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Another Conspiracy Theory Becomes Fact: The Entire Oil Collapse Is All About Crushing Russian Control Over Syria

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Another Conspiracy Theory Becomes Fact: The Entire Oil Collapse Is All About Crushing Russian Control Over Syria


Zero Hedge
By Tyler Durden
4 February 2015

While the markets are still debating whether the price of oil is more impacted by the excess pumping of crude here, or the lack of demand there, or if it is all just a mechanical squeeze by momentum-chasing HFT algos who also know to buy in the milliseconds before 2:30pm, we bring readers' attention back to what several months ago was debunked as a deep conspiracy theory.

Back then we wrote about a certain visit by John Kerry to Saudi Arabia, on September 11 of all days, to negotiate a secret deal with the now late King Abdullah so as to get a "green light" in order "to launch its airstrikes against ISIS, or rather, parts of Iraq and Syria. And, not surprising, it is once again Assad whose fate was the bargaining chip to get the Saudis on the US' side, because in order to launch the incursion into Syrian sovereign territory, it "took months of behind-the-scenes work by the U.S. and Arab leaders, who agreed on the need to cooperate against Islamic State, but not how or when. The process gave the Saudis leverage to extract a fresh U.S. commitment to beef up training for rebels fighting Mr. Assad, whose demise the Saudis still see as a top priority."


We concluded:

Said otherwise, the pound of flesh demanded by Saudi Arabia to "bless" US airstrikes and make them appear as an act of some coalition, is the removal of the Assad regime. Why? So that, as we also explained last year, the holdings of the great Qatar natural gas fields can finally make their way onward to Europe, which incidentally is also America's desire - what better way to punish Putin for his recent actions than by crushing the main leverage the Kremlin has over Europe?

Because at the end of the day it is all about energy. We made as much very clear one month later when in mid-October we said "If The Oil Plunge Continues, "Now May Be A Time To Panic" For US Shale Companies." The panic time has long since come, but only after we laid out the problem clearly enough for all to grasp:

... while we understand if Saudi Arabia is employing a dumping strategy to punish the Kremlin as per the "deal" with Obama's White House, very soon there will be a very vocal, very insolvent and very domestic shale community demanding answers from the Obama administration, as once again the "costs" meant to punish Russia end up crippling the only truly viable industry under the current presidency.

As a reminder, the last time Obama threatened Russia with "costs", he sent Europe into a triple-dip recession.

It would truly be the crowning achievement of Obama's career if, amazingly, he manages to bankrupt the US shale "miracle" next.

Of course, all of the above was purely in the realm of the conspiratorial, because the last thing the administration would admit is that the tradeoff to its bargain with Saudi Arabia to implement a (largely failed) foreign policy regarding ISIS (which has grown in size since the coalition campaign) was to put at risk the entire US shale miracle, a miracle which is evaporating in front of everyone's eyes. And all thanks to that "closest" of US allies in the middle east: Saudi Arabia.

It was conspiratorial, that is, until today, when thanks to the far less "tinfoil" NYT one more conspiracy theory becomes conspiracy fact, following a report that "Saudi Arabia has been trying to pressure President Vladimir V. Putin of Russia to abandon his support for President Bashar al-Assad of Syria, using its dominance of the global oil markets at a time when the Russian government is reeling from the effects of plummeting oil prices."

From the NYT:

Saudi Arabia and Russia have had numerous discussions over the past several months that have yet to produce a significant breakthrough, according to American and Saudi officials. It is unclear how explicitly Saudi officials have linked oil to the issue of Syria during the talks, but Saudi officials say — and they have told the United States — that they think they have some leverage over Mr. Putin because of their ability to reduce the supply of oil and possibly drive up prices."

As we predicted, correctly, in September: it was all about Syria:

“If oil can serve to bring peace in Syria, I don’t see how Saudi Arabia would back away from trying to reach a deal,” a Saudi diplomat said. An array of diplomatic, intelligence and political officials from the United States and Middle East spoke on the condition of anonymity to adhere to protocols of diplomacy.

So what would it take for the price of oil to finally jump? Not much: Putin's announcement that Syria's leader Bashar is no longer a strategic ally of Russia.

Any weakening of Russian support for Mr. Assad could be one of the first signs that the recent tumult in the oil market is having an impact on global statecraft. Saudi officials have said publicly that the price of oil reflects only global supply and demand, and they have insisted that Saudi Arabia will not let geopolitics drive its economic agenda. But they believe that there could be ancillary diplomatic benefits to the country’s current strategy of allowing oil prices to stay low — including a chance to negotiate an exit for Mr. Assad.

...

"Russia has been one of the Syrian president’s most steadfast supporters, selling military equipment to the government for years to bolster Mr. Assad’s forces in their battle against rebel groups, including the Islamic State, and supplying everything from spare parts and specialty fuels to sniper training and helicopter maintenance."


Will Putin relent?

"Mr. Putin, however, has frequently demonstrated that he would rather accept economic hardship than buckle to outside pressures to change his policies. Sanctions imposed by the United States and European countries have not prompted Moscow to end its military involvement in Ukraine, and Mr. Putin has remained steadfast in his support for Mr. Assad, whom he sees as a bulwark in a region made increasingly volatile by Islamic extremism."

Actually that's not it: Syria, as we have been explaining for nearly two years is the critical transit zone of a proposed natural gas pipeline, originating in Qatar, and one which would terminate somewhere in central Europe. The same Qatar which was the "mystery sponsor of weapons and money to Syrian mercenary rebels" who eventually became ISIS. The same Qatar which is now directly funding ISIS. Of course, if Putin were to handover Syria to the Saudi princes (and to Qatar), he would effectively shoot himself in the foot by ending any leverage Gazprom has over Europe.

This too is very well known to Putin. For now he has shown that he has no intention of abdicating Syria, and losing critical leverage when it comes to being the provider of last resort of European gas:

The Saudis have offered economic enticements to Russian leaders in return for concessions on regional issues like Syria before, but never with oil prices so low. It is unclear what effect, if any, the discussions are having. While the United States would support initiatives to end Russian backing for Mr. Assad, any success by the Saudis to cut production and raise global oil prices could hurt many parts of the American economy.

After the meeting in Moscow in November between Prince Saud al-Faisal, the Saudi foreign minister, and Sergey V. Lavrov, the Russian foreign minister, Mr. Lavrov rejected the idea that international politics should play a role in setting oil prices.

“We see eye to eye with our Saudi colleagues in that we believe the oil market should be based on the balance of supply and demand,” Mr. Lavrov said, “and that it should be free of any attempts to influence it for political or geopolitical purposes.”

Which, in retrospect puts the Ukraine conflict, and the western isolation of Russia in a very simple spotlight - the whole point is to inflict as much pain as possible, so Putin has no choice but to hand over Syria.

Russia is feeling financial pain and diplomatic isolation because of international sanctions stemming from its incursion into Crimea and eastern Ukraine, American officials said. But Mr. Putin still wants to be viewed as a pivotal player in the Middle East. The Russians hosted a conference last week in Moscow between the Assad government and some of Syria’s opposition groups, though few analysts believe the talks will amount to much, especially since many of the opposition groups boycotted them. Some Russia experts expressed skepticism that Mr. Putin would be amenable to any deal that involved removing support for Mr. Assad.

Saudi Arabia’s leverage depends on how seriously Moscow views its declining oil revenues. “If they are hurting so bad that they need the oil deal right away, the Saudis are in a good position to make them pay a geopolitical price as well,” said F. Gregory Gause III, a Middle East specialist at Texas A&M’s Bush School of Government and Public Service.

As for Assad, the Syrian president "has shown no inclination to step aside. He said in a recent interview with Foreign Affairs magazine that the true threat in Syria comes from the Islamic State and Qaeda-affiliated groups that, in his words, make up the “majority” of rebellion. American and Arab officials said that even if Russia were to abandon Mr. Assad, the Syrian president would still have his most generous benefactor, Iran. Iranian aid to the Syrian government has been one of the principal reasons that Mr. Assad has been able to hold power as other autocrats in the Middle East have been deposed.

And as a major oil producer, Iran would benefit if Saudi Arabia helped push up oil prices as part of a bargain with Russia.

“You are going to strengthen your enemy whether you like it or not, and the Iranians are not showing any flexibility here,” said Mustafa Alani, an analyst at the Gulf Research Center who is close to the Saudi royal family.

But the military aid that Russia provides to Syria is different enough from what Damascus receives from Iran, its other major supplier, that if “Russia withdrew all military support, I don’t think the Syrian Army could function,” a senior Obama administration official said.


The conclusion:

A number of Arab nations have been pushing for the Saudis and Russians — polar extremes in their positions toward Mr. Assad — to find common ground on the matter as a step toward ending the carnage of Syria’s civil war, now almost four years old. But, as one Arab diplomat put it, “This decision is ultimately in Putin’s hands.”

And that, ladies and gentlemen, is what the great oil collapse of 2014/2015 is all about. For those who want to know when to buy oil, the answer is simple: just after (or ideally before) Putin announces he will no longer support the Assad regime. If, that is, he ever does because that act will effectively destroy all leverage Putin may ever have over Europe, and in the process, also end - quite prematurely - his career.

Until then, every single HFT-induced spike in oil is one to be ultimately faded, because as the past few months have shown, it is the Saudis who set the price, and they will not take no for an answer, even if it means crippling the entire US shale, and energy, industry in the process.

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6 comments :

  1. Is it just me or does John Kerry look like Herman Munster`s wet dream

    ReplyDelete
    Replies
    1. He looks like he is made of plaster. Think there has been a face lift.

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    2. Clone robotoid...he changed all of a sudden...he might be the actor that play Herman Munster? LOL

      Delete
  2. Al-Qaeda, Saudi Arabia and Israel
    http://www.fourwinds10.net/siterun_data/government/war/terrorism_war/news.php?q=1423232492

    Saudi Arabia is under a new cloud after a jailed al-Qaeda operative implicated senior Saudi officials as collaborators with the terror group – and the shadow could even darken the political future of Israeli Prime Netanyahu because of his odd-couple alliance with Riyadh, reports Robert Parry.
    By Robert Parry
    The disclosure that convicted al-Qaeda operative Zacarias Moussaoui has identified leading members of the Saudi government as financers of the terrorist network potentially reshapes how Americans will perceive events in the Middle East and creates a risk for Israel’s Likud government which has forged an unlikely alliance with some of these same Saudis.

    According to a story in the New York Times on Wednesday, Moussaoui said in a prison deposition that he was directed in 1998 or 1999 by Qaeda leaders in Afghanistan to create a digital database of the group’s donors and that the list included Prince Turki al-Faisal, then Saudi intelligence chief; Prince Bandar bin Sultan, longtime Saudi ambassador to the United States; Prince al-Waleed bin Talal, a prominent billionaire investor; and many leading clerics.

    “Sheikh Osama wanted to keep a record who give money,” Moussaoui said in imperfect English — “who is to be listened to or who contributed to the jihad.”
    Although Moussaoui’s credibility came under immediate attack from the Saudi kingdom, his assertions mesh with accounts from members of the U.S. Congress who have seen a secret portion of the 9/11 report that addresses alleged Saudi support for al-Qaeda.

    Further complicating the predicament for Saudi Arabia is that, more recently, Saudi and other Persian Gulf oil sheikdoms have been identified as backers of Sunni militants fighting in Syria to overthrow the largely secular regime of President Bashar al-Assad. The major rebel force benefiting from this support is al-Nusra Front, al-Qaeda’s affiliate in Syria.

    In other words, the Saudis appear to have continued a covert relationship with al-Qaeda-connected jihadists to the present day.

    The Israeli Exposure

    And, like the Saudis, the Israelis have sided with the Sunni militants in Syria because the Israelis share the Saudi view that Iran and the so-called “Shiite crescent” – reaching from Tehran and Baghdad to Damascus and Beirut – is the greatest threat to their interests in the Middle East.

    That shared concern has pushed Israel and Saudi Arabia into a de facto alliance, though the collaboration between Jerusalem and Riyadh has been mostly kept out of the public eye. Still, it has occasionally peeked out from under the covers as the two governments deploy their complementary assets – Saudi oil and money and Israeli political and media clout – in areas where they have mutual interests.

    In recent years, these historic enemies have cooperated in their joint disdain for the Muslim Brotherhood government in Egypt (which was overthrown in 2013), in seeking the ouster of the Assad regime in Syria, and in pressing for a more hostile U.S. posture toward Iran.

    Israel and Saudi Arabia also have collaborated in efforts to put the squeeze on Russia’s President Vladimir Putin, who is deemed a key supporter of both Iran and Syria. The Saudis have used their power over oil production to drive down prices and hurt Russia’s economy, while U.S. neoconservatives – who share Israel’s geopolitical world view – were at the forefront of the coup that ousted Ukraine’s pro-Russian President Viktor Yanukovych in 2014. (more)

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  3. New Saudi King Tied to Al Qaeda, Bin Laden and Islamic Terrorism
    http://www.fourwinds10.net/siterun_data/government/war/terrorism_war/news.php?q=1423187803

    We’ve long noted that Saudi Arabia is a huge supporter of terrorism [2].
    But the new Saudi king is particularly bad.
    Investors Business Daily notes [3]:
    King Salman has a history of funding al-Qaida, and his son has been accused of knowing in advance about the 9/11 attacks.
    ***
    Salman once ran a Saudi charity tied to al-Qaida and has been named a defendant in two lawsuits accusing the Saudi royal family of helping the 9/11 terrorists, one of which the U.S. Supreme Court recently let move forward after years of being blocked by the State Department and the well-funded Saudi lobby.

    Plaintiffs have provided an enormous amount of material to source their accusations against Salman. Here’s why his ascension to the throne is not good news, especially as the terrorism threat grows:

    • Salman once headed the Saudi High Commission for Relief to Bosnia and Herzegovina, which served as a key charitable front for al-Qaida in the Balkans.
    • According to a United Nations-sponsored investigation, Salman in the 1990s transferred more than $120 million from commission accounts under his control — as well as his own personal accounts — to the Third World Relief Agency, another al-Qaida front and the main pipeline for illegal weapons shipments to al-Qaida fighters in the Balkans.
    • A U.N. audit found that the money was transferred following meetings with Salman, transfers that had no legitimate “humanitarian” purpose.
    • Former CIA officer Robert Baer has reported that an international raid of Saudi High Commission offices found evidence of terrorist plots against America.
    • Baer also revealed that Salman “personally approved” distribution of funds from the International Islamic Relief Organization, which also has provided material support to al-Qaida.
    • A recent Gulf Institute report says Salman and former Saudi intelligence chief Prince Turki al-Faisal knowingly aided and abetted al-Qaida in the run-up to 9/11.
    • Salman works closely with Saudi clerics Saleh al-Moghamsy, a radical anti-Semite, and Safar Hawali, a one-time mentor of Osama bin Laden, according to the Washington Free Beacon.
    • In “Why America Slept,” author Gerald Posner claimed that Salman’s son Ahmed bin Salman also had ties to al-Qaida and even advance knowledge of the Sept. 11, 2001 attacks.
    David Andrew Weinberg provides a superb round-up [4] of Salman’s ties to terrorism and extremism:

    As former CIA official Bruce Riedel astutely pointed out [5], Salman was the regime’s lead fundraiser for mujahideen, or Islamic holy warriors, in Afghanistan in the 1980s, as well as for Bosnian Muslims during the Balkan struggles of the 1990s. In essence, he served as Saudi Arabia’s financial point man for bolstering fundamentalist proxies in war zones abroad.

    As longtime governor of Riyadh, Salman was often charged [6] with maintaining order and consensus among members of his family. Salman’s half brother King Khalid (who ruled from 1975 to 1982) therefore looked to him early on in the Afghan conflict to use these family contacts for international objectives, appointing [7] Salman to run the fundraising committee that gathered support from the royal family and other Saudis to support the mujahideen against the Soviets.(more at link)

    ReplyDelete

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