Oil Prices Rebound After Saudi Arabia Crashed The Market, But Will it Last?

After dropping more than 80% in two years, oil prices have started to recover. But a full rebound remains uncertain, stuck at the crossroads of a worldwide recession and the House of Saud’s suicide mission to keep pumping more oil.

In February 2016, the oil industry and energy dependent countries panicked as oil prices collapsed from a high of $145 per barrel to a low of $27 per barrel. Market analysts speculated that the collapse in oil prices would cause unrest in oil-rich countries and whiplash investors who had tossed their fortunes into speculative US shale oil fields.

Since then, oil prices have rebounded considerably. Resting just below $50 per barrel, many hope the catastrophe has been averted. But with market turmoil surrounding the recent Brexit referendum potentially sparking a global recession and the Saudi Kingdom’s pledge to continue flooding the market, many risks remain for the oil industry.

The best case scenario may be that we are now seeing a new normal, with oil prices hovering between $40 and $60 per barrel for the foreseeable future as market oversupply comes off of the market due to a wave of bankruptcies in the US shale industry. Since 2015, over 130 US oil and gas companies have filed for bankruptcy, with US and Canadian oil production sagging by over 2 million barrels per day.

The question remains whether the crash was due to a surge of new supplies that came onto the market during the boom time by countries like the US and Canada, or if the collapse in prices was part of an intentional Saudi strategy to force competitors out.

Did Saudi Arabia Crash the Market Intentionally? Likely.

In 2015, market analysts prepared for the threat of a global recession after Chinese economic data showed signs that Beijing may face headwinds in the coming years. While everybody was preparing for demand to fall, the Saudi Kingdom made a curious decision to increase oil production.

Saudi Arabia increased production by 2 million barrels of oil per day, a roughly 20% increase, with the Crown Prince demanding an additional 20% hike in oil production by 2017. Nonetheless, market watchers believed that Saudi Arabia, whose budget is based on a $66.70 per barrel oil price, would back away from pumping oil as prices started to cascade – they were wrong.

As energy analyst Marin Katusa explained on Radio Sputnik, Saudi Arabia forced US shale oil properties out of business and proceeded to purchase those same US oil sites for pennies on the dollar in bankruptcy. The Saudi Kingdom not only ravaged America’s energy renaissance, but also sought to preserve market share from Iran, no longer hindered by international sanctions in the wake of the historic nuclear deal.

On Monday, Loud & Clear’s Brian Becker sat down with Ed Hirs, the Managing Director for Hillhouse Resources, and Zafar Bangash, author of the book “The Doomed Kingdom of the House of Saud,” to separate fact from fiction on Saudi Arabia’s role in the oil price meltdown, and what to expect next.

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Oil Prices Made a Surprise Recovery Since February – Will it Last?

“The oil market is following the path that OPEC lined out for it,” said Hirs. “If you look back at the OPEC statements in 2015, the ministers said that they would continue producing and let the attrition of supply from high cost resources slip away from the market and let the ever growing demand set the floor for the market, at which point prices would begin to increase as the excess inventory gets worked out of the system.”

Hirs explained that although the collapse in oil prices has been devastating for many countries oil-based economies, the market waves have matched very closely with what oil analysts expected, with most experts predicting a rebound to well over $50 per barrel by the end of the year.

Was this a Deliberate Effort by the Saudis to Target Rivals?

Hirs said that while it could be argued that Saudi Arabia intentionally undercut the market, a separate line of thought is that the US shale oil was the last to enter an already crowded market and failed to offer competitive prices.

In support of this secondary line of thought, he pointed to oil industry models showing that for every 1% increase in oil supply, prices fall by 25%. In his estimate, consistent with previous reports from OPEC, the world oil market is oversaturated by roughly 2%, explaining at least 50% of the collapse from the high of $145 per barrel.

Zafar Bangash disagreed with the economist’s assertions that the phenomenon was solely a matter of supply and demand, arguing that Saudi Arabia fabricated the market dislocation in order to penalize the United States and Iran over the 2015 nuclear agreement.

“The Saudis were extremely upset and frightened by the agreement that Iran signed with the P5+1 countries that led to Iran coming on board with respect to their production,” he said. “Iran is producing quite a substantial amount of oil on the market right now, so the Saudis were trying to punish Iran as well undercut American shale oil production because they see Iran as not only a challenger, but also as an existential threat to their hegemony in the Muslim world.”

“In addition to this economic war, there is a political war, and I don’t see how the Saudis can win that, and they caused a lot of economic grief for themselves as well, with their budgets running deficits for the first time,” Bangash added.

“On the one hand they have been able to undermine shale oil considerably, but on the other hand they will continue to pay the price both economically and politically.”

Russia, Syria Lead Fight To Free Raqqa From Daesh, US-Backed Forces Retreat

The Obama administration pledged to play an integral role in liberating the city of Raqqa, but US-backed forces are moving in the wrong direction and are now nearly 80 miles from the Daesh stronghold.

The Syrian Army (SAA) continued to advance on Raqqa after seizing the Taqba dam on the Euphrates River only 25 miles (40km) from Raqqa this weekend. The surge represents the first time that Syrian forces have entered the Raqqa province since 2014, when Daesh first began its terror campaign.

The SAA’s assault on the Daesh stronghold has been supplemented by unrelenting Russian airstrikes in the eastern areas of Hama province, bordering Raqqa. The aligned forces are currently situated in the town of al Tabqah, recently cleared of Daesh and which served in 2014 as a aunchpad for Daesh attacks, givens its proximity to Raqqa.

At the same time, the US-backed and Kurdish-dominated Syrian Democratic Forces (SDF) have reversed their position and refocused military strength toward recapturing the city of Manbij, in a bid to strengthen the opposition group’s position to destabilize Syria’s Assad regime.

The retreat by the US-backed SDF, which had previously been in competition with the Russian-backed SAA in a collective bid to recapture Raqqa from Daesh, presents a major strategic setback for the Obama administration, employing the dual goals of ousting Bashar al-Assad while also liberating territory from Daesh.

Financial Times reporter William Wallis wrote on Monday that by recapturing Raqqa ahead of American-backed forces, the Russian and Syrian armies would “poke the Americans in the eye in a place they have long talked of helping to recapture.”

What has been to date a productive competition could erupt into a conflict between the partners, with the two-sides sharing very different geopolitical views. Russia believes it is necessary to prop up the Assad regime, at least until Daesh has been vanquished. The United States believes it is necessary to support opposition forces and oust Assad. The US effort has often stumbled, with American weaponry consistently falling into the hands of al-Nusra terrorists aligned with violent rebel groups.

Others see the retreat by Kurdish-dominated forces as an acquiescence by American military strategists, suggesting that the US and Russia are coordinating efforts to liberate territory in Syria.

US Defense Department spokesperson Peter Cook rejected this explanation, saying “in terms of direct coordination of activities on the ground [between the US and Russia] that is not happening.”

The possibility remains that both the US-backed SDF and the Russian-backed SAA could meet in Raqqa, potentially escalating tensions between Moscow and Washington. The strategic repositioning of American troops, however, has minimized that possibility albeit at considerable expense to the Obama administration.

With both sides planning to soon descend on Raqqa and bring an end to a civil war that has killed 500,000 Syrians, Loud & Clear’s Brian Becker sat down with Zafar Bangash of Toronto’s Institute of Contemporary Islamic Thought to discuss the situation.

https://www.spreaker.com/embed/player/standard?episode_id=8723483&autoplay=false

Are the US-Backed SDF and Russian-Backed SAA Forces Cooperating?

“I don’t think there is coordination between the two sides,” said Bangash. More so there appears to be a race towards Raqqa, although the Syrian Army seems to be better placed because they have already captured al Tabqah right next to a dam on the Euphrates River, and they are trying to take control of the airport there.”

“The Syrian Army is only 40km (25 miles) southwest of Raqqa whereas the Syrian Democratic Forces, dominated by the Kurds, have headed in the opposite direction, towards Manbij, which is 136 kilometers (85 miles) away from Raqqa, so the Kurds are much further away right now.”

Bangash explained that Kurdish forces are focused on playing the long game by consolidating their own territories with a view toward having a stronger hand in future negotiations, but potentially at the expense of the United States losing the race to be the first to seize Raqqa.

What is the relationship between the US military and the Kurdish-dominated forces?

“The United States is backing the Kurds fully,” said the commentator. “There are US special forces working with them and American forces wearing Kurdish uniforms have been viewed guiding them in operations, which has been problematic for relations with Turkey who has adamantly protested this.”

Bangash explained that the United States’ willingness to support Kurdish fighters even over the protests of Turkey indicate that the Obama administration is “keen on preventing the Syrian Army from taking control of their own country” by strengthening alternate forces to ultimately weaken Assad’s control over the Syrian government.

NATO War Games Near Russia ‘Pushing Humanity Towards World War lll’

 

NATO has begun its Anaconda-16 war game, calling for the largest assembly of foreign forces in Poland since World War II.

On Monday, NATO launched its largest war game in decades, near the Russian border, as part of what analysts call the “summer of provocation,” a bid to reignite the Cold War intended to force Moscow to starve its domestic economy to ramp up its military to meet a growing external threat.

The war game, titled Anaconda-16, will take place in Poland ahead of next month’s NATO summit in Warsaw, where officials are expected to approve permanent troops to be stationed in the country and throughout eastern Europe, to combat what they consistently refer to ‘Russian aggression.’

The 10-day military exercise calls for the participation of some 31,000 NATO troops and thousands of military vehicles, in what will be the single largest movement of foreign forces inside of Poland since World War II, rehashing painful memories for many Russians.

In June 2015, Russian President Vladimir Putin sought to disarm the ‘Russian aggression’ talking point disseminated by neoconservative Beltway think tanks, pointing to the absurdity of Russia instigating a war against NATO member states.

“I think that only an insane person, and only in a dream, can imagine that Russia would suddenly attack NATO,” said Putin, adding, “I think some countries are simply taking advantage of people’s fears with regard to Russia.”

Regardless of the motives, the escalation of a NATO military presence close to Russian borders has reached a fever pitch, with the US establishing a missile-defense system in Romania and undertaking the development of a separate missile shield in neighboring Poland.

Beyond attempting to strangle Moscow’s nuclear deterrent, the Obama administration has also increased Pentagon spending in countries neighboring Russia by four-fold.

The Obama administration is not alone in its efforts to increase a rhetoric of threat. In recent months Poland has called for an influx of US troops and military aid, citing concerns that Russia may seek to invade. Germany has agreed to dispatch troops into the country for the war game, marking the first time that German soldiers have entered Polish territory since the Nazis used it as a route to invade the Soviet Union.

On Monday, Loud & Clear’s Brian Becker sat down with security analysts Daniel McAdams and John Wight to discuss the latest round of provocations on Russia’s border, and whether NATO war hawks seek more violence.

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What is the purpose of the Anaconda-16 War Game?

“Well this is a series of so many NATO exercises on Russia’s borders during the summer, you can call it the summer of provocation,” said McAdams. “This is the largest of the military exercises, and is the largest movement of foreign forces within Poland since World War II, so that is very significant and it is all being sold to everyone else as a protection against Russian aggression.”

“In reality, it is NATO troops that are outside of Russia’s borders and it is absolutely a provocation, another step in trying to poke Russia in the eye,” explained the security analyst.

Is Poland important to the United States strategically?

“Poland is massively important because of the historical enmity between the Poles and Russia along with the location,” explained John Wight. “Daniel is absolutely right in calling this the summer of provocation, what we are witnessing is the recrudescence of the policy of containment that was devised after the Second World War.”

“Containment, however, is a bit of a misnomer because it isn’t a policy of containment, it is a policy of aggression designed to surround Russia politically, economically, and ultimately militarily, in order to keep Russia’s government paranoid and to apply pressure on Russia to cause it to implode internally,” said Wight, explaining the existential threat that Moscow faces from US-led saber rattling.

Is Russia a counter-hegemonic force against the United States?

“I wouldn’t say that Russia set out to be counter-hegemonic, but certain events have taken place,” suggested McAdams. “You know the famous Putin speech where he essentially said ‘We’ve had it, we’ve had enough, and we’ve taken it for a number of years,’ and this was right before Russia accepted Syria’s invitation to put down the jihadists.”

I believe Russia has been pushed into this position, but if you talk about the early dates of the Obama administration, there was still this idea of resetting relations,” said McAdams. “Instead, what happened in the Obama administration, and it happens in every administration, in which the neocons swoop in and take over foreign policy.”

“You have people like Victoria Nuland who served Dick Cheney prior to President Obama. What on earth were they thinking by allowing somebody like this to have control of power, somebody who is a member of the Kagan neocon crime family, as the wife to Robert Kagan. This is how the neocons do it and they swallowed the Obama administration like a cancer that keeps growing,” stated the security analyst.

“The neoconservatives now have control of Obama’s Russian policy and I think they are pushing us towards World War III,” asserted McAdams.

Graveyard Of Empires’: America’s Endless War In Afghanistan

US Soldiers continue to fight and die in Afghanistan and civilians continue to be slaughtered or displaced, despite the fact that 92% of Afghans have never heard of the September 11 tragedy.

Less than one month after the deadly September 11, 2001, terror attacks that killed just under 3,000 American civilians, the United States invaded Afghanistan on October 7 under the guise of hunting down the terrorists responsible for the attacks, including Osama bin Laden.

Years after the al-Qaeda ringleader was killed by a team of Navy SEALS in Pakistani territory, the United States remains embroiled in the simmering conflict, which threatens to boil over again, a war without an endgame.

A recent public opinion poll suggests that it may also be a war on a people who don’t know why they were invaded in the first place, with 92% of Afghani respondents claiming they had never heard of the World Trade Center.

There have been 2,326 US military deaths in Afghanistan since the conflict began 15 years ago, in addition to 1,173 US civilian contractor deaths, with over 2/3 of these fatalities occurring since President Barack Obama assumed office in 2009, on a promise to scale back the conflict.

The situation has been more egregious for Afghanistan’s civilian population, with over 91,000 deaths traced directly to the conflict and an estimated 360,000 additional deaths traced to causes indirectly related to the war, including dislocation of civilian populations, destruction of social services, and devastation of the country’s infrastructure.

The heavy price in lives and the social infrastructure carries on to this day, but with much less reporting than during the Bush administration. A simple reading of current affairs will reveal that the popular focus has shifted to the presidential election season and celebrity stories.

On Monday, Loud & Clear’s Brian Becker sat down with Col. Lawrence Wilkerson, who served as Secretary of State Colin Powell’s chief of staff under the Bush administration, along with antiwar activists Kathy Kelly and Dilip Hiro to ask why the fighting rages to this day.

Did you anticipate that the Afghanistan War would still be waged 15 years later?

“I would have to say that yes there were some of us who saw Afghanistan as the graveyard of empires, some of us who were students of history,” said Col. Wilkerson. “The US got stuck in that graveyard, or they called it a quagmire, and it all comes back to the great geopolitical game played out by the British and other empires for many years.”

Was the war necessary to combat terrorism?

Colonel Wilkerson said that, whether or not war was justified on strategic merit alone, Americans were clamoring for violence after the World Trade Center buildings were destroyed during the 9/11 tragedy. Even a less militaristic US leader, he suggested, such as an Al Gore, would have found himself embroiled in a conflict in Afghanistan simply to assure people that he was doing something to keep the US safe.

However, he opined that Gore would have likely carried out a war in a different way, keeping the effort limited to perhaps a few months. Many Americans believed, he said, that “we would go to Afghanistan for a few months, knock out al-Qaeda the best we could, and send a clear warning to the country’s ruling body, the Taliban, that if they let al-Qaeda back then we’ll attack again.”

Can the war be explained when 92% of Afghans never heard of the World Trade Center?

“I suppose some of the people suffering the most are those who become homeless and displaced, especially the children — who should never be held accountable for governance,” said peace activist Kathy Kelly. “The UN is reporting 117,976 families have had to flee their homes and there are so many different fighting warlords that people aren’t sure which side is which.”

She explained that, for Afghans, one day the roads to their houses are blocked, warlords creep in, and they are forced to head to squalid refugee camps where they suffer the harshest elements during the winter months with no protection.

“Hunger is really terrible in Afghanistan, and it isn’t just the displaced people but also ordinary civilians who have a hard time finding resources to cover rent and food at the same time that the health and education systems have collapsed,” said Kelly. “The economy has tilted so heavily to funding warlords and maintaining the opium trade that Afghanistan has become a miserable place to live.”

Did the United States gain any influence in Afghanistan due to the war?

“No,” responded Dilip Hiro. “When the new President Ghani came into office, he said that we [Afghanistan] have five circles of friends, starting with the Islamic world, then China, and the US and Europe came third and fourth.”

Hiro explained that China and Afghanistan share a long history tracing back to being wedged between the Russian monarchy and the governors of British India in the 19th century, and that both of the neighboring countries have long been caught in a struggle against Western imperialism.

He suggested that a geopolitical view motivating the US intervention in Afghanistan, beyond a several-month anti-terror campaign, may have been a desire to have a permanent base in the country to constrain the ambitions of China and Iran, but that endeavor failed after Chinese companies built roads and bolstered social services in the country, winning the favor of Afghans.

What is the driving force behind this endless war besides anti-terrorism?

Colonel Wilkerson argued that the ongoing conflict is largely the design of the US military-industrial economy, along with foreign and military policymakers feeding personal agendas, ambitions, and pocketbooks at the expense of Americans.

“I don’t want to pay another American dollar to Lockheed Martin, Boeing, Northrop, or McKesson or any of those filthy defense contractors,” declared Colonel Wilkerson.

“Look at our two choices for President – Donald Trump and Hillary Clinton,” he said, “There is not an iota worth of difference between them, except that Trump is incoherent and Clinton, unfortunately, is very coherent about the fact that she would continue this playbook on foreign policy that we have carried out for the past thirty years that is extremely expensive and extremely dangerous. It bleeds our treasury and it bleeds our people while less than 1% of our population serves in the military, bleeding and dying.”