Grant Smith, Bloomberg: How OPEC Weaponized the Price of Oil Against U.S. Drillers
WNU Editor: This is one of the best analysis and explanations that I have read on the "how and why" the "rich members" of OPEC decided to crash the price of oil. They have done this before (in 1986) .... and it gave them a significant market share (plus a few trillion dollars) for the next 25 years. This Bloomberg post is a must read. Predictions .... these OPEC countries are not going to relent .... expect hard times in the U.S. oil patch and to those who service them.
Update: Saudi prince: $100-a-barrel oil 'never' again -- USA Today
5 comments:
Well as I've said before, this policy will hurry the collapse of Venezuela, possibly Iran, and certainly Nigeria. Nigeria is imporatant in that they are target #1 for Islam is West sub Sahara. When Nigeria falls Islam rules from east to west coast Africa. Any resistance from "moderate" islamic states to the north will be easy to overcome.
Then the big one: China. China must have oil for it's communist government to survive. China's government has bet it's future on a hybrid economy that must expand, to do that it must have oil. So you see the agreement with Russia, but not to put all their eggs in one basket you find them now in the Mid East for a second source (not to mention they just bought Venezuela). To assure this second source they have already put military on the ground in Africa and are building a blue water navy. On top of this they are constructing a secure sealane to the Mid East over the objects of smaller countries and in contravention of some international agreements. The only real impediments to them are the US, Japan, and Australia. The US is receding so China probably feels it can produce a large enough and good enough navy to intimidate Japan and Australia before the US makes any effective counter moves. The new Chinese Navy might not be as powerful or as effective as the US's, but for the prior stated goals it might be enough. Their deadliest potential enemy would be Australia sitting astride the all important sealane to the MidEast. Watch Chinese moves in the future toward Australia.
I agree James. China is doing what the U.S. use to do until the end of the Cold War .... think strategically. Their focus is on securing energy supplies, and then developing their military to complement this policy.
Absoutely.
To expand, I think to get a feel for China's true intentions and what lengths they are willing to achieve their goals, how they deal with Australia in the next 2 yrs will tell the tale. Australia is a special problem for them.
James. It appears that Australia is already making their intentions known. http://www.theguardian.com/australia-news/2015/jan/05/australians-opposed-taking-sides-china-japan
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