What Would The End Of OPEC Mean?

OPEC

 

The Organization of the Petroleum Exporting Countries – the oil market institution that has exerted an unyielding power over the price of crude for nearly 60 years – is now in deep crisis. The latest OPEC meeting in Vienna offered new insights into the cartel’s raging civil war that is tearing it apart and threatens to ultimately make the cartel irrelevant.

In a two-year period since the group of 15 major oil producers formed an alliance with Russia, OPEC’s smaller members have been marginalized, their voices have been diminished and Saudi Arabia seems to prioritize its partnership with Moscow above all else. An unlikely partnership between Saudi Arabia and Russia is causing dissension within OPEC, with one of the oldest members announcing it would withdraw from the organization in January just days prior to the talks. With Russia tightening its grip over OPEC’s decisions and the United States officially reaching net oil exporting status in late November for the first time in decades, even if only briefly, the new world oil order is now dependent on three energy superpowers: Saudi Arabia, Russia and the United States. Continue reading

How the New Silk Roads are merging into Greater Eurasia

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People take pictures of the first freight train from Shenzhen to Minsk, capital of Belarus, that set out of Yantian Port in Shenzhen in May 2017. Photo: Reuters / stringer

 

Russia’s embrace of the Far East and other parts of Asia is proceeding with a symbiotic embrace of China’s New Silk Roads, or Belt and Road Initiative

The concept of Greater Eurasia has been discussed at the highest levels of Russian academia and policy-making for some time. This week the policy was presented at the Council of Ministers and looks set to be enshrined, without fanfare, as the main guideline of Russian foreign policy for the foreseeable future.

President Putin is unconditionally engaged to make it a success. Already at the St Petersburg International Economic Forum in 2016, Putin referred to an emerging “Eurasian partnership” Continue reading

China Intensifies Efforts to Topple U.S. Dollar

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China Photos/Getty Images

 

‘The pace of expansion has been explosive’ for China’s new yuan-denominated oil futures contract.

Less than a year after China launched an oil futures contract denominated in the Chinese currency, the contract is beginning to be embraced by global commodities traders.

The Chinese Communist Party has long desired to see the United States dollar sidelined and the Chinese currency, the yuan, take on a more central role in global finance. The latest major push toward that goal came on March 26 when China launched a new oil futures contract on the Shanghai International Energy Exchange denominated in yuan. Now the contract is finding increasing acceptance among multinational commodity traders, which could threaten the dollar’s position. Continue reading

The German-American Relationship Illusion

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Demonstrators march through Berlin to protest U.S. President Donald Trump on Jan. 20, 2017. (Omer Messinger/NurPhoto/Getty Images)

 

Germans see relations as negative; Americans see them as positive. What is going wrong?

Germans and Americans have very different ideas of the relationship between their two countries, according to a survey published by the Körber Foundation and the American Pew Research Center last month.

While 73 percent of Germans surveyed described relations with the United States of America as “somewhat bad” or “very bad,” 70 percent of Americans said that relations with the German Federal Republic were “somewhat good” or “very good.” Continue reading

U.S. Aircraft Carrier Heads To Persian Gulf In “Show Of Force” After Iran Ballistic Missile Test

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USS John C. Stennis nuclear-powered aircraft carrier, via Defence Blog

 

Days after Iran unveiled its first stealth destroyer in a televised ceremony on Saturday which saw the warship launched into operation in the Persian Gulf, and after the US condemned Iran’s test firing a medium-range nuclear capable ballistic missile on Sunday, Pentagon officials have announced the U.S. is sending an aircraft carrier strike group to the Persian Gulf in a show of force against Iran. Continue reading

The Oil Powerhouses Replacing OPEC

Offshore rig

 

Three countries currently account for close to 40 percent of global crude oil production and only one of these countries is a member of the Organization of Petroleum Exporting Countries. The three are Russia, the United States, and Saudi Arabia and as their clout over oil markets increases with rising production rates, OPEC’s is set to decline, at least temporarily. Continue reading

Russian South Stream 2.0 Comes Out of the Shadows

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Source: Kommersant

 

Russia and Turkey have announced that the two countries have reached significant progress in reviving the November 2014-shut down South Stream gas pipeline intended to land Russian gas across the Black Sea. The project is the part of the already secured open tender contracts for purchases of gas signed between Gazprom, Bulgaria, Serbia, Hungary, Slovakia and Austria.

The new Black Sea gas pipeline Turkish Stream will run under sea from Krasnodar to a landing hubv just west of Istanbul. On November 19, presidents Vladimir Putin and Recep Tayyip Erdogan met in Istanbul to announce the completion of pipeline’s off-shore section. Continue reading

The Biggest Threat To Dollar Dominance

dollars

 

Russian oil exporters are pressuring Western commodity traders to pay for Russian crude in euros and not dollars as Washington prepares more sanctions for the 2014 annexation of Crimea by Moscow, Reuters reported last week, citing as many as seven industry sources.

While it may have come as a surprise to the traders, who, Reuters said, were not too happy about it, the Russian companies’ move was to be expected as the Trump administration pursues a foreign policy where sanctions feature prominently. This approach, however, could undermine the dominance of the U.S. dollar as the global oil trade currency. Continue reading

US sanctions: SWIFT network suspends Iran banks

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The SWIFT banking network, the backbone for international monetary transfers, said Monday it has suspended several Iranian banks from its service, after the United States reimposed nuclear sanctions on Tehran.

“In keeping with our mission of supporting the resilience and integrity of the global financial system as a global and neutral service provider, SWIFT is suspending certain Iranian banks’ access to the messaging system,” it said. Continue reading

Europe’s Gas Game Just Took A Wild Twist

Natural Gas

 

Despite the almost unprecedented divisive nature of Donald J. Trump’s presidency, he is chalking up some impressive foreign policy victories, including finally bringing Beijing to task over its decades long unfair trade practices, stealing of intellectual property rights, and rampant mercantilism that has given its state-run companies unfair trade advantages and as a result seen Western funds transform China to an emerging world power alongside the U.S.

Now, it looks as if Trump’s recent tirade against America’s European allies over its geopolitically troubling reliance on Russian gas supply may also be bearing fruit. On Tuesday, The Wall Street Journal reported that earlier this month German Chancellor Angela Merkel offered government support to efforts to open up Germany to U.S. gas, in what the report called “a key concession to President Trump as he tries to loosen Russia’s grip on Europe’s largest energy market.” Continue reading

US Is Negotiating With SWIFT To Disconnect Iran From Network

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Treasury Secretary Steven Mnuchin said that unlike Obama’s 2013 Iran blockade, it would be harder for countries to get waivers on Iran oil sanctions as the US is already working on disconnecting Iran from the SWIFT network and dismissed concerns that oil prices could rise, saying the market had already factored in the output losses.

Speaking in an interview with Reuters in Jerusalem on Sunday at the start of a Middle East trip, Mnuchin said countries would have to reduce their purchases of Iranian oil by more than the roughly 20% level they did from 2013 to 2015 to get waivers. “I would expect that if we do give waivers it will be significantly larger reductions,” said the US Treasury Secretary. Continue reading

Russia And China Prepare To Ditch Dollar In Bilateral Trade

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In a time when many nations have gone public with their intention to ditch the dollar in part or in whole, in bilateral trade with non-US counterparts, either to prevent the US from having “veto power” of commerce courtesy of SWIFT or simply in response to Trump’s “America First” doctrine, attention has long focused on Russia and China – the two natural adversaries to the US – to see if and when they would accelerate plans for de-dollarization. Continue reading

Saudi Arabia Calls The End Of Russia’s Oil Prowess

Putin MBS

 

Saudi Arabia has not only called the end of Russia’s prominence as a global oil behemoth, but anticipates that Russia’s oil exports “will have declined heavily if not disappeared” within the next 19 years, Mohammed bin Salman said in a recent interview with Bloomberg. Continue reading

Venezuela Ditches US Dollar, Will Use Euros For International Trade

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Venezuela has just taken the next step in its quest to “free” itself from the tyranny of US dollar hegemony. One year after the country said it would stop accepting US dollars as payment for its (ever shrinking) oil exports (saying the country’s state-run oil company would accept payment in yuan instead), Venezuelan Vice President for Economy Tareck El Aissami said Tuesday that Venezuela will officially purge the dollar from its exchange market in favor of euros. Continue reading

Saudis Vow to Retaliate if ‘Punished’ for Khashoggi Disappearance

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(Photo Credit: Common Action Forum/Twitter)

 

The kingdom has effectively threatened to cut off oil supplies if it is sanctioned.

As many countries around the world have rallied to say they will punish Saudi Arabia if it is found to have been involved in the disappearance and possible death of dissident journalist Jamal Khashoggi, the kingdom vowed it would retaliate against any such action. Continue reading