What Would The End Of OPEC Mean?

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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

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

Russian Central Bank Preparing for SWIFT ‘Nuclear Option’

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(Photo Credit: Ludvig12 via Creative Commons 4.0)

 

Smaller banks have been encouraged to establish secondary arrangements for processing bank card transactions.

Preparing for new U.S. sanctions “early next year” that will likely target Russia’s access to the SWIFT international banking system—something that was just described as a “nuclear option” against Moscow just earlier this week—the Bank of Russia has urged the country’s smaller banks to prepare for a “worst-case scenario.” Continue reading

Chinese Ambassador Warns of ‘Dire Consequences’ Over Trade War

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(Photo Credit: Tech Sgt. Vernon Young Jr./U.S. Air Force)

 

As the world’s leaders prepare for Buenos Aires G20 Summit, Cui Tiankai hints all-out war could be looming.

Although both sides are going to this week’s G20 summit in Buenos Aires hoping for a deal to end the escalating trade war between them, Chinese and U.S. officials have conceded such a deal is highly unlikely despite the looming signs of dire consequences if they fail to do so. Continue reading

U.S. Declares War on Russia’s New Middle East Order

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(Photo Credit: U.S. Treasury Department)

 

Treasury Department details how Russian, Iranian companies funneled oil to Syria to fund Hezbollah, Hamas.

This afternoon, the Treasury Department’s Office of Foreign Asset Control laid out an elaborate network through which the Central Bank of Iran funneled cash through Iranian and Russian companies to buy Iranian oil that was then shipped to Syria for the purpose of propping up the Syrian government and the terrorist organizations Hezbollah and Hamas. Continue reading

The Biggest Threat To Dollar Dominance

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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

China Is Beating the US in the Rare-Earths Game

For more information regarding China and the rare earths situation, see the following previous articles:

 

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It’s time for the administration to use its powers to preserve America’s access to vital defense materials.

How to view China’s recent threat to limit domestic production of rare earths, those 16 elements that make our cellphones and smart bombs work? It’s the latest move in a game that began before the United States realized it was even playing, that has grown more complex than U.S. leaders realize, and that is nearing a very unfortunate ending. Continue reading

Iran president warns of ‘war situation’ as sanctions resume

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US President Donald Trump, left, on July 22, 2018, and Iranian President Hassan Rouhani on February 6, 2018. (AP Photo)

 

Rouhani vows defiantly that ‘Iran is able to sell its oil and it will sell,’ rejects prospect of mediation with Washington

Iran greeted the re-imposition of US sanctions on Monday with air defense drills and an acknowledgement from President Hassan Rouhani that the nation faces a “war situation,” raising Mideast tensions as America’s maximalist approach to the Islamic Republic takes hold.

The sanctions end all the economic benefits America granted Tehran under its 2015 nuclear deal with world powers, though Iran for now continues to abide by the accord that saw it limit its enrichment of uranium. While for now not threatening to resume higher enrichment, Iranian officials in recent months have made a point to threaten that could resume at any time faster than before. Continue reading

A Transmission Belt of German Supremacy

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ROME/BERLIN (Own report) – German politicians and media are intensifying pressure on Rome in anticipation of today’s EU Commission verdict on Italy’s national budget. Already last week, EU Budget Commissioner Günther Oettinger announced, in reference to the Italian deficit, that the Italian government must “correct” its draft budget. Media reports refer to a “black week” for Rome. Negative reporting – like rating agencies’ devaluation of Italy’s creditworthiness – can contribute to the destabilization of Italy’s financial and credit markets. The country’s current downward spiral threatens to re-escalate the banking crisis. Whereas Berlin insists that the EU take sharp measures against deficits, Germany’s Finance Minister at the time, Wolfgang Schäuble had prevented the EU Commission from taking measures against excessive surpluses, which the commission sees as potentially just as destabilizing. Germany has been achieving these surpluses year after year.

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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

The EU’s Game of Chicken

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LONDON/BRUSSELS/BERLIN (Own report) – The EU’s heads of states and governments were again unable to make progress in the Brexit negotiations last Wednesday, provoking strong criticism from the German business community. Their only proposal was to prolong the transitional period another year, which is out of the question for London, because this would cost the UK additional billions of pounds. The EU is “too inflexible” in the Brexit negotiations, criticized the head economist of Commerzbank. It is a “stickler for principles,” even though it has itself “stretched the rules to the point of becoming unrecognizable” – such as those of the currency union. Commentaries assume that Brussels seeks to set a deterrent example. The EU sees itself “too unattractive,” to be able to prevent other countries from leaving by other means. At the same time, Brussels is running the risk of the Brexit negotiations collapsing, which would cause serious losses, particularly to German industry. Experts do not rule out German export losses in the double-digit billions.

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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

Russian Share In U.S. Debt Is Getting Close To Zero

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Grigory Dukor. IMAGE: Reuters

 

Russian investments in US securities as of August 2018 have fallen to just $14 billion from $180 billion back in 2011. From one of the top holders of the US debt, Moscow became the 54th largest holder. Continue reading

China To Unveil Next-Generation Stealth Bomber In 2019

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Last week, the Global Times confirmed that the Hong-20, China’s newest long-range stealth bomber was ready for imminent trial flights.

Now, it seems Chinese media, as per Defense Blog, has indicated that the stealth bomber will be unveiled during a massive military parade in 2019.

While there is no official statement or confirmation from the Chinese government or military, the unveiling is expected to occurring during a period where JPMorgan expects a full-blown trade war between the US and China.  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