to warn of consequences, but in essence he is bluffing. Saudis cannot increase and sustain production above current levels.

Longtimber , 04/16/2016 at 4:58 pm

"WASHINGTON - Saudi Arabia has told the Obama administration and members of Congress that it will sell off hundreds of billions of dollars' worth of American assets held by the kingdom if Congress passes a bill that would allow the Saudi government to be held responsible in American courts for any role in the Sept. 11, 2001, attacks."

What the chance we will see the conclusions before Oil exports fro KSA tank?

http://www.nytimes.com/2016/04/16/world/middleeast/saudi-arabia-warns-ofeconomic-fallout-if-congress-passes-9-11-bill.html?_r=0

[Apr 17, 2016] Saudi Arabia Kills Doha Deal, Talks Fall Apart by Nick Cunningham

Notable quotes:
"... Another possibility is differences between Saudi officials themselves on how to approach Doha. Doubts over a potential success in Doha surfaced in recent weeks following comments from Saudi Arabia's Deputy Crown Prince Mohammed bin Salman, who laid out Saudi Arabia's position not to freeze without Iran following suit. He reiterated those comments three days before the meeting. "If all major producers don't freeze production, we will not freeze production," Prince Salman said on April 14. "If we don't freeze, then we will sell at any opportunity we get." ..."
17 April 2016 | OilPrice.com
One possibility is that Saudi Arabia had at least some intention of signing up to the freeze, but let its antipathy towards Iran get in the way at the last minute. "The fact that Saudi Arabia seems to have blocked the deal is an indicator of how much its oil policy is being driven by the ongoing geopolitical conflict with Iran," Jason Bordoff, the director of the Center on Global Energy Policy at Columbia University, told Bloomberg.

Another possibility is differences between Saudi officials themselves on how to approach Doha. Doubts over a potential success in Doha surfaced in recent weeks following comments from Saudi Arabia's Deputy Crown Prince Mohammed bin Salman, who laid out Saudi Arabia's position not to freeze without Iran following suit. He reiterated those comments three days before the meeting. "If all major producers don't freeze production, we will not freeze production," Prince Salman said on April 14. "If we don't freeze, then we will sell at any opportunity we get." Much of the world, including many negotiators, again thought that this was bluster.

The Wall Street Journal hinted at the fact that Saudi Arabia's delegation to Doha, led by the iconic oil minister Ali al-Naimi, had quite a different tone from the powerful young prince. As late as Saturday, the Saudi delegation appeared to be "willing to sign a deal despite what they described as political statements from Prince Salman," the WSJ wrote, based on comments from its sources familiar with the talks. On Sunday, al-Naimi unexpectedly backtracked, and the Doha negotiations dragged on for hours before ultimately falling apart. Although it is unclear what caused the change, one would have to wonder if Prince Salman ultimately prevailed over his country's delegation to take a hard line over Iran.

Separately, Kuwait's oil workers could do more for the markets than any OPEC production freeze. While oil traders are focusing on the failed Doha talks, Kuwait's oil production dropped by half this weekend because of a worker strike. Kuwait Oil Company reported that its oil production fell to a staggering 1.1 mb/d after workers began a strike over wages.

[Apr 13, 2016] The predatory pricing initiated by KSA in mid 2014 was not directed against the USA frackers

Notable quotes:
"... Looks more like while they initialed the price slump, they were quickly taken for a ride by "paper oil producers", who promptly assume control and drove the price to the current price band. And intend to maintain it as long as possible (look at all "low oil price forever" propaganda in Western MSM). ..."
peakoilbarrel.com
likbez , 04/11/2016 at 12:06 am
…..Why would a price spike above $40 be a bad thing for Saudi Arabia?

Because it would provide a life support to American frackers who have undermined the pricing power of the Kingdom these days, as was discussed in a previous piece here.

The predatory pricing initiated by KSA in mid 2014 was not directed against the USA frackers and in no way directed at establishing $30-40 per barrel price band. They viewed US frackers as a useful balancing mechanism (and this was stressed several times by high level Saudi officials), that allow to establish and maintain $70-$80 or so price range. and that probably was their initial intention. But they quickly lost control to Wall Street, which has other plans.

And they think that this price range is also OK for the world economy. I can't find quotes now but there were such quotes by Saudi oil minister.

Looks more like while they initialed the price slump, they were quickly taken for a ride by "paper oil producers", who promptly assume control and drove the price to the current price band. And intend to maintain it as long as possible (look at all "low oil price forever" propaganda in Western MSM).

That's why Saudis were forced to ally with Russia in "freezing production" scheme.

clueless , 04/11/2016 at 2:43 pm
likbez – "Looks more like while they initialed the price slump, they were quickly taken for a ride by "paper oil producers", who promptly assume (sic) control and drove the price to the current price band." This theory makes the "paper oil producers" God like.

Since the early 1970's I have heard almost nothing except that the "paper oil producers" have artificially made oil much more expensive than it should be. Of course, during that same period of time, with respect to farm products, all I heard was that the "paper farmers" were artificially making farm product prices cheaper than they should be. They must all be Gods.

Thus, I have never paid attention to what "paper" people are doing. Rather, I try to look at the fundamentals. For example, assume that we are "paper" traders [with access to billions of $'s], and we think that the price of oil should be $70. But, we get together and hatch a plan. At $70 we will sell short billions of $ of oil contracts and that will force the market down and force Saudi Arabia and Russia to keep cutting their prices and we will make a fortune. That sounds like a reasonable plan – NOT!!

It is like when oil got to $70, you bet me a billion $'s that prices would go down and I took your bet, thinking that they would not go down. So you told OPEC and Russia about our bet and they took your side.

likbez , 04/12/2016 at 2:19 pm
clueless,

Please read for example http://www.motherjones.com/politics/2013/02/high-frequency-trading-danger-risk-wall-street

It's like a snow avalanche. "No Snowflake in an avalanche ever feels responsible."

Also during Aleynikov's trial GS explicitly stated that they can manipulate markets up or down using the software Aleynikov stole from them.

https://en.wikipedia.org/wiki/Sergey_Aleynikov

[Apr 13, 2016] Rosneft is implementing the most ambitions modernization program in RF

peakoilbarrel.com
AlexS , 04/12/2016 at 4:06 pm
"All oil producing countries … now started accelerated development of petrochemical industry.
This is probably the most important consequence of this oil price slump.
They all want to export more refined products and products with substantial added value (plastics, composites)."

This process started at least 10 years ago and has nothing to do with the drop in oil prices. See, for example, the chart below:

Russia's crude oil and refined products exports (million tons)

likbez , 04/12/2016 at 4:45 pm
Alex,

Not so fast. I remember that Sechin on one of International conferences had proudly pumped his chest explaining how good a player Russia is in a sense that they are just exporting raw oil instead of refined products. This guy dumped huge amount of money into Arctic shelf instead of building refineries and other chemical plants which would help enormously in 2015.

Can you please compare that with KSA dynamics. Because that will tell us how backward in this respect Russians were up to this day in comparison with Arab sheikhs.

The recent refinery built in KSA (0.4 Mb/d):

Yanbu Aramco Sinopec Refining Company (YASREF) Ltd. King Salman and Chinese President Xi Jinping inaugurate YASREF Refinery Riyadh, Saudi Arabia, January 20, 2016 The Custodian of the Two Holy Mosques King Salman bin Abdulaziz Al Saud, the King of Saudi Arabia and His Excellency Xi Jinping, the President of the People's Republic of China today jointly inaugurated the Yanbu Aramco Sinopec Refining Company (YASREF)refinery. https://lnkd.in/eCBZ4PZ W.J

AlexS , 04/12/2016 at 5:39 pm
I do not know what you remember, but there are statistical facts.
The share of refined products in Russia's oil and product exports increased from 25-30% in 2000-2005 to 41-42% in 2014-2015.
In volume terms, exports of refined products increased by 174% (almost 3 times) between 2000 and 2015.
Given that Russia has sufficient primary distillation capacity, there was an intensive modernization program.

Saudi Arabia has also been developing refining capacity and currently covers all its domestic needs. In 2015, refining products accounted for 13% of total crude and products exports.

Saudi Arabia's crude and refined product exports (mb/d)
source: JODI

AlexS , 04/12/2016 at 5:51 pm
As you mentioned Sechin, here is a brief summary of Rosneft's refinery modernization program:

"Rosneft is implementing the most ambitions modernization program in RF: more than 30 construction projects, reconstruction of re-refinery units. The Company's refineries are implementing the modernization program that implies significant increase of the refining depth and improvement of the produced petroleum products (all motor fuels will correspond to the European environmental class Euro-5).

The capacity of the modernization program projects:

primary processing – 12.0 million tons/year;
conversion processes – 23.6 million tons/year;
reforming processes – 35.9 million tons/ year.
At present, within the framework of implementation of the program, reconstruction and construction works are being performed with respect of the following:

reforming, isomerization, alkylation plants for production of high-octane gasoline components;
catalytic cracking plants for production of high-quality gasoline components and oil conversion rate increase;
hydrocracking plants for production of high-quality diesel fuel components, jet fuel and oil conversion rate increase;
hydrotreatment plants for compliance with the requirements of the Technical Regulations of the Customs Union in terms of sulfur content in the products."

http://www.rosneft.com/Downstream/refining/Refinery_Modernization_Program/

likbez , 04/12/2016 at 6:27 pm
Alex,

Sorry, I was wrong.

[Apr 11, 2016] Russia produces higher volume of oil with a much less number of wells.

Notable quotes:
"... even if LTO output starts to recover, its annual growth rate will never return to previous high growth rate of 1 mb/d. ..."
"... Potential 300-400 kb/d annual growth in LTO output will be much less than 1.2mb/d projected growth in global demand. ..."
"... I do not dispute Russian companies are cash flow positive. My point is, what do Russian oil and gas industry workers make in salary and benefits, in relation to their US peers? If it is substantially less, is this why, in part, Russian oil and gas companies are still cash flow positive? ..."
"... Yes, salaries in Russia are generally much lower than in the U.S., not just in the oil industry. Especially, if they are measured in dollar-terms, rather than in real purchasing power. Locally produced equipment, pipes, other materials, electricity, services, etc. are also much less expensive, especially after the depreciation of the local currency. ..."
"... Finally, and particularly important, Russia produces higher volume of C+C with a much less number of wells. The number of new wells drilled annually is also several times less than in the U.S. ..."
"... Old conventional onshore fields are on average less mature. There is almost no stripper wells. There is much less (high-cost) deep offshore production. And almost no LTO output. ..."
"... I do not know a lot about Russian oil and gas production, but it does appear to me that a combination of lower costs, and less mature fields, is keeping Russian oil and gas companies generally profitable, despite the downturn. ..."
"... Maybe too simplistic, but there was a time, from 1986-2004, where we would have been cheering $40 WTI. A combination of lower production volumes, combined with much higher costs, make $40 WTI a money loser in most onshore US fields, or at least not enough for new wells. I guess maybe Russia is just where the US was 30 years ago? 30 years ago, $40 WTI would have been very profitable in most US onshore fields. ..."
peakoilbarrel.com
AlexS , 04/11/2016 at 8:30 am
"I read Russian companies are still making money, but the purchasing power of their currency is much less than it was."

shallow sand,

Their revenues are mostly in dollars, and 90% of costs are in rubles. So the decline of the ruble's rate versus the dollar is very positive for the Russian companies, as it partially mitigates the negative effect of low oil prices.

http://www.bloomberg.com/news/articles/2016-04-08/goldman-sees-russian-oil-output-rising-amid-doha-freeze-talks
----------–
"LTO has almost destroyed the balance sheets of noteworthy companies like Marathon Oil, Hess, ConocoPhillips, Apache and Anadarko, just to name a few."

Which means that OPEC decision not to cut output was correct. One year more of relatively low oil prices ($40-50) and LTO will not be a threat to other producers.
The excess supply will be eliminated by that time. And even if LTO output starts to recover, its annual growth rate will never return to previous high growth rate of 1 mb/d.

Potential 300-400 kb/d annual growth in LTO output will be much less than 1.2mb/d projected growth in global demand.

shallow sand , 04/11/2016 at 8:49 am
AlexS,

I do not dispute Russian companies are cash flow positive. My point is, what do Russian oil and gas industry workers make in salary and benefits, in relation to their US peers? If it is substantially less, is this why, in part, Russian oil and gas companies are still cash flow positive?

I do not know the answer, maybe you could provide some information in that regard?

AlexS , 04/11/2016 at 9:16 am
shallow sand,

Yes, salaries in Russia are generally much lower than in the U.S., not just in the oil industry. Especially, if they are measured in dollar-terms, rather than in real purchasing power. Locally produced equipment, pipes, other materials, electricity, services, etc. are also much less expensive, especially after the depreciation of the local currency.

Finally, and particularly important, Russia produces higher volume of C+C with a much less number of wells. The number of new wells drilled annually is also several times less than in the U.S.

Old conventional onshore fields are on average less mature. There is almost no stripper wells. There is much less (high-cost) deep offshore production. And almost no LTO output.

Fernando Leanme , 04/11/2016 at 11:00 am
They earn less. They also spend less.
shallow sand , 04/11/2016 at 11:38 am
AlexS,

Thanks. I always appreciate your comments on this site.

I do not know a lot about Russian oil and gas production, but it does appear to me that a combination of lower costs, and less mature fields, is keeping Russian oil and gas companies generally profitable, despite the downturn.

Maybe too simplistic, but there was a time, from 1986-2004, where we would have been cheering $40 WTI. A combination of lower production volumes, combined with much higher costs, make $40 WTI a money loser in most onshore US fields, or at least not enough for new wells. I guess maybe Russia is just where the US was 30 years ago? 30 years ago, $40 WTI would have been very profitable in most US onshore fields.

Fernando, I also agree on the spending part, but I doubt you will find many places more consumer spending driven than the US. But I am going to refrain from further comment on this topic, as last time I discussed it, I put both feet in my mouth. And we need to stick to the oil topic. LOL!

[Apr 11, 2016] Not only KSA but most of the global production has been maintained from old depleted wells, using new techologies to sweep up remnants of trapped oil.

Notable quotes:
"... KSA is the primary driver into the turmoil in Syria. KSA is sitting on vast NatGas fields underneath their oil fields. However, producing NatGas from these fields would cause severe Oil production issues, so they won't tap the NatGas until their Oil fields are tapped out. KSA needs to path to get its NatGas into Europe, which requires a pipeline through Syria. So if they are pressing to remove Assad from power, I suspect that KSA production problems aren't too far into the future. ..."
"... Iran & KSA appear to be gearing up for war. Both nations are buying military equipment and are running multiple proxy wars. I believe KSA is now has the 4 or 5 biggest military budget for 2016. Both KSA and Iran also have a limited number of nuclear weapons. Should the proxy wars turn into a hot war, then it really doesn't matter how much oil is left to be produced. ..."
"... I have wondered this for awhile too. They appear to handle so much water. As I have stated, handling water is a major expense in producing oil. I wonder how much chemical KSA has to use and as well how much electricity. I also wonder what pressure is required on the injected water. There are very few water floods in the US with LOE much under $15 per BOE. Most are well over $20. Same applies to steam floods, CO2 and polymer floods. ..."
"... What happens as the "old" big fields that provided decades of oil comes to an end of their economic life, shortened by the collapse in the oil price and the lasting low oil price? Generally the discoveries that wait in line for development are smaller, so to keep the level and/or grow becomes THE Red Queen race. Then throw in that several of the majors have had a Reserves Replacement Ratio (RRR) of less than 100%, meaning reserves are depleted faster than they are being replaced. ..."
"... Let's say Ghawar begins to decline, that is one field, I imagine that you believe it is unlikely that all the large fields in the World will begin their decline phase simultaneously. So let's assume they do not. For simplicity we will assume Ghawar produces about 5 Mb/d and that it will decline at 3%/ year (similar to US before LTO production started from 1985-2004), we will also assume each year the equivalent of one Ghawar begins to decline until all World production is eventually declining at 3% per year. For simplicity we will assume all fields decline at 3% (in reality some will be more than this and some will be less and the rate won't be constant over time. This is a very simple model. ..."
"... I expect than when the Oil column dips some where between 10 feet and 3 feet, Production is going to collapse at a much faster rate than 3% per year, Perhaps as high 10 to 20% per year. I think as the remaining Oil column shrinks its going to be much harder to extract oil since it will be difficult to steer laterals to follow the uneven remaining oil column. The water cut will grow increasing problematic, and drilling will need to increase to keep laterals on near the top of the oil column. ..."
"... My understanding average large fields are declining at a rate of 5% to 7% per year. Horizontal and other advance drilling\extraction tech has prevented significant production declines so far, but this trend isn't sustainable. At some point I believe we will see shocking decline rates no matter what tech is developed, or how much the Price of Oil increases into. ..."
"... Yes. But I think KSA would likely go to war first as a diversion to internal unrest. Ron Patternson would be a better source than me, since I never visited or worked in KSA. Ron has. So far KSA is using brutal tactics to prevent protests and uprisings. ..."
"... Will economic and social problems become a crisis before Oil production collapses begin? Lots of nations are downing in debt, have aging population with no or inadequate retirement savings, and younger labor pools unequipped (educated/skilled) to meet the needs of businesses. I can't image that the global economy can be sustained for much longer (EU, Asia & South America in recession & the US teetering on the end of another recession). Since when in history have major industrial powers have negative interest rates? ..."
"... I believe the most of the Ghawar formation has a profile where its narrow at the bottom and much wider at the top. There is more volume at the top of the formation than at the bottom. So the decline in oil column depth is not linear. ..."
"... "The 200