Tag Archives: Iraq

Putin’s OPEC tactics: Iran sanctions and the Saudis [IBD cites me]

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June 2018 OPEC meeting’s key players (AP)

Last week, Gillian Rich at Investor’s Business Daily (Washington), asked me (Berlin) and others about the OPEC’s 20-21 June meeting. Below here, I give my views in more detail, including the tie-in to the Trump project to isolate Iran and my comment about Putin likely betraying the Iranians again.  The IBD piece is here: Trump Could Make OPEC’s Next Meeting As Dysfunctional As G-7 Summit. 15 June ’18.

We spoke about market and geopolitical aspects. On the latter, I emphasized both the Trump Administration’s evolving plan to sanction and isolate Iran, and Russia’s new role as a central player with OPEC ever since the 2016 joint Russian-OPEC decision to raise production.

That’s when Putin played a new role for any Russian leader. Not only did he coordinate Russian oil policy with OPEC’s, he got personally involved in heated discussions, getting on the phone late in the last night with Iranian and Saudi leaders to get the deal sealed.

This new Russian role was clearly foreseen by al-Naimi, Saudi oil minister from 2014, before al-Falih replaced him as minister, to serve the new king, Salman, and his son Prince MbS.

In 2014, as prices were crashing, al-Naimi said that there was no way  nowadays that OPEC alone could cut sufficient production to reverse this. Indeed, he met with Russia and Mexico, at the insistence of Venezuela, before the late-2014 OPEC summit to see what these two  non-OPEC states were willing to do to help out.  At that time, the Russians (much less the Mexicans) were still unwilling to join with OPEC. So, instead of implementing cuts, al-Naimi led OPEC to increase production, declaring a (ultimately unsuccessful) price war against US shale producers, whose new cheap oil had been driving down prices.

Finally, in 2016, after almost two years of crushingly low prices, Russia was finally willing to come onboard late in the year, joining in the first-ever coordinated OPEC-Russian production cuts, and in the process Putin (and Rosneft’s Igor Sechin) personally played an essential role inside OPEC by cajoling the Iranians to go along with the Saudi-Russian plan – as per the aforementioned late-night phone  calls.

So, here we are another two years later, in mid-2018:  the Russia-Saudi, or OPEC/NOPEC combo has finally gotten the previous global oil glut and low-prices somewhat under control.  Aided by growing global demand for oil, their cuts have gotten storage in the USA and elsewhere down, and they have gotten lucky as long as US shale producers face temporary limits on getting their rapidly growing production to market for a lack of pipeline capacity to USA ports.

Now that they’ve begun to get some leverage over prices, Russia and the Saudis want to reign in prices from overheating.  At the same time, they have to make up for the death spiral in production caused by the Chavez- and Maduro-led collapse of the Venezuelan oil industry, and an expected decline in Iranian exports due to the Trump administration’s campaign to impose the “strongest sanctions in history” (Sec. of State Pompeo).    Continue reading

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“Energy independence” won’t free the USA from global oil market & geopolitics [I’m cited: CNNMoney]

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Credit: CNNMoney, 9 August 2016

Mr. Trump promises he’d use the USA’s shale-oil revolution to deliver “complete” independence from foreign oil, telling voters in May: “Imagine a world in which our foes and the oil cartels (sic) can no longer use energy as a weapon. Wouldn’t that be nice?” But, he is confusing two quite distinct things:

“Energy independence” – in the sense of the USA producing more oil than the country consumes – is indeed possible, even “tantalizingly close” as this CNNMoney article (Aug. 9, 2016, by Matt Egan) makes clear, citing myself and other experts.  For clarity, I’ll call this “net oil-exporter status.”

However, Donald Trump asks us to “imagine” he can use this net oil exporter status, to make the US independent of the global oil market and oil in geopolitics where our “foes” and “cartels” have leverage. Continue reading

Wikistrat Report “Saudi Arabia & the Future of Oil” cites my views

Wikistrat - my quote on US continued interestThis Wikistrat Report on the Saudi kingdom’s “reform” plans and the future of oil is from a press webinar I did on 17 May together with Dr. Ariel Cohen (Atlantic Council, Washington) and Prof. Shaul Mishal (Middle East Division, IDC Herzliya & Tel Aviv U.).  A nicely done report on oil market and geopolitical hot topics.

30May16 note: A couple typos I had found have been fixed by Wikistrat since I initially posted this Report.  The latest version is now linked here. – T.O’D.

Watch: Falling Oil Price & Geopolitics – Saudis & OPEC, Russia, USA, .. | My Real News Network interview

A wide-ranging interview on the “perfect storm” of low prices from low demand plus rising production, the Saudi market strategy and some geopolitical implications.

“Oil & the US-Iran Crisis” – My talk at American University, Washington DC:

If you are in Washington, DC, this historical overview of the US-Iran Crisis and the role of oil might be of interest:
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My IP Journal latest: “A firm US-EU partnership on Iran came at great cost, and made a deal possible”

EU and Iranian foreign ministers (foto: Austrian Foreign Ministry)

EU and Iranian foreign ministers in Vienna (Austrian Foreign Ministry)

My latest at the IP Journal of the German Council on Foreign Relations (DGAP)US-EU Cooperate on Iranian Nonproliferation:  Agreement positions Tehran as regional leader — IP Journal 14/08/2014 

Although negotiators failed to reach agreement on Iran’s nuclear program by the late-July deadline set last November, as Iran’s Foreign Minister Mohammad Javad Zarif put it: “We have made enough headway to be able to tell our political bosses that this is a process worth continuing. … I am sure Secretary Kerry will make the same recommendation.” Indeed, Washington, Brussels, and Tehran readily agreed on a four-month extension.

This represents a sea change in tone from the period prior to November 2013, Continue reading

My talk on Iran, NYC | After an Iran-USA deal: A Mideast without democracy, run by Iran & Saudi Arabia?

Figure 1.  Ayatollah Hashemi Rafsanjani (R) exchanges greetings with the new Saudi Arabian ambassador to Iran, Abdulrahman Bin Groman Shahri in Tehran, April 22, 2014. (photo by Twitter/ISNA)    Read more: http://www.al-monitor.com/pulse/originals/2014/04/rafsanjani-saudi-ambassador-kiss-controversy.html#ixzz32ktJuoKR

Kiss between Rafsanjani and Saudi ambassador stirs controversy   Former Iranian President, Ayatollah Hashemi Rafsanjani (R) exchanges greetings with the new Saudi Arabian ambassador to Iran, Abdulrahman Bin Groman Shahri in Tehran, Al Monitor, April 22, 2014. (photo by Twitter/ISNA)

Appreciation: I am honored to again be invited by my Iranian colleagues in New York, Professors Reza Ghorashi, Hamidah Zangeneh and Hamid Sedghi, to join this panel and discuss the geopolitics of US-Iranian relations.  And, my thanks to Prof. Sedghi for reading my paper as I am teaching in Berlin and cannot be with you today. I only ask that those who dislike my message, kindly refrain from shooting the messenger.

Introduction

The US-Iran nuclear confrontation finally appears close to resolution.  This is because both Presidents Obama and Rouhani desire a diplomatic solution, and both countries need to move on. With such an agreement, it is possible that relations will slowly become normalized.

Of particular note—as a direct consequence—are the recent secret negotiations between Iran and Saudi Arabia towards a rapprochement.  These were initially facilitated by Oman (e.g. see reports here, here, and here). Until very recently the Saudis had remained fiercely opposed to any US deal with Iran.  However, the Saudi’s are realists, and know when it is time to adapt.  Figure 1. is a photo of kisses exchanged on 22 April between ex-President Rafsanjani of Iran and King Abdullah’s ambassador to Iran, which caused quite a stir in the region. Agreements reached in these recently revealed negotiations have already significantly affected the presidential-succession crisis in Lebanon, sectarian conflicts in Iraq, and the conflict in Yemen. Next the two sides are expected to negotiate regarding their interests in the Syrian conflict.

In addition, the nature of the US-Saudi relationship is changing, transferring much more responsibility on the Kingdom and its Gulf partners for their own defense–albeit strongly supported with US weapons and logistics. This is part of the US disengagement from direct regional interventions, which will be significantly furthered by a successful US-Iran agreement (e.g., see here and here, and this report on Saudi defense buildup from Balfour at Harvard).

How are these new developments to be understood? Continue reading