Chinese President Xi Jinping next to Saudi Crown Prince and Prime Minister Mohammed bin Salman in Riyadh, Saudi Arabia on December 8, 2022 (Saudi Press Agency/AP)
The increasing economic growth opportunities between China and the Middle East pose a great threat to the US and its influence in the region in the coming decades.
After Chinese leader Xi Jinping visited Saudi Arabia in December to meet Saudi Crown Prince Mohammed bin Salman, and later brokered a diplomatic breakthrough between Saudi Arabia and Iran, political flourishment was in its bloom state and so were business deals between China and the Middle East.
According to a report by The Wall Street Journal, state-owned oil giant Saudi Aramco intends to invest $3.6 billion in Hangzhou-based Rongsheng Petrochemical. Deals have also been signed such as a $5.6 billion investment into a joint venture with Human Horizons, a Chinese electric-vehicle company. An Abu Dhabi government-backed entity has bought a share valued at more than $730 million in NIO, another Chinese EV maker.
Following these deals, at the Arab-China Business Conference in Riyadh back in June, the head of Hong Kong’s stock exchange forecasted that the Middle East’s largest sovereign-wealth funds’ investments in China could amount to between $1 trillion and $2 trillion by 2030.
The increasing economic growth between China and the Middle East poses a great threat to the US as it attempts to control the oil-rich region in the coming decades. Chinese investment into the Middle East, or Saudi Arabia namely, is producing even more opportunities for ally-forming and political doorways.
It is worth mentioning that the Middle East has served as a better replacement or opportunity for Chinese firms cut off by the US.
Real-life examples
Nicolas Aguzin, the head of the Hong Kong stock exchange, stated that the sovereign-wealth funds only invest 1% to 2% of their assets in China currently, but believes that this will develop 10-fold.
Ethan Chan, chairman of Hong Kong-based asset manager ARTE Capital Group, said: “First, the relationship between the U.S. and the Gulf Cooperation Council has regressed, so they’re investing less into the U.S.,” adding: “Second, their allocation to China isn’t high enough.”
One sovereign-wealth fund that Chan works with is in the United Arab Emirates and invests around 7% of its entire stock in Chinese assets, which is a fifth of what it invests in the US. Chan expressed that doubling investments in China won’t be a problem.
Hong Kong-based artificial intelligence company blacklisted by the US, SenseTime, signed deals in Saudi Arabia this year in an effort to develop digital tourism and smart-city projects in the country.
Abu Dhabi’s sovereign-wealth fund Mubadala has been investing in Chinese artificial intelligence company 4Paradigm since 2021, according to S&P Global Market Intelligence. This March, the US added the company to its export control list.
More than networking
Chinese telecom mogul Huawei Technologies was at the forefront of the US-China tech battle around five years ago following accusations of violating sanctions on Iran, which sparked an effort by Canada to extradite the company’s CFO.
However, Huawei has been thriving in the Middle East, in addition to helping the UAE build the first 5G network in the Gulf region, per Jiawei Liu, the company’s chief executive in the UAE. The company has also signed agreements with Saudi Arabia’s state-owned telecoms company.
Hong Kong’s chief executive, John Lee, headed a delegation to Saudi Arabia in February and persuaded Aramco to sell shares on Hong Kong’s stock exchange.
Nonprofit government entity Dubai Chambers is launching an office in Hong Kong after setting one up in the neighboring mainland city of Shenzhen. It stated that it intends to expand Dubai’s presence in Asia and help Hong Kong companies learn more about Dubai and network there.
In an interview with the South China Morning Post, Saudi Minister of Communications and Information Technology Abdullah Al-Swaha said that Saudi Arabia intends to strengthen its engagement with Hong Kong, utilizing the city as a bridge to mainland China to stimulate its transformation under the Vision 2030 economic plan.
In the war between global finance and energy, one fact remains clear: You can print money but you can’t print oil
There is more to the current struggle between the oil-consuming west and the oil-producing nations than meets the eye and it runs far deeper than the war in Ukraine
On 6 October, when the European Union (EU) agreed to impose a Russian oil price cap as part of a new package of sanctions against Moscow, 23 oil ministers from the OPEC+ group of oil-producing countries spoke out in favor of a sharp cut in their joint production quota.
Their collective decision to decrease output by about two million barrels of oil per day elicited strong reactions in the US in particular, and there was even talk of “declarations of war.” The EU feels duped, as the OPEC+ production cuts could drive up fuel prices and dampen their eight sanctions packages. Despite the narrative of the world edging toward a “post-oil era,” it seems there’s life in the old dog yet, as OPEC remains the talk of the town.
OPEC is as relevant as ever
OPEC and ten non-OPEC energy producers – including Russia – have been coordinating their production policy since December 2016. At the time, analysts gave this “OPEC-plus” format little chance of having an impact.
Back then, I recall the mockery of many who scorned the announcement in the press room of the OPEC General Secretariat in Vienna. But OPEC has weathered the storm of the global oil market in recent years, and has emerged as a key player.
Recall the exceptional situation in the spring of 2020 during the global COVID-19 pandemic lockdown, when futures trading for US oil grades were even quoted at negative prices at times, only to rise again to new heights in April 2021.
In contrast to the escapades in the oil market between 1973 and 1985, when there was little consensus among OPEC’s members and many had already written the organization’s obituary – today, former rivals such as Saudi Arabia and Russia are managing to converge their interests into powerful cards.
In those days, it was normal practice for Riyadh to take into account and execute Washington’s interests within OPEC: A single phone call from the US capital was enough. When the US oil company ARAMCO – which acted like an extended arm of the US in the kingdom – was nationalized by Saudi Arabia in the early 1970s as part of the sweeping nationalization trends around the world, compensation was promised to the US on a mere handshake.
The era of the “Seven Sisters,” a cartel of oil companies that divided up the oil market, came to an end then. However, for US policymakers – at least, psychologically – this era still persists. “It’s our oil,” is an expression I often hear uttered in Washington. Those voices were particularly loud during the illegal US-led 2003 invasion of Iraq.
Financial market versus the energy market
To really understand the core of the conflict in Ukraine – where a proxy war rages – one must break down the confrontation thus: The US and its European allies, who represent and back the global financial sector, are essentially engaged in a battle against the world’s energy sector.
In the past 22 years, we have seen how easy it is for governments to print paper currency. In just 2022, the US dollar has printed more paper money than in its combined history. Energy, on the other hand, cannot be printed. And therein lies a fundamental problem for Washington: The commodity sector can outbid the financial industry.
When I wrote my book “The Energy Poker” in 2005, I also dealt with the currency question, i.e. whether oil will be traded in US dollars in the long term. At the time, my interlocutors from the Arab OPEC countries unanimously said that the US dollar would not be changed. Yet, 17 years later, that view has devolved starkly.
Riyadh is warming up to the idea of trading oil in other currencies, as indicated this year in discussions with the Chinese to trade in yuan. The Saudis also continue to purchase Russian like other West Asian and Global South states, they have opted to ignore western sanctions on Moscow, and are increasingly preparing for the new international condition of multipolarity.
Washington, thus, no longer maintains its ability to exert absolute leverage on OPEC, which is now repositioning itself geopolitically as the enlarged OPEC+.
US reacts: Between defiance and anger
The OPEC+ ministerial meeting on 6 October was a clear foreshadowing of these new circumstances. The inherent tensions between two world views unfolded immediately in the post-meeting press room where a Saudi oil minister put the western news agency Reuters in its place, and where US journalists fiercely attacked OPEC for “holding the world economy hostage.”
The next day, a tough policy was grudgingly announced by the White House. The OPEC+ production cuts has Washington vacillating between sulking and seeking revenge – against the once-compliant Saudis, in particular. In a few weeks US midterm elections will be held, and the ramifications of spiking fuel prices will no doubt unfold at the ballot box.
For almost a year, President Joe Biden has been expanding US fuel supply via the Strategic Petroleum Reserve, but has been unable to calibrate either the price of oil or runaway inflation. The US Congress is threatening to use the so-called “NOPEC” bill – under the legal pretext of banning cartels – to seize the assets of OPEC governments.
The concept has been floating around for decades on Capitol Hill, but this time new irrational emotions may own the momentum. But hostile or threatening US actions are likely to backfire and even accelerate the geopolitical shifts taking place in West Asia, which has been edging out of the US orbit in recent years. Many Arab capitals have not forgotten the unseating of Egyptian President Hosni Mubarak in 2011, and how quickly the US abandoned its longterm ally.
“It’s the economy, stupid”
The price of oil is a seismograph of the world economy and also of global geopolitics. With the production cuts, OPEC+ is simply planning in anticipation of upcoming recessionary consequences. Moreover, some producing countries are failing to create new capacities in view of the investment gap that has persisted since 2014: a low price of oil simply cannot be sustained if there is no major capital investment in its sector.
The energy supply situation is expected to further worsen as of 5 December, when the oil embargo imposed by the EU comes into force.
The fundamental laws of supply and demand will ultimately determine the many distortions in the commodity markets. The anti-Russian sanctions created by the EU and other states (a total of 42 states) have disrupted global supply, and that has man-made supply and pricing consequences.
The two major global financial crises – real estate and banks in 2008, and the pandemic in 2020 – led to the excessive printing of paper money. Ironically, it was China that moved the paralyzed global economy out of the first crisis: Beijing stabilized the entire commodity market in 2009/10 by serving as the global locomotive and bringing the yuan into the trading schemes.
China, the well-oiled machine
Until the early 1990s, China satisfied its domestic oil consumption with domestic oil production, ranging from 3-4 million barrels per day. But fifteen years and a rapidly-expanded economy later, China had turned into the world’s number one oil importer.
This status reveals the crucial role of Beijing in the global oil market. While Saudi Arabia and Angola are important oil providers, Russia is the main gas supplier for China. As former Premier Wen Jiabao once aptly observed: “any small problem multiplied by 1.3 billion will end up being a very big problem.”
For the past 20 years, I have argued that pipelines and airlines were moving east not west. Arguably, one of Russia’s biggest mistakes was to invest in infrastructure and contracts for a promising but ungrateful European market. The cancellation of the South Stream project in 2014 should have served as a lesson to Moscow not to enlarge Nord Stream as of 2017. Times, nerves, and money could have been better spent on expanding the grid heading east.
It’s never been about Ukraine
Ever since the start of Ukraine’s military conflict in February 2022, we have essentially been watching the western-led financial industry waging its war against the eastern-dominated energy economy. The momentum will always be with the latter, because as stated above, in contrast to money, energy cannot be printed.
The oil and gas volumes needed to replace Russian energy sources cannot be found on the world market within a year. And no commodity is more global than oil. Any changes in the oil market will always influence the world’s economy.
“Oil makes and breaks nations.” It is a quote that epitomizes the importance of oil in shaping global and regional orders, as was the case in West Asia in the post-World War I era: First came the pipelines, then came the borders.
The late former Saudi oil minister Zaki Yamani once described oil alliances as being stronger than Catholic marriages. If that is the case, then the old US-Saudi marriage is currently undergoing estrangement and Russia has filed for divorce from Europe.
The views expressed in this article do not necessarily reflect those of The Cradle.
On November 5, the Houthis (Ansar Allah) announced that they had attacked several targets in central, western and southern Saudi Arabia as a part of a large-scale operation.
Brig. Gen. Yahya Sari, a spokesman for the Yemeni group, revealed in a statement that a total of 14 suicide drones were launched in the course of the operation that was codenamed “Deterrent Balance 8”.
According to the spokesman’s statement:
King Khalid International Airport near the Saudi capital Riyadh in the Kingdom’s central region was targeted with four Samad-3 suicide drones.
King Abdulaziz International Airport in the city of Jeddah and a number of nearby oil refineries of Aramco in the western Saudi province of Mecca were targeted with four Samad-2 suicide drones.
An unidentified military target in Abha International Airport in the southern Saudi province of ‘Asir was targeted with a Samad-3 drone.
Several military targets in ‘Asir and the nearby provinces of Jizan and Najran were targeted with five Qasef-2K suicide drones.
Brig. Gen. Sari stressed that the Houthis can and will carry out more large attacks in order to protect Yemen and its people.
“The armed forces, with the help of God Almighty, will face escalation with escalation until the aggression stops and the siege is lifted, and God is a witness to what we say,” the spokesman said in his statement.
Two days earlier, the Houthis warned Saudi Arabia that it will face “serious consequences” as a result of its recent internes airstrikes on Yemen.
The Saudi-led coalition played down the Houthis’ large-scale operation, claiming that three of suicide drones were shot down and that the group failed to launch two ballistic missiles. These claims are yet to be verified.
In response to the operation, Saudi-led coalition warplanes destroyed 13 targets of the Houthis in different parts of Yemen. According to the coalition’s claims, the targets included weapons depots, air-defense systems, communication systems and drones’ equipment.
Operation Deterrent Balance 8 is the most recent in a series of large-scale missile and drone attacks by the Houthis against Saudi Arabia.
Operation Deterrent Balance 1 targeted the Shaybah super-giant oil field in southeast Saudi Arabia on 17 August 2019.
Operation Deterrent Balance 2 targeted two strategic oil facilities in the eastern Saudi areas of Buqayq and Khurais on 14 September 2019.
Operation Deterrent Balance 3 targeted an oil facility of Aramco as well as sensitive targets in the western Saudi city of Yanbu on 21 February 2020.
Operation Deterrent Balance 4 targeted the headquarters of the Saudi Defense Ministry, intelligence facilities, King Salman Air Base and other positions in Riyadh as well as in Jizan and Najran on 23 June 2020.
Operation Deterrent Balance 5 targeted military sites in the Saudi capital, Riyadh, as well as in the Kingdom’s southern cities of Abha and Khamis Mushait on 28 February 2021.
Operation Deterrent Balance 6 targeted Ras Tanura oil port and an unspecified target in the nearby city of Dammam as well as several targets in both Jizan and ‘Asir on 7 March 2021.
Operation Deterrent Balance 7 targeted oil facilities of Aramco at Ras Tanura port, the western Saudi province of Makkah as well as in Jizan and Najran on 5 September 2021.
As suggested by their codename, these large-scale operations are meant to deter the Saudi-led coalition and pressure the Kingdom into ending its war on Yemen.
The Yemeni army has launched a large-scale military operation inside Saudi Arabia, hitting the Arab kingdom’s Khaled airbase and Aramco refinery, in retaliation for a years-long brutal war by the Saudi-led coalition against impoverished Yemen.
In a statement carried by Yemen’s Arabic-language al-Masirah television network on Saturday, spokesman of Yemen’s Armed Forces Brigadier General Yahya Saree announced the successful implementation of the “Eighth Deterrence Balance Operation” by bombing a number of military and vital targets inside Saudi Arabia, using 14 domestically-developed combat drones.
He said four Sammad-3 [Invincible-3] drones bombed the King Khaled airbase near capital Riyadh, adding that four Sammad-2 [Invincible-2] drones also bombed military targets at King Abdullah International Airport in Jeddah and Aramco Jeddah refineries.
Separately, military targets at Abha International Airport in Saudi Arabia’s southwestern province of Asir were bombarded by Sammad-3 drone and five Qasef-2K [Striker-2K] drones bombed various military targets in Abha, Jizan and Najran provinces.
Yemen’s “armed forces affirm their ability to carry out more offensive operations against Saudi and Emirati enemies within the framework of the legitimate defense of Yemeni nation and homeland,” General Saree further said.
He also stressed that the Yemeni “armed forces, with the help of God Almighty, will face escalation with escalation until the aggression stops and the siege is lifted.”
Saudi Arabia and a number of its regional allies – including the United Arab Emirates [UAE] – launched the brutal war on Yemen in March 2015. The campaign was launched to eliminate popular Ansarullah movement and reinstall Yemen’s Riyadh-backed former President Abd Rabbuh Mansur Hadi.
Ansarullah has been running state affairs in the absence of an effective government in Yemen.
The war has also been carried out in collaboration with a number of Riyadh’s allied states and with arms and logistics support from the United States and several Western countries.
The brutal aggression, which is accompanied by a tight siege, has failed to reach its goals, but it has killed hundreds of thousands of Yemeni people.
The UN says more than 24 million Yemenis are in dire need of humanitarian aid, including 10 million suffering from extreme levels of hunger. The world body also refers to the situation in Yemen as the world’s worst humanitarian crisis. The war has also taken a heavy toll on Yemen’s infrastructure, destroying hospitals, schools, and factories.
Saudi Arabia is being targeted by the Yemeni army and its allied popular forces continuously, with the Sanaa government saying that it will keep hitting targets deep inside the Arab kingdom as long as the war and siege continue.
To address this issue, we need to breakdown a few key concepts to understand the interests of both the people and the governments in the region.
Does Resisting “Israel” and the US Benefit People of the Region?
The answer to this question is the core focus in the ongoing media war between the Resistance Axis and the American-led Axis in the region. All the countries that are within the Resistance Axis are facing dire economic difficulties, social divisions, and security issues (Palestine, Lebanon, Syria, Iraq, Iran, and Yemen). At a first glance, without digging too deep, one might ask that indeed, why not just make peace with “Israel” and the US and end all the chaos? Wouldn’t making peace end all the sanctions and economic pressure and make everyone’s lives easier? These are valid questions that young people in particular ask. To address this issue, we need to breakdown a few key concepts to understand the interests of both the people and the governments in the region.
Relationship between the West and the region
Let’s go back 100 years ago. The Ottoman empire that ruled the region for around 500 years was crumbling. This took place during the second industrial revolution in Europe. Cars, airplanes, ships, electricity, gas, oil, and communication systems were being created. The end of the Ottoman Empire led to the split of the region between France and Britain with the Sykes-Picot agreement. These events prevented various countries in the Middle East from engaging in the industrial revolution as their own independent nations. The owners of the technologies and the infrastructure builders were mainly France and Britain. They viewed the region as an investment for their own projects and a market for their industries. They built most of the region and became the main providers of various technological products. After World War 2, the Israeli entity was created by Western powers to be used as a foothold to project their power and protect their interests. Fast forward to the cold war, the leadership of the region was transferred from Britain and France to the United States of America. This was ratified in the 50’s with the creation of ARAMCO (Arabian-American Oil Company) and the Mutual Defense Assistance Agreement with Saudi Arabia, the Consortium Agreement of 1954 with Iran, which gives American, British, and French oil companies 40% ownership of the nationalized oil industry after overthrowing Mohammed Mosaddegh that nationalized the Britain-owned Anglo-Persian Oil Company, and other similar type of deals across the region. The US became the main weapons provider for the armies in the region, including “Israel”. This was in exchange for natural resources and compliance with American national security interests. Because of “Israel’s” usurper nature and its history of instigating friction, the USA had to make sure that “Israel” always had the upper hand over the rest of its regional allies. As a result, “Israel” became the policeman of the region. As Joe Biden has said before; “If there were not an Israel, we would have to invent one to make sure our interests were preserved”. By that time, the first world was engaging in the third industrial revolution (electronics, telecommunications, and computers).
Our region never took part in these industrial revolutions, as it relied on importing products and technologies from abroad rather than producing them. The capital required to import products and technologies coming from the sale of natural resources. With all this in mind, we can conclude that the relationship between the Middle East and the West is a relationship of “the buyer and supplier”. The West supplies technology, products, and armament while the region provides natural resources in return. This relationship exposes the region to extortion as it is unable to survive without foreign technology and products because it doesn’t have the industries or the knowledge. The Middle East region completely depends on the Americans and their allies to function.
The Iranian revolution and independence
A major change came into the region with the Iranian Islamic revolution coming into play. Iran became the first country to break free from the “buyer and supplier” relationship by engaging in a local industrial revolution across many sectors, with the military sector being the most important one. Having an indigenous military industry is the key to true independence. It allows countries to truly rely on themselves for their security instead of relying on foreign powers that always impose conditions which limits sovereignty.
Iran today creates its own vehicles, weapons, medicine, robots, satellites, food, energy, along with various other resources. Iran reverse-engineered what it could, sent students abroad to study technology and return to Iran with full knowledge and capability. The entire nation is engaged in being self-built. Iran is in the process of creating its own civilization, just like the US, China, and Russia are also doing. Any nation that breaks free from its client-status and elevates itself to self-sufficiency is seen as a threat to the United States’ dominance over markets across the globe. It is the reason why the US views China and Russia as enemies.
The regional resistance
Regional resistance groups such as Hamas, Hezbollah and the Iraqi Popular Mobilization Forces were created by locals in response to the foreign Israeli and American invaders. Naturally, the only country that could supply them with weapons is Iran since its weapons are locally produced and not under the jurisdiction of the US like the rest of region. They also have the same interests as Iran, which is to break free from the American-Israeli hegemony. The initial stage in these resistance groups is always “The Armed-Struggle” which is necessary to their survival.
The next stage of the resistance is working towards a revolutionary approach to gain independence from the foreign imposed buyer and supplier system. This quest for independence directly clashes with American security and economic interests in the region and the world. Given the buyer and supplier relationship between the US and the countries in the region, it automatically puts those countries in a collision course with Iran and any group or country that is seeking independence. Syria was one of the very few Arab countries that had local civilian industries – and they got intentionally dismantled by the NATO-backed mercenaries during the war; especially in Aleppo where thousands of factories were lost.
The interest of the people
With the previous concepts in mind, we understand that the ultimate interest of any nation should be working towards as much self-sufficiency as its capability (utilizing the available resources it has, and working with other nations that are seeking the same goals). This is how nations contribute to humanity, share their cultures, and limit foreign powers from deciding their fate.
Seeking these goals however comes at a great cost: the people must be ready to face sanctions and possible military actions. To limit the effect of sanctions, all the nations of the region that decide to take this path would have to fully co-operate with each other; to share resources and support each other. The region has enough natural and human resources to become independent from foreigners. A lot of sacrifices have to be made, but this is the key to long-term development, security, and prosperity.
Role of the media
The media plays a large part in influencing and educating people about their own interests, which people are often unaware of. To achieve this revolution for independence, the people need to understand why they’re resisting “Israel” and the United States. Apart from the humanitarian and religious reasons, the ultimate goal of this resistance is to start the process of civilization and nation-building. The goal of the American hegemony is to prevent the rise of nations that will become future competitors in the international arena. There is still a big lack of awareness on such important subjects because the region is engulfed in religious, tribal, and ethnic wars.
A lot of work needs to be done to raise awareness and to unite people towards these goals, which are way beyond religious, humanitarian, and justice considerations. These are goals that can unite the multi ethnic and multi religious region. It is definitely in the best interest of the people of the region to resist “Israel” and the United States. Although the revolution will take a long time, and although it comes at a great cost; if the revolution is achieved, the final outcome will be the rise of the Middle East and North Africa as global competitors. The opinions mentioned in this article do not necessarily reflect the opinion of Al mayadeen, but rather express the opinion of its writer exclusively.
News – Middle East: Oil prices rose, Monday, after the Yemeni Armed Forces announced the implementation of a large-scale military operation in the depths of Saudi Arabia, which targeted the facilities of the Saudi oil company “Aramco” in Jeddah and Jubail.
According to “RT” website, oil prices changed direction after the announcement of the operation, as they were in the red trading, in the morning.
According to Bloomberg data, US West Texas Intermediate crude rose 0.22% to $ 59.45 a barrel, while Brent crude rose 0.38% to $ 63.19 a barrel.
The Yemeni armed forces announced, earlier, Monday, the implementation of the “Thirty of Shaaban” operation, in response to the escalation of US-Saudi aggression and its unjust siege.
News – Yemen: Yemeni Armed Forces announced, Monday, the implementation of the “Thirty of Shaaban” operation, which targeted the Saudi depth, in response to the escalation of the US-Saudi aggression and its unjust siege.
The Armed Forces spokesman, Brigadier General Yahya Sare’e, said in a statement that Thirty of Shaaban Operation was carried out by 17 drones and ballistic missiles.
He indicated that Aramco’s refineries in Jeddah and Jubail were hit with 10 Sammad-3-type drones, and sensitive military sites in Khamis Mushait and Jizan regions were also hit with 5 Qasif-2k-type drones and two Badr 1 ballistic missiles.
He pointed out that the operation lasted from yesterday evening until dawn today, Monday, and it has successfully achieved its objectives.
The Yemeni armed forces reiterated that their operations are continuing and escalating as long as the aggression and siege on our country continues.
We can see the ongoing war against Russia’s energy industry as an act of revenge from the Empire – but a war which it is losing.
After Putin prevented the looting of the country’s energy reserves in the early 2000s, this economic war was launched, designed to cripple the nascent Russian Federation’s oil and gas industry and by extension the Russian economy as a whole.
This plan began with the planning of the Trans-Caspian, Nabucco, and Baku Tbisili Ceyhan (BTC) pipelines. The BTC pipeline was erected in 2005, pumping oil from Azerbaijan’s Caspian Sea fields through Georgia to Turkey. Next, the planned Nabucco pipeline would have brought Azeri gas from the BTC to the Baumgarten gas hub in Austria, where it would circumvent Europe’s need for Russian energy. As a final blow by NATO, the Trans-Caspian pipeline was intended to cross the Caspian Sea, bringing Turkmen gas and oil to Azerbaijan and eventually to Europe through the BTC and Nabucco routes, isolating Russia.
The Russo-Georgian war can also be understood through this lens. Two days before the outbreak of the conflict, the BTC pipeline suffered from a mysterious explosion. Putin’s victory in the war and subsequent occupation of South Ossetia and Abkhazia held the Nabucco and Trans-Caspian projects at risk, as Western energy corporations would no longer invest in such an expensive undertaking only miles from a conflict zone. The plans were scuttled. Russia’s oil giant Gazprom now signs deals to purchase Turkmen gas directly in order to disincentivize Turkmenistan from taking part in such a future project.
And while we see the reintegration of Crimea as the return of historically Russian territory, it was also a major victory in the energy war. In the Crimean conflict, Putin’s nightmare was that the overthrow of Yanukovych would be followed by the eventually weakening or removal of Russian military positions on the energy-rich Black Sea. A strengthened position in Crimea was leveraged in the creation of the TurkStream pipeline, which then allowed Russia to bypass Ukraine by shipping gas under the Black Sea to Europe.
Russia’s standing in the pipeline battle has been further cemented by recent events regarding the NordStream 2 pipeline, which will bring Russian gas through the Baltic Sea to Germany. Naturally, America is not a fan of this project and has sought to delay the construction by any means possible.
But even Germany, no friend of Putin or Russia, has pushed ahead with the project. Gazprom will now complete the pipeline alongside partners from British, Dutch, Austrian, and German energy companies. And while America may disapprove from afar, all America exports is its fiat dollar which can offer no substitute for the Russian gas and oil required to power Germany’s industrial clusters.
In December of 2020, Gazprom resumed construction on the pipeline despite America’s protestations. In fact, the German-Prussian state of Mecklenburg Vorpommern has recently voted to create a sanction-proof legal structure that would preempt future attempts by America to interrupt the project.
What a turn of fate: to see America’s omnipotence fade as the Empire’s geopolitical meddling is simply circumvented by peaceful trade
So while Russia’s victory in the pipeline battle has been unequivocal, the war has been fought in other domains. For the last 6 years the Empire has won the pricing battle, with its two primary weapons being the oil of Saudi Arabia and the natural gas produced by the shale revolution.
The oil price battle began when John Kerry and the Saudi King met in September of 2014. An arrangement was worked out where the Saudis would suppress crude prices to weaken the Russian economy in exchange for America’s military support in overthrowing Bashar al-Assad. Because Saudi Arabia has the lowest extraction costs of any major producer (3$ per barrel as of 2020), it can profit at prices much lower than its higher-cost oil-producing opponents such as Russia, Iran, and Syria. Under this new arrangement, crude prices fell to new lows as ISIS was spawned in Eastern Syria, and the Free Syrian Army was given American heavy weapons.
The Russian economy shrank almost 40% over the next two years. By comparison, America’s “Great Recession” almost crushed the entire financial system after a mere 2.5% drawdown in GDP. Russia was able to withstand the enormous contraction because under Putin the country’s monetary policy is focused on maintaining net-zero debt: a far cry from the 1990s when Saudi price-suppression (intended to punish Russia for fighting Islamists in Chechnya) hammered down crude prices and resulted in the 1998 Russian financial crisis. Now that Russia operates without external debt, these price tactics are harmful to the populace but no longer imperil the functioning of the state.
While 2020 has seen a renewal of price suppression by the Saudis, the Kingdom’s long-term prospects are plummeting. Below Saudi Arabia sits the state of Yemen. As the high birth rate outstrips the supply of natural resources, Yemen produces an excess of poor and radicalized young men. In response to Saudi and American airstrikes, the Houthi movement has united Shia and Sunni Muslims in Yemen under a common banner against their northern neighbor. Now Yemeni rebels are targeting Saudi oil facilities with increasingly frequent drone strikes, one of which spiked oil prices by almost 20% in Sep 2019.
Another problem for Saudi Arabia is resource depletion. The Saudis are systematically lying about the amount of oil that’s remaining. Leaked communications showed the former VP of Aramco warning the US that their oil reserves could actually be 40% lower than claimed. Consensus used to be that the Ghawar field had 5 million barrels per day capacity. The IPO filing for Aramco revealed a maximum capacity of 3.8 million barrels per day: and that’s their biggest field, producing a third of the nation’s oil output.
If their oil reserves are fine, why has the Kingdom been panickedly talking about economic diversification for the past 5 years? Why did Aramco even have to IPO? America’s vassal state in the crude oil battle seems to be drying up.
Another weapon in the energy price war has been the shale gas revolution. New advancements in horizontal drilling and hydraulic fracturing have allowed America to access previously hard to reach “tight” oil and gas reserves. As many small and mid-sized fracking operations rapidly set up shop in the mid 2010s this flooded the world with cheap natural gas and lowered Russia’s energy earnings. However, many of these firms were unprofitable and existed only due to the ultra-low interest rates available at the time, which enabled companies to operate at a loss for several years: meaning that the profitless shale revolution which hurt Russia was de facto financed by the Federal Reserve.
The fall of US shale seems to be on the horizon, as the industry showed signs of huge weakness in 2020. Oil and gas bankruptcies have quadrupled from 2019 to 2020, and production levels from America’s largest fields have dwindled. The Eagle Ford field is down 30% from 2019, Niobrara is down 35%, and Anadarko is down 40%! The best case for America is that these were voluntary production drawdowns due to cheap prices. The worst case is that these are symptoms of the end stage of depletion – the same fate befalling Saudi Arabia.
Even if the large American fields return to their previous production levels, this wave of bankruptcies will remove many small producers from the market who were essentially drilling at an operating loss for years.
There are other developments that suggest that the Empire is losing the energy war
1. Nikol Pashinian, who targeted Gazprom in Armenia with spurious lawsuits, has been given a black eye by Putin. By brokering the Armenian-Azeri peace deal the Russian military now permanently occupies the Caucasus. Anyone who seriously believes it is limited to 5 years should look to the “temporary peacekeeping operations” that have kept Russian troops stationed in the tiny nation of Transnistria for almost 3 decades. Russia’s position in the region – a crucial energy hub, is now stronger than at any other point since the Soviet Union.
2. In defiance of US sanctions, Iran has restarted its domestic shipbuilding industry by constructing new oil tankers with natively sourced parts. New Aframax size tankers have the capacity to hold 750,000 barrels of crude oil and will be used to surreptitiously deliver oil to Iran’s trading partners
3. Despite feeble efforts by Washington to install Juan Guaido in Venezuela – the only country with comparable energy reserves to Saudi Arabia, Maduro is still in power, and Russia and China are now collaborating to circumvent US sanctions. Throughout 2020, crude from Venezuela arrived at Chinese ports, having been snuck past American detection with the aid of Russian state oil company Rosneft, which made the oil appear as if its port of origin was Malaysia.
So what are the takeaways from these events?
First, we can see that Europe is waking up to the necessity of Russian energy. Despite all America’s bluster, it cannot provide a viable alternative even for the countries with which it aligns ideologically. Sure, there will be haphazard attempts like squirreling tight gas from cracks in the Mediterranean Sea, but those are at best partial solutions. Second, sanctions have backfired: the Russian economy is now fully resilient and profitable. There is no further way to wage economic warfare on a nation that has already been isolated from the global financial system. As far as oil trading is concerned, the willingness of America to impose restrictive sanctions has been matched by the creativity of those hoping to bypass them. Finally, the toughest period of the price war seems to be over and the pipeline battle has been won.
The Empire’s diminishing position in this conflict
Nikol Pashinian who targeted Gazprom is out – and Russia now occupies the Caucasus
Yemeni Armed Forces Spokesman Brigadier General Yehya Saree announced that Yemen’s Ansaurllah revolutionary movement targeted the Saudi Aramco oil company in the Red Sea city of Jeddah.
Brigadier General Saree said Yemeni fighters fired a ‘Quds 2’ missile at a distribution station of Aramco on Monday.
“With God’s help and support, the missile force was able to target the Aramco distribution station in Jeddah with a Quds 2 missile, which entered service recently after successful operational experiments in the Saudi depth, which have not been announced yet,” Saree tweeted on Monday.
He also informed that the missile hit the target accurately, forcing ambulances and firefighting vehicles to rush to the targeted area immediately.
News – Yemen: The spokesman for the Armed Forces, Brigadier General Yahya Sare’e, announced that the Rocketry Force targeted Aramco’s distribution station in Jeddah with a winged missile Quds-2, which is announced for the first time.
Brigadier General Sare’e confirmed in a press statement at dawn, Monday, that the missile targeted its target accurately, and ambulances and firefighting vehicles rushed to the targeted place.
He pointed out that the missile Quds 2 is from a new generation of winged missiles produced by the Yemeni Rocketry Force, had been used recently after successful operational tests targeting the Saudi depth in operations that had not been announced yet.
The spokesman of the Armed Forces indicated that the operation comes in response to the continuation of the siege and aggression, and in the context of what the Armed Forces had promised earlier to implement large-scale operations in the depths of Saudi Arabia.
The Brigadier General call on all civilians and foreign companies in Saudi Arabia, to move away from important vital installations, stressing that the operations in Saudi depth continues.
Legislation circulating in the US Congress threatens to withdraw military support from Saudi Arabia.
This is not because Saudi Arabia is an absolute dictatorship which still severs heads off in public. It is not because Saudi Arabia arms and funds some of the worst terrorist organizations on Earth – including Al Qaeda, its Syrian franchise Tahrir al-Sham – previously known as Jabhat Al Nusra, and the Islamic State in Iraq and Syria (ISIS).
And it’s not even because of Saudi Arabia’s years of committing war crimes in neighboring Yemen.
These are all aspects of modern Saudi Arabia the US has in fact aided and abetted.
Instead, US representatives are threatening to withdraw US military support from Saudi Arabia for allegedly lowering energy prices by flooding markets with Saudi oil.
A Republican US senator introduced legislation on Thursday to remove American troops from Saudi Arabia, adding pressure on the kingdom to tighten its oil taps to reverse the crude price drop that has hurt domestic energy companies.
The threat of yanking out military support from Saudi Arabia undermines decades of propaganda attempting to justify US military support for the Saudi regime.
According to the US State Department’s own website under a section titled, “US Relations With Saudi Arabia,” the US supports Saudi Arabia because (emphasis added):
The United States and Saudi Arabia have a common interest in preserving the stability, security, and prosperity of the Gulf region and consult closely on a wide range of regional and global issues. Saudi Arabia plays an important role in working toward a peaceful and prosperous future for the region and is a strong partner in security and counterterrorism efforts and in military, diplomatic, and financial cooperation. Its forces works closely with US military and law enforcement bodies to safeguard both countries’ national security interests.Securing US Interests Through US Military Build-up in Saudi Arabia
If anything the US State Department says about US-Saudi relations is true – “preserving the stability, security, and prosperity of the Gulf region” must surely come first and foremost – especially ahead of something as trivial as oil profits for America’s domestic shale industry.
Of course, very little the US State Department says is ever true. US ties with Saudi Arabia have helped drive precisely the opposite of stability, security, and prosperity for both the Persian Gulf region as well as the wider Middle East and even as far as North Africa and Central Asia – with both nations playing leading roles in destabilizing and destroying nations, fueling extremism, separatism, and terrorism, and even engaging in direct military aggression.
Because of the dubious nature of US-Saudi ties and the true agenda of money and power that defines them – there should be little surprise that at moments of opportunity, these two “allies” draw geopolitical and economic daggers against one another.
The US threatening to withdraw military support from Saudi Arabia would leave Riyadh particularly vulnerable in the many proxy wars it wages on Washington’s behalf against Iran, Syria, Yemen, and beyond. Of course – the ultimate loser would be Washington itself – which would be further isolating itself in a region increasingly slipping out from under its control.
The US finds itself trying to prioritize its various rackets – its domestic shale gas industry versus its protection rackets abroad, versus its profitable and endless wars, versus maintaining a collection of obedient client regimes around the globe.
But by threatening Saudi Arabia – whether the threat is empty or not – Washington once again reveals to the world that it maintains an international order exclusively serving special interests – using platitudes like “preserving the stability, security, and prosperity of the Gulf region” as an increasingly tenuous facade behind which it advances its self-serving agenda.
Saudi Arabia – despite its many, many sins and from a realist point of view – must begin seriously thinking about a major overhaul of its economic, political, diplomatic, and military alignment within the region and world. As multipolarism moves forward and the tired unipolar order Riyadh belongs to – subordinated to Washington – continues to fade, the threats Riyadh faces will increase as will the cost of being an American “ally.”
When Washington begins turning the screws on Riyadh, it does however open a window of opportunity for nations like Russia and China who are looking to improve and expand ties with Saudi Arabia and lead it toward a more constructive role upon the international stage.
It also opens a window of opportunity for nations like Iran – who are perceived as enemies of Saudi Arabia – but who would benefit greatly from a Saudi Arabia that no longer serves US interests and instead truly seeks to preserve “the stability, security, and prosperity” of the region – side-by-side with other nations that actually are located there – not a nation located oceans and continents away.
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Tony Cartalucci is a Bangkok-based geopolitical researcher and writer, especially for the online magazine “New Eastern Outlook” where this article was originally published. He is a frequent contributor to Global Research.
On March 10th, Kuwait and Iraq, as well as the UAE joined Saudi Arabia in reducing oil prices. Iraq cut the official selling price for its Basrah Light crude for buyers in Asia by $5 a barrel for April shipments.
That’s less than the $6 reduction for Aramco’s comparable Arab Medium grade. Kuwait reduced its selling price to Asian customers by the same as the Saudis.
The UAE, the only major producer that still sets prices retroactively, lowered the cost of its four grades for February sales by $1.63 a barrel from January.
“Any price war to acquire the largest market share does not serve the interests of the producing countries,” Iraqi Oil Ministry spokesman Asim Jihad said. His country is trying to bridge oil producers’ viewpoints to reach a deal to stabilize and rebalance markets, he said in a statement.
Iraq’s state oil-marketing company, SOMO, plans to increase exports in April, according to an unnamed person, cited by Bloomberg.
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Kuwait set its April Export Crude OSP for Asian customers at a $4.65 a barrel discount to the regional benchmark, according to a price list seen by Bloomberg. That’s 60 cents lower than Aramco’s Arab Medium and $1.45 below than Iraq’s Basrah Light to the region. Kuwait’s exports to Northwest Europe were set at a record-low of a $12.60 discount.
Meanwhile, Riyadh is continuing on its “warpath” and is about to flood Europe with crude oil at a price of about $25 per barrel. The Saudi shipments, coupled with unprecedented discounts, are turning the European oil market into a major price battlefield.
Diplomatic and OPEC sources quoted by mainstream media directly say that the ongoing Saudi-led effort to crush the oil market is a pre-planned ‘agressive campaign’ against Russia. One of the main targets is the Russian ability to sale oil to Europe. The fall of oil prices allready caused a major fall of the Russian ruble and impacted negatively the Russian economy.
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European refiners including Royal Dutch Shell Plc, BP Plc, Total SA, OMV AG, Repsol SA and Cepsa SA have all received crude allocations from state-owned Saudi Aramco significantly above their normal levels, according to sources cited by Bloomberg.
The increase in volumes, known in the industry as nominations, was confirmed by Aramco to the European oil companies on Wednesday, the same people said, asking not to be named discussing private information. One of Europe’s major refiners got double its normal allocation, an unnamed source said.
Aramco cut its official selling prices by the biggest amount in more than three decades. The company made its biggest cuts for buyers in northwest Europe. An $8 a barrel reduction in most grades amounts to a direct challenge to Russia, which sells a large chunk of its flagship Urals crude in the same region.
Aramco will sell Arab Light at an unprecedented $10.25 a barrel discount to Brent in Europe.
Discounts for Russian crude immediately ballooned. Vitol Group and Trafigura Group Ltd. failed to find buyers on March 9th when they offered to sell Urals crude at the deepest discounts to a regional benchmark in almost two months.
Currently, the two countries who are suffering most from the oil war are Russia and Iran, both are also under heavy sanctions by the US. Iran’s oil sector is especially crippled owing to Washington’s “maximum pressure” campaign.
In Iraq, which as above mentioned is a major oil producer, a camp housing US-led coalition troops was hit by more than a dozen Katyusha rockets. The Taji base was hit and two US marines, as well as a British soldier were killed in the attack.
“Three Coalition personnel were killed during a rocket attack on Camp Taji, Iraq, March 11. The names of the personnel are withheld pending next of kin notification, in accordance with national policies,” the statement said.
“Approximately 12 additional personnel were wounded during the attack. The attack is under investigation by the Coalition and Iraqi Security Forces. Camp Taji is an Iraqi base that hosts Coalition personnel for training and advising missions,” it added.
A spokesperson for the UK Ministry of Defense said, “We can confirm we are aware of an incident involving UK service personnel at Camp Taji, Iraq. An investigation is underway, it would be inappropriate to comment further at this time.”
Iraq is a hot point in tensions between the US and Iran.
Furthermore, on March 11th, the US House of Representatives approved War Powers resolution, which would require US President Donald Trump receive Congressional approvement for any attacks launched against Iran. He is, however, likely to veto it.
Regardless, this means that if, for example, Yemen’s Houthis strike Aramco’s infrastructure again, and both Riyadh and Washington blame Iran, Trump will have less options in the military sphere and face much more political pressure if he opts such a move. So, one could say that the Washington political establishment is limiting the freedom of actions of the Trump administration against Iran, but, at the same time, keeps the window of opportunities for anti-Russian actions open.
Taking into account that recentl US threatened Russia with more sanctions (this time over the situation in Idlib) and the US mainstream media is in the state of constant anti-Russian hysteria, US ‘experts and analysis’ will easily find the ‘Russian trace’ in any escalation in the Middle East or any other place around the world.They already found that the Kremlin should be blamed for the ongoing oil prices collapse, despite Russia being one of the most affected parties. This happens amid the ongoing consitutional reform in Russia itself. Pro-Western forces inside Russia and the neo-liberal part of the Russian elites are actively trying to use this reform to destabilize the situation in the country and turn its course in what they call the ‘right direction’ (the surrender of the national interests to the global capital). These forces as well as their foreign backers are openly interested in the escalation of tensions between the United States and Russia.
Is the planet under the spell of a pair of black swans – a Wall Street meltdown, caused by an alleged oil war between Russia and the House of Saud, plus the uncontrolled spread of Covid-19 – leading to an all-out “cross-asset pandemonium” as billed by Nomura?
Or, as German analyst Peter Spengler suggests, whatever the averted climax in the Strait of Hormuz has not brought about so far “might now come through market forces”?
Let’s start with what really happened after five hours of relatively polite discussions last Friday in Vienna. What turned into a de facto OPEC+ meltdown was quite the game-changing plot twist.
OPEC+ includes Russia, Kazakhstan and Azerbaijan. Essentially, after enduring years of OPEC price-fixing – the result of relentless US pressure over Saudi Arabia – while patiently rebuilding its foreign exchange reserves, Moscow saw the perfect window of opportunity to strike, targeting the US shale industry.
Shares of some of these US producers plunged as much as 50% on “Black Monday.” They simply cannot survive with a barrel of oil in the $30s – and that’s where this is going. After all these companies are drowning in debt.
A $30 barrel of oil has to be seen as a precious gift/stimulus package for a global economy in turmoil – especially from the point of view of oil importers and consumers. This is what Russia made possible.
And the stimulus may last for a while. Russia’s National Wealth Fund has made it clear it has enough reserves (over $150 billion) to cover a budget deficit from six to ten years – even with oil at $25 a barrel. Goldman Sachs has already gamed a possible Brent crude at $20 a barrel.
As Persian Gulf traders stress, the key to what is perceived in the US as an “oil war” between Moscow and Riyadh is mostly about derivatives. Essentially, banks won’t be able to pay those speculators who hold derivative insurance against a steep decline in the price of oil. Added stress comes from traders panicking with Covid-19 spreading across nations that are visibly unprepared to deal with it.
Watch the Russian game
Moscow must have gamed beforehand that Russian stocks traded in London – such as Gazprom, Rosneft, Novatek and Gazprom Neft – would collapse. According to Lukoil’s co-owner Leonid Fedun, Russia may lose up to $150 million a day from now on. The question is for how long this will be acceptable.
Still, from the beginning Rosneft’s position was that for Russia, the deal with OPEC+ was “meaningless” and only “cleared the way” for American shale oil.
The consensus among Russian energy giants was that the current market setup – massive “negative oil demand,”positive “supply shock” and no swing producer – inevitably had to crash the price of oil. They were watching, helplessly, as the US was already selling oil for a lower price than OPEC.
Moscow’s move against the US fracking industry was payback for the Trump administration messing with Nord Stream 2. The inevitable, steep devaluation of the ruble was gamed.
Still, what happened post-Vienna essentially has little to do with a Russia-Saudi trade war. The Russian Energy Ministry is phlegmatic: Move on, nothing to see here. Riyadh, significantly, has been emitting signs the OPEC+ deal may be back in the cards in the near future. A feasible scenario is that this sort of shock therapy will go on until 2022, and then Russia and OPEC will be back to the table to work out a new deal.
There are no definitive numbers, but the oil market accounts for less than 10% of Russia’s GDP (it used to be 16% in 2012). Iran’s oil exports in 2019 plunged by a whopping 70 %, and still Tehran was able to adapt. Yet oil accounts for over 50% of Saudi GDP. Riyadh needs oil at no less than $85 a barrel to pay its bills. The 2020 budget, with crude priced at $62-63 a barrel, still has a $ 50 billion deficit.
Aramco says it will be offering no fewer than 300,000 barrels of oil a day beyond its “maximum sustained capacity” starting April 1. It says it will be able to produce a whopping 12.3 million barrels a day.
Persian Gulf traders say openly that this is unsustainable. It is. But the House of Saud, in desperation, will be digging into its strategic reserves to dump as much crude as possible as soon as possible – and keep the price war full tilt. The (oily) irony is that the top price war victims are an industry belonging to the American protector.
Saudi-occupied Arabia is a mess. King Salman is in a coma. Every grain of sand in the Nefud desert knows Jared of Arabia Kushner’s whatsapp pal MBS has been de facto ruler for the past five years, but the timing of his new purge in Riyadh speaks volumes. Princes Mohammed bin Nayef, the king’s nephew, and Ahmed bin Abdulaziz, his younger brother, are now really in detention.
The CIA is fuming: Nayef was and remains Langley’s top asset. When Saudi regime spin denounced “Americans” as partners in a possible coup against MBS, that word needed to be read as “CIA.” It’s just a matter of time before the US Deep State, in conjunction with disgruntled National Guard elements, comes for MBS’s head – even as he articulates taking over total power before the G-20 in Riyadh next November.
Black Hawk down?
So what happens next? Amid a tsunami of scenarios, from New York to all points Asia, the most optimistic say that China is about to win the “people’s war” against Covid-19 – and the latest figures confirm it. In this case, global oil demand may increase by at least 480,000 barrels a day.
Well, that’s way more complicated.
The game now points to a confluence of Wall Street in panic; Covid-19 mass hysteria; lingering, myriad aftershocks of Trump’s global trade mess; the US election circus; total political instability in Europe. These interlocked crises do spell Perfect Storm. Yet the market angle is easily explained: that may be the beginning of the end of Wall Street artificially inflated by tens of trillions of US dollars pumped by the Fed through quantitative easings and repos since 2008. Call it the calling of the central bankers’ bluff.
A case can be made that the current financial panic will only subside when the ultimate black swan – Covid-19 – is contained. Borrowing from the famous Hollywood adage, “No one knows anything,” all bets are off. Amid thick fog, and discounting the usual amount of disinformation, a Rabobank analyst, among others, came up with four plausible Covid-19 scenarios. He now reckons it’s getting “ugly” and the fourth scenario – the “unthinkable” – is not far-fetched anymore.
This implies a global economic crisis of, yes, unthinkable magnitude.
To a great extent it will all depend on how fast China – the inescapable crucial link in the global just-in-time supply chain – gets back to a new normal, offsetting interminable weeks of serial lockdowns.
Despised, discriminated against, demonized 24/7 by the “system leader,” China has gone full Nietzsche – about to prove that whatever does not kill you makes you stronger when it comes to a “people’s war” against Covid-19. On the US front, there’s scant hope that the gleaming Black “helicopter money” Hawk will crash down for good. The ultimate Black Swan will have the last word.
Saudi Arabia launched an all-out oil war offering unprecedented discounts and flooding the market in an attempt to capture a larger share and defeat other oil producers. This “scorched earth” approach caused the biggest oil price fall since the war in the Persian Gulf in 1991.
It all began on March 8 when Riyadh cut its April pricing for crude sales to Asia by $4-$6 a barrel and to the U.S. by $7 a barrel. The Kingdom expanded the discount for its flagship Arab Light crude to refiners in northwest Europe by $8 a barrel offering it at $10.25 a barrel under the Brent benchmark. In comparison, Russia’s Urals crude trades at a discount of about $2 a barrel under Brent. These actions became an attack at the ability of Russia to sell crude in Europe. The Russian ruble immediately plummeted almost 10% falling to its lowest level in more than four years.
Another side that suffered from Saudi actions is Iran. The Islamic country is facing a strong US sanctions pressure and often selling its oil via complex schemes and with notable discounts already.
Saudi Arabia is planning to increase its output above 10 million barrel per day. Currently, it pumps 9.7 million barrels per day, but has the capacity to ramp up to 12.5 million barrels per day. According to OPEC and Saudi sources of The Wall Street Journal, Riyadh’s actions are part of an “aggressive campaign” against Moscow.
The formal pretext of this campaign became the inability of the OPEC+ (a meeting of representatives of member states of the Organization of the Petroleum Exporting Countries and non-OPEC members) to extend output agreements.
Saudi Arabia was seeking up to 1.5 million b/d in further oil production cuts, but this proposal was rejected by Russia. After the inability to reach the new OPEC+ deal, Saudi Arabia became the frist and only power that took aggressive actions on the market. However, it is hard to imagine that Saudi Arabia would go for such an escalation without at least an order or approval from Washington.
This came amid the detention of two senior members of the Saudi royal family – Prince Ahmed bin Abdulaziz, the younger brother of King Salman, and Mohammed bin Nayef, the king’s nephew – on March 7. This development took place just ahead of the Saudi offensive on the oil market, and was likely a tip of the ongoing undercover struggle between the pro-US and pro-national factions of the Saudi elites; and the pro-US bloc seems to have the upper hand in this conflict.
In this case, the real goal of the Saudi campaign is not only to secure larger share of the oil market and punish Moscow for its unwillingness to accept the proposed OPEC+ deal, but to deliver a powerful blow to Washington’s geopolitical opponents: Russia and Iran. Pro-Western and anti-government forces existing in both Russia and Iran would try to exploit this situation to destabilize the internal situation in the countries.
On the other hand, Saudi Arabia may soon find out that its actions have backfired. Such economic and geopolitical games amid the acute conflict with Iran, military setbacks in Yemen and the increasing regional standoff with the UAE could cost too much for the Kingdom itself.
If the oil prices fall any further and reach $20 per barrel, this will lead to unacceptable economic losses for Russia and Iran, and they could and will likely opt to use nonmarket tools of influencing the Saudi behavior. These options include the increasing support to Yemen’s Houthis with intelligence, weapons, money, and even military advisers, that will lead to the resumption of Houthi strikes on Saudi oil infrastructure.
On top of these, the Saudi leadership may suddenly find that the internal situation in the Kingdom is being worsened by large-scale protests rapidly turning into an open civil conflict.
Such a scenario is no secret for international financial analysts. On March 8, shares of Saudi state oil company Aramco slumped below their initial public offering (IPO) and closed 9.1% lower. On March 9, it continued the fall plunging another 10%. There appears to be a lack of buyers. The risks are too obvious.
At the same time, the range of possible US actions in support of Saudi Arabia in the event of such an escalation is limited by the ongoing presidential campaign. Earlier, President Donald Trump demonstrated that a US military base could become a target of direct missile strike and Washington will not order a direct military action in response. Taking into account other examples of the US current approach towards non-Israeli allies, Riyadh should not expect any real support from its American allies in this standoff.
تمثّل عملية ينبع قفزة نوعية إضافية في مسار «عام الحسم» (أ ف ب )
بعد عمليتَي «توازن الردع» الأولى والثانية اليمنيتَين، جاءت العملية الثالثة التي استهدفت مواقع حيوية في محافظة ينبع السعودية على البحر الأحمر، لتُبطِل رهانات الرياض، ومِن خَلفها واشنطن، على إمكانية إخضاع اليمنيين بسياسة الخداع التي امتدّت على مرّ الأشهر الماضية، ولتثبت استعداد الجيش اليمني واللجان الشعبية للذهاب بعيداً في استراتيجية الهجوم التدريجيعشية اجتماع وزراء المالية ومحافظي البنوك المركزية في «مجموعة العشرين» في الرياض، وتزامناً مع زيارة وزير الخارجية الأميركي مايك بومبيو إلى السعودية والتي طغت عليها المواقف التصعيدية، أوصلت قيادة صنعاء رسالة «توازن الردع الثالثة»، باستهدافها مواقع حيوية في محافظة ينبع السعودية على البحر الأحمر. رسالةٌ، وإن جاءت ردّاً على المجزرة التي أودت بحياة 40 مدنياً معظمهم نساء وأطفال في مديرية المصلوب بالجوف (15 شباط/ فبراير الجاري) والتي ارتكبها «التحالف» انتقاماً لإسقاط الجيش اليمني واللجان الشعبية طائرة «تورنيدو» تابعة له، إلا أنها في سياقها الأعمّ تأتي كتحذير للرياض وواشنطن من أن سياسة «شراء الوقت» لا يمكن أن تستمرّ إلى ما لا نهاية، ومحاولة لإفهامهما بأن الاعتقاد بقدرتهما على تحييد «أنصار الله» بالمماطلة والتسويف لا يعدو كونه وهماً.
وفي عملية هي الأولى من نوعها منذ دخول المبادرة التي أعلنها رئيس «المجلس السياسي الأعلى» في صنعاء، مهدي المشاط، في الـ20 من أيلول الماضي، والتي اقترحت وقف استهداف السعودية بالطائرات المسيّرة والصواريخ الباليستية مقابل وقف غارات طيران «التحالف» على الأراضي اليمنية، نفذت قوة الصواريخ وسلاح الجوّ المسيّر في الجيش اليمني عملية نوعية ضدّ ثمانية أهداف في عمق المدينة الصناعية السعودية في ينبع. ووفقاً لمصادر عسكرية في صنعاء تحدّثت إلى «الأخبار»، فإن من بين تلك الأهداف «محطة تصدير الزيت، ومصفاة أرامكو التي تنتج قرابة 2.5 مليون برميل نفط يومياً، ومصنع الغاز الطبيعي، وميناء ينبع القادر على تصدير 3 ملايين برميل نفط يومياً، وأيضاً تصدير مشتقات النفط والبتروكيماويات». وقالت المصادر إن «الأضرار كبيرة وفادحة، ولكن الجانب السعودي كعادته يرفض الاعتراف»، لافتاً إلى أن «استهداف منشآت على بعد قرابة 1000 كيلومتر من الحدود اليمنية يُعدّ رسالة واضحة على السعودية أن تفهمهما جيّداً، فما بعد ينبع سيكون أشدّ إيلاماً للنظام السعودي». من جهته، كشف المتحدث باسم القوات المسلحة اليمنية، العميد يحيى سريع، أن العملية نُفّذت باستخدام 12 طائرة مسيّرة من طراز «صماد 3»، وصاروخين مجنّحَين من نوع «قدس»، وصاروخ باليستي بعيد المدى من طراز «ذو الفقار»، لافتاً إلى أن الضربة جاءت «في إطار الردّ الطبيعي والمشروعِ على جرائم العدوان»، متوعّداً النظام السعودي بـ«ضربات موجعة ومؤلمة إذا استمرّ في عدوانه وحصاره». وفي الاتجاه نفسه، أكد الناطق باسم «أنصار الله»، رئيس وفدها التفاوضي محمد عبد السلام، أن «استهداف عمق مملكة العدوان يأتي في إطار الردّ الطبيعي والمشروع»، جازماً أن «شعبنا اليمني لن يتخلّى عن حق الردّ، ولن يسمح للعدو بأن يستبيح دمه من دون تدفيعه الثمن».
استُخدمت في العملية 12 طائرة مسيّرة وثلاثة صواريخ
في المقابل، اكتفى المتحدث باسم «التحالف»، تركي المالكي، بالقول إن «قوات الدفاع الجوي الملكي السعودي اعترضت صواريخ باليستية أطلقتها الميليشيا الحوثية الإرهابية المدعومة من إيران باتجاه مدن سعودية»، وفق ما نقلت عنه وكالة الأنباء الرسمية. وفيما أغارت طائرات «التحالف»، في أعقاب العملية، على مديريتَي نهم في صنعاء ومجزر في مأرب فضلاً عن قرى حدودية في محافظة صعدة، أجبرت السلطات السعودية عشرات الناشطين على حذف مشاهد الانفجارات في ينبع (والتي استمرّت لأكثر من نصف ساعة) مِن على حساباتهم، مُتوعّدة مَن يبقيها منهم بالعقوبات. وتأتي عملية ينبع لتبطل حسابات السعودية التي راهنت على إمكانية استغلال مبادرة المشاط، من أجل إرساء هدنة موقّتة تخوّلها تمرير استحقاقات داهمة على المستويين الداخلي والخارجي. حساباتٌ لمسها مفاوضو «أنصار الله» بوضوح أثناء المفاوضات التي جرت في خلال الأشهر الماضية على أكثر من مستوى وفي غير مكان، حيث وجدوا أن الرياض تحاول انتزاع تهدئة مجانية، وبسقف زمني مفتوح، من دون إبداء استعداد لأيّ خطوة جدّية من شأنها التمهيد لوقف العدوان ورفع الحصار والانخراط في مفاوضات سياسية وأمنية وعلنية. ولعلّ هذا هو ما عناه عضو وفد صنعاء التفاوضي، عبد الملك العجري، بقوله أمس إن «دول العدوان تثبت يوماً بعد آخر أنها غير قادرة على التعافي من تقديراتها الخاطئة»، وإنها «تخطئ مرة أخرى في النظر إلى مبادراتنا الإيجابية على أنها مجرد فرصة للدخول في تلهية تكتيكية… وترتيب أوضاعها الداخلية واستكمال الحصار».
وعلى مرّ الأشهر التي أعقبت إعلان مبادرة «المجلس السياسي الأعلى»، والتي جاءت على إثر عملية «توازن الردع الثانية» ضدّ منشأتَي «أرامكو» في بقيق وخريص شرقي السعودية (أدّت إلى تعطّل نصف الإنتاج السعودي من النفط)، لم ترسل المملكة أيّ إشارة إلى نيّتها التوطئة لإنهاء الحرب. إذ كان جلّ ما أقدمت عليه خطوتين يتيمتين: تمثّلت أولاهما في الموافقة على تسليم 200 مقاتل من «أنصار الله» مقابل إطلاق الأخيرة سراح عدد من الجنود السعوديين، ومع ذلك نكثت الرياض بعهدها ولم تطلق سوى 130 أسيراً يمنياً. أما الخطوة الثانية فهي قبول فتح جسر جوي طبّي لنقل المرضى من صنعاء إلى عمّان والقاهرة، لكن لم تُنفّذ من هذا الجسر سوى رحلة واحدة فقط في بداية الشهر الجاري، قبل أن تعلن «منظمة الصحة العالمية» تعثّر انطلاق الرحلة الثانية لأسباب وصفتها بـ«الفنية»، فيما هي في الحقيقة أسباب سياسية مرتبطة بإرادة السعودية إبقاء اليمن تحت الحصار الكامل.
وتمثل عملية ينبع قفزة نوعية إضافية في مسار «عام الحسم» (العام الخامس من العدوان) الذي انتقلت فيه «أنصار الله» من وضعية الدفاع البحت إلى وضعية الهجوم التدريجي، بدءاً من التقدّم الملحوظ في محافظتَي البيضاء والضالع، مروراً بالقضاء على التمرّد في منطقة الحجور في محافظة حجة، وصولاً إلى عملية «نصر من الله» في وادي آل جبارة في كتاف بصعدة، وليس انتهاءً بعملية «البيان المرصوص» في فرضة نهم ومديريات في الجوف ومأرب. وكان العميد سريع، أعلن، أواخر العام الماضي، عن بنك أهداف جديدة يشمل 6 مواقع «بالغة الأهمية» في السعودية، و3 مواقع في الإمارات، مُتوعّداً بـ«توسيع الأهداف لتشمل مراكز حيوية وحسّاسة على طول وعرض جغرافيا دول العدوان».
Yemeni Armed Forces Spokesman Brigadier General Yehya Saree held a press conference to announce details of the Operation ‘Firm Structure’ noting the operating started with confronting the Saudi-led aggression’s escalation.
Saree explained that Nihm witnessed military operations by the aggression forces, which pushed our forces to deal seriously with this threat.
In light of the success in the operation, the Yemeni forces went forward in their counter offensive along the operations field, Saree added.
“The main goal of the ‘Firm Structure’ operation was to deter the enemy forces and expel them out of the region, eventually securing the area entirely.”
Operation ‘Firm Structure’, Saree said, aimed at thwarting the offensive against our forces and advance towards the areas close to the capital Sanaa.
According the Yemeni Armed Forces intelligence, the enemy has been preparing for this operation since months ago, with the aim to reach the nearest area linked to Sanaa.
The enemy forces in Nihm were composed of 17 brigades, and a number of battalions that was supplied with different kinds of weapons, the statement added.
“An entire military zone of the enemy used Nihm as its platform,” Saree said, adding that Special Forces of the countries of the coalition of aggression were in charge of fire and intelligence support of the mercenaries force in Nihm.
Nihm is a mountainous area with complicated topography, Saree said, a matter that pushed the Yemeni Armed Forces to deploy Special Forces in the first days of the battle.
After the successful confrontation of the enemy forces’ offensive, the Yemeni Forces started a military offensive that was based on the collapse of the enemy’s forefronts, allowing our forces to advance towards the strategic heights, Saree added.
The Yemeni Forces, he added, succeeded in the operational duties in the first hours of the operation, before which the command ordered surrounding the enemy forces from different eastern and western tracks.
In the first three days of the operation, Saree explained, the Yemeni armed Forces secured most of the Nihm area, which include all of strategic sites.
The offensive was from the all four main sides and all branches which resulted in different tracks.
The Yemeni forces were keen to surround the enemy forces inclusively while opening other tracks to allow the most possible number of mercenaries flee the place.
Saree went on to say that the Yemeni Armed Forces made military pressure on all enemy’s sites and camps to force them to surrender.
At the same time, the Yemeni Armed Forces were keen on the Yemenis’ lives at the enemy’s sites, namely those who showed readiness to flee the battlefield.
They also succeeded in dealing with the enemy’s forces in clashes and direct fighting after giving them the chance to flee.
“With the defeat of the enemy forces, the Yemeni Armed Forces continued to advance beyond Nihm,” Saree stated.
As the Yemeni Forces were keen to save lives of the mercenaries, thousands of them were able to flee the battlefield in the first days.
The enemy’s warplanes, meanwhile, waged more than 250 strikes against the Yemeni Forces.
Elaborating on the Aerial Defense Units’ role in the Operation ‘Firm Structure’, Saree said the Fatir-1 missile system played a crucial role in confusing the warplanes and preventing them from launching airstrikes.
He further noted than the Aerial Defense system carried out more than 25 operations forcing the enemy’s aircrafts to leave the area.
“The command’s instructions were clear to strike Saudi facilities and military bases in response to the airstrikes.”
He also explained that the Rocketry Force and the Propelled Ai Force targeted many airports the enemy uses for military purposes, while the missile and aerial strikes targeted airports in Najran and Jizan in addition to targeting the Khamis Mushait base with a number of missiles.
Their first operations, he noted, only represented a warning, but the continuity of air bombing led to targeting an economic target of Aramco Company, in addition to two sensitive targets in the enemy’s depth. Saree also noted that the aforementioned forces played a crucial role reflecting the command’s instructions related to the deterrence strategy.
In further details, he said they carried out more than 41 inside and outside operations between January 25th and 30th. As part of their role, the Rocketry Force and the Propelled Air Force carried out 26 operations targeting the airports of Abha, Jizan and Najran. They also targeted Khamis Mushait base, Aramco Company and sensitive sites in the Saudi depth.
Saree noted that the Operation ‘Firm Structure’ led to a major defeat in the enemy’s lines, while hundreds of the mercenaries fled the area.
The major achievement of the Yemeni Armed Forces was securing Nihm in the first days of the operation. Saree also stated that the Yemeni forces reached al-Jawf and advanced inside al-Jawf Province, clashing with the forces that were in the same area.
The Yemeni Armed Forces, meanwhile, started another offensive in al-Jawf to liberate the provinces of al-Jawf and Ma’rib. Saree told the press conference that the liberation of those two provinces, in addition to Nihm, occupied an area of 25002 kilometers.
Relatively, Saree hailed the patriotic stance of the tribesmen, which mainly contributed to the liberation of many areas located in the field of the operation.
“The Al-Hazm Directorate, which includes the capital of al-Jawf was an area of confrontation, as well as some parts of the directorates of Ghayl and Madghal in Ma’rib,” Saree said.
The Operation ‘Firm Structure’ boosted our forces in their forefronts close to Ma’rib, Saree said, adding that more than 3500 members were either killed, injured or detained. He made clear that the bodies of 1500 killed militants are still in the operations’ field.
According to Saree, 1830 of them were injured, in addition to hundreds of others who were detained.
He concluded his conference as saying that due to the big number of those killed, the command ordered the formation of humanitarian committees whose role is to document details about all bodies.
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Saudi Arabia has deployed “dozens” of soldiers to a major oil field in eastern Syria’s Deir Ez-Zor in an apparent effort to protect the group of Saudi and Egyptian Aramco experts who arrived in the area the previous week, reports have said.
According to the Arabic service of the Anadolu Agency, local sources said that the Saudi soldiers arrived at Al-Omar oil field aboard helicopters. The source also added that this coincided with the arrival of about 30 trucks carrying drilling and digging equipment, which entered Syrian territory from northern Iraq.
The Al-Omar oil field is the largest in the country, which was once seized by Daesh, it is currently under the control of the Kurdish-led Syrian Democratic Forces (formerly YPG), although there has been an increase in American troops being deployed in the area.
It is understood that investments will be made through contracts signed between Aramco and the US government whose own armed forces have steadily been increasing their military presence around the oil fields. Despite initially claiming to scale back troops from Syria, US President Donald Trump announced in October that America had “secured” and taken control of the oil in the Middle East.
The Syrian government, which has not authorised American military presence within its territory, has accused the US of “plundering” the country’s oil resources. Earlier today, the Syrian Foreign Minister Walid Al-Muallem met with his Russian counterpart in Moscow Sergey Lavrov affirming the need for a political solution to the crisis in Syria and mentioned the “looting” of Syrian oil by the US.
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Featured image: Saudi troops [SGT. H. H. DEFFNER/Wikipedia]
As US President Donald Trump was delivering his speech at the United Nations General Assembly, somebody was busy enough to read a book instead of listening.
In a photo published by @FarsNewsInt, the lady representing Venezuela appeared attentive enough to the book in her hands, with a caption that describes the action happening while Trump was giving his speech there.
Trump has been notoriously known for intervening in Venezuela’s affairs, especially after the failed coup attempt against legitimate president Nicolas Maduro by US-backed opposition leader Juan Guaido.
During his third address to the United Nations, Trump was threatening to tighten US sanctions against Iran, accusing the Islamic Republic of “menacing behavior” in the Middle East.
“As long as Iran’s menacing behavior continues, sanctions will not be lifted. They will be tightened,” Trump claimed on Tuesday at the 74th session of the UN General Assembly in New York.
Trump repeated his baseless accusations against Iran’s civilian nuclear and ballistic missile programs, as well as Tehran’s support for the people in the war-ravaged countries of Syria and Yemen.
The US president also continued to criticize the 2015 nuclear agreement that he withdrew from last year.
Trump’s speech follows escalating tensions in the Middle East following attacks on Saudi Arabia’s oil facilities.
![Saudi troops [SGT. H. H. DEFFNER/Wikipedia]](https://i0.wp.com/www.middleeastmonitor.com/wp-content/uploads/2017/08/2017_8_14-saudi-army1280px-AuF1_and_AMX-10P_Royal_Saudi_Land_Force.jpg?resize=1200%2C800&quality=85&strip=all&ssl=1)
UPROOTED PALESTINIANS: SALAM ALQUDS ALAYKUM 