Is Putin Laying a Petroleum Trap for Trump?

The president is heralding a deal that commits Russia to cuts in oil production, but a closer look reveals a more complicated path.

By Scott Ritter

Global Research, April 15, 2020

The American Conservative 14 April 2020

Rod Rosenstein

The G20 met in virtual session on April 10, ostensibly to address the crippling one-two punch brought on by the economic impact of coronavirus and the simultaneous collapse of the price of oil resulting from Russia and Saudi Arabia flooding an already depressed market.

In the end, the world’s leading oil producers finalized an agreement on sweeping oil production cuts, building on a previous agreement between Russia and Saudi Arabia to stop their price war. The United States is taking credit for this breakthrough, however, citing the role it played in helping bring Mexico to closure.

But the U.S. contribution was, and is, illusory—President Trump is in no position to promise cuts in U.S. oil production, and as such remains unable to meaningfully contribute to the global oil production reduction scheme. Void of any substantive final agreement, global energy markets will continue to suffer as production far outstrips demand. For U.S. oil producers, who have already seen a 2.5-3 million barrel per day decrease in production, the results will be catastrophic, driving many into bankruptcy and helping push the U.S. economy into a tailspin that will lead to a depression potentially worse than that of the 1930’s.

Trump’s only recourse may be to turn to Russia for help in offsetting needed U.S. oil production quotas, which appears to have been the Russian plan all along.

On Monday March 30, President Trump spoke on the phone with Russian President Vladimir Putin. The suppressed price of oil, and Russia’s role in facilitating that vis-à-vis its refusal to cut its oil production, thereby triggering a price war with Saudi Arabia, was the dominant topic. A Kremlin read-out of the call noted that “opinions on the current state of global oil markets were exchanged. It was agreed there would be Russo-American consultations about this through the ministers of energy.”

During the call, Trump mentioned America’s need for life-saving medical supplies, including ventilators and personal protective equipment. Putin asked if Russia could be of assistance, and Trump said yes.

The decision to allow Russian aid (purchased by the U.S.) into the country, however, directly contradicted guidance that had been issued by the U.S. State Department a full week before Trump’s phone call with Putin. On March 22, the State Department sent out an internal email to all U.S. Embassies with guidance on how to proceed with seeking out critical support. “Depending on critical needs, the United States could seek to purchase many of these items in the hundreds of millions with purchases of higher end equipment such as ventilators in the hundreds of thousands,” the email stated. The email noted that the request applies to all countries “minus Moscow,” indicating the United States would not ask Russia for support.

While the two leaders, according to the White House, “agreed to work closely together through the G20 to drive the international campaign to defeat the virus and reinvigorate the global economy,” the March 30 phone call apparently did not directly touch upon U.S. sanctions on Russia. In fact, Trump told  Fox News prior to the leaders’ exchangethat he fully expected Putin to bring it up. He did not say how he might respond if Putin did.

Trump’s confidence in a Putin sanction request most likely stemmed from a statement made by the Russian President to a virtual meeting of G20 leaders on March 22, where he noted that “ideally we should introduce a…joint moratorium on restrictions on essential goods as well as on financial transactions for their purchase.” Putin’s comments were more pointed toward the lifting of sanctions for humanitarian purposes on nations like Iran and Venezuela, but his conclusion hinted at a larger purpose: “These matters should be freed of any politics.”Economic Warfare against Russia: Moscow Condemns New “Draconian” Sanctions, Weighs Banning Rocket Engines to US

Russia has been operating under U.S. and European sanctions following its annexation of Crimea in 2014 and its role in the Ukraine crisis. But the sanctions that have angered Russia the most—and which have contributed to Russia’s price war with Saudi Arabia targeting U.S. oil producers—were those levied against NordStream 2, the Russian pipeline intended to supply Germany, and Europe, with natural gas. Trump signed a bill authorizing these sanctions in December 2019. Russia immediately condemned this action.

Instead of asking Trump outright to lift sanctions, Putin got Trump to help underscore Russia’s position that sanctions were an unnecessary impediment to relations between the U.S. and Russia during the coronavirus pandemic. In agreeing to allow the Russian AN-124 aircraft to deliver medical supplies to the U.S., Trump unwittingly played into a carefully laid bit of Russian propaganda.

Among the aid Russia delivered were boxes of Aventa-M ventilators, produced by the Ural Instrument Engineering Plant (UPZ). UPZ is a subsidiary of Concern Radio-Electronic Technologies (KRET) which, along with its parent holding company ROSTEC, has been under U.S. sanctions since 2014. According to the State Department, which payed for 50 percent of the equipment on the flight, the sanctions do not apply to the purchase of medical equipment. But by purchasing critical medical equipment from sanctioned companies, the State Department simultaneously violated its own guidance against buying Russian equipment while underscoring Putin’s point—sanctions should be waived for humanitarian purposes.

But Putin’s trap had one more twist. According to the Russians, half of the aid shipment was paid for by the U.S. State Department, and the other half by the Russian Direct Investment Fund (RDIF), a Russian sovereign wealth fund which, like ROSTEC, was placed on the U.S. lending blacklist in 2014 following Russia’s intervention in Crimea. The arrival of an airplane full of critical medical equipment ostensibly paid in part by a sanctioned Russian sovereign wealth fund provided a window of opportunity for Kirill Dmitriev, the CEO of RDIF, to gain access to the U.S. mainstream media to push the Russian line.

On April 5, Dmitriev published an OpEd on the CNBC web page titled “The US and Russia should work together to defeat the coronavirus.” Dmitriev likened the current global struggle against the coronavirus pandemic to the fight against Nazi Germany. “During World War II, American and Russian soldiers fought side by side against a common enemy,” he wrote. “We achieved victory together. Just as our grandfathers stood shoulder to shoulder to defend our values and secure peace for future generations, now our countries must show unity and leadership to win the war against the coronavirus.”

But Dmitriev’s true target was oil, and by extension, sanctions. “In times like this,” he noted, “new approaches to explore close collaboration between the U.S., Russia and other countries are needed to stabilize energy and other markets, to coordinate policy responses and to revitalize economic activity. For example, Russia proposed to jointly undertake significant oil output cuts with the U.S., Saudi Arabia and other countries to stabilize markets and secure employment in the oil industry.”

Getting the U.S. to lift sanctions was a big ask, something Dmitriev acknowledged. “To change the views on Russia in an election year may be an insurmountable challenge. But so it also seemed in 1941, when the U.S. and the Soviet Union put behind the differences of the past to fight the common enemy.”

While the “common enemy” referred to by Dmitriev was clearly the coronavirus pandemic, he could also have been speaking about Senator Ted Cruz, and others of his ilk, who led the charge to sanction NordStream 2. The current oil crisis has hit Texas particularly hard. In an indication of things to come, Whiting Petroleum, a major player in the shale oil industry,filed for Chapter 11 bankruptcy protection. Whiting specialized in North Dakota fracking, which required oil prices of $60 per barrel to be economically viable. The current price of sub-$25 doomed the company. Texas fracking is slightly cheaper, with a profitability margin of around $49. With oil prices depressed, Texas companies are feeling the pinch, and are on the verge of collapse.

Trump agreed to participate in the G20 meeting because of the promise of a Russian-Saudi production cut; on this, Putin delivered. But the Russians made any final agreement contingent upon Trump agreeing to significant reduction in U.S. oil production. This was never a possibility—whereas both Russia and Saudi Arabia have national oil companies whose operations are a matter of national policy, the U.S. oil industry is privately owned in its entirety, and dependent on supply and demand equations derived from a free market to determine profitability.

While the G20 meeting resulted in collective cuts of close to 10 million barrels a day, the drop in demand for oil brought on by the coronavirus pandemic has created a glut in which the world produces some 27.4 million barrels per day in excess of global needs. The bottom line is the G20 cuts won’t solve the problem of too much oil, and without additional cuts, the bottom will continue to fall out of the oil market, dooming U.S. producers.

Trump cannot turn on or off the U.S. oil-producing spigot, a fact Russia knows only too well. When Trump attempted to gain credit for a 2.5-million-barrel reduction in production brought on by bankruptcy, Russia refused to allow it. Likewise, when Trump promised cuts in oil production to help Mexico meet G20 targets, it was a promise the American president is unable to deliver on. In getting the U.S. to agree to attend a G20 summit on oil production, the Russians lured the U.S. into a policy trap from which there is no escape.

Void of any final agreement, the U.S. oil industry will inevitably collapse. Trump claims that the G20 virtual summit came up with cuts totaling up to 20 million barrels per day, without explaining how he came up with this number. This number is fictional; the U.S. production crisis is not. Trump’s only hope is for a further softening of the Russian position on production. But this will not come without a price, and that price will be the lifting of energy-sector sanctions targeting Russia.

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Scott Ritter is a former Marine Corps intelligence officer who served in the former Soviet Union implementing arms control treaties, in the Persian Gulf during Operation Desert Storm, and in Iraq overseeing the disarmament of WMD. He is the author of several books, including his forthcoming, Scorpion King: America’s Embrace of Nuclear Weapons From FDR to Trump (2020).

Featured image: President Donald J. Trump and President Vladimir Putin of the Russian Federation | July 16, 2018 (Official White House Photo by Shealah Craighead)The original source of this article is The American ConservativeCopyright © Scott RitterThe American Conservative, 2020

هل هناك خلاف فعليّ بين الأميركيين وآل سعود؟

د. وفيق إبراهيم

يثير التهديد الأميركي لآل سعود بقطع التعاون معهم على مستويات التغطية السياسية والاستراتيجية والتسليح والتدريب والرعاية وسحب المستشارين والعسكريين الاميركيين المنتشرين في الخليج، الدهشة لأنه لا يتصل بأي توتر سابق بين الطرفين ولا يعكس تاريخاً طويلاً ومتواصلاً من الولاء السعودي الكامل للسياسة الاميركية في كل بقاع الارض.

فهذه العلاقات تطورت بعد توقيع معاهدة كوينسي في 1945 بين الرئيس الاميركي روزفلت والعاهل السعودي عبد العزيز على اساس التغطية الكاملة مقابل الولاء والتسهيلات النفطية والتبعية الاقتصادية بما جعل هذا التاريخ رمزاً لانصياع سعودي كامل وعلني وضع كامل الإمكانات الاقتصادية والدينية في خدمة الجيوبوليتيك الاميركي متيحاً بدوره للسعودية فرصة حيازة ادوار في كبيرة في الخليج والتأثير في جوارهما المباشر في العراق واليمن والعالمين العربي والاسلامي.

على هذا الاساس قامت معادلة القطبية الاميركية التي تشكل السعودية جناحها في محوريها العربي والاسلامي مع أهمية دولية نسبية.

اللافت هنا ان هذا الوضع لا يزال معتمداً حتى هذا التاريخ ويبدو منفصلاً الى درجة غريبة من نوعين من التهديد الأميركي.

الاول اطلقه الرئيس دونالد ترامب محذراً صديقته السعودية ومنافسته روسيا من الاستمرار في رفع انتاجيهما النفطي وإلا فإنه متجه الى فرض ضرائب ورسوم على صادراتهما من البترول.

اما الثاني فكان أشد عنفاً واطلقه الحزب الجمهوري الاميركي الذي ينتمي اليه ترامب معلناً فيه استعداد الدولة الاميركية قطع كامل علاقاتها مع السعودية اذا لم تتراجع عن رفع انتاجها النفطي الى مستويات اقل مما كان عليه قبل شهرين فقط.

وهذا يعني إعادته من 13 مليون برميل يومياً كما هو الآن الى تسعة ملايين كما كان في كانون الثاني الماضي… مع امل على خفضه اضافياً في اطار خفض جماعي لدول منظمة اوبيك يتعادل مع التراجعات الاقتصادية التي فرضها انتشار جائحة الكورونا المتواصل حتى الآن.

المدهش هنا أن الاميركيين يصرون على هذا الخفض رافضين تحديد سقف لإنتاجهم من النفط الصخري الشديد الكلفة والبترول العادي ويبررون بأن نفوطهم تراجعت في الآونة الأخيرة بسبب تراجع اسعار البترول الى 23 دولاراً للبرميل بعد الرفع السعودي – الروسي لإنتاجيهما فكان ان توقفت شركات النفط الصخري عن العمل، لأن كلفة استخراج البرميل الواحد من هذا النوع تتعدى الأربعين دولاراً، ما ادى الى تدهور كبير في اقتصاديات هذه الشركات الاميركية وتريد خفض الاسعار العالمية لإعادة انعاش الشركات الاميركية التي تؤمن وظائف لعشرات آلاف العمال وتؤدي دوراً مركزياً في التفاعلات الاقتصادية الكبرى، لذلك فإن هذه التطورات تدعو الى التساؤل عن اسباب صمت الاميركيين عن رفع السعودية لإنتاجها النفطي في تاريخ رفعه قبل أشهر عدة، ولماذا يعترضون الآن؟

الواضح أنهم في المرحلة الأولى اعتقدوا ان رفع الإنتاج السعودي يؤدي فوراً الى ضرب الاقتصاد الروسي المعتمد على النفط والغاز بمعدل اربعين في المئة من موازناتهم ويضاعف مصاعب ايران التي يقاطعها الاميركيون ويحاصرونها مع نفر كبير من دول تؤيدهم او تخشاهم.

لكن انتشار الكورونا والشلل الاقتصادي في العام احدث شللاً كبيراً وخطيراً وعاماً في الاقتصاد الاميركي وشركات النفط الصخري وذلك عشية انتخابات رئاسية واصبح المشروع الاميركي بضرب روسيا عبر استخدام النفط السعودي كارثة على الاميركيين ايضاً.

وإذا كان إقناع السعوديين بخفض إنتاجهم عملاً ممكناً بسهولة، فإن إقناع الروس هو المشكلة الفعلية لانهم سارعوا الى رفض الطلب الاميركي مصرين على خفض متواز بين دول «اوبيك +» اي اوبيك زائد روسيا مع النفط الأميركي.

في حين أن الأميركيين يريدون خفضاً عالمياً يسمح لشركاتهم بالعودة الى الإنتاج والتوظيف بقوة ما يسمح لترامب بكسب أصوات الفئات الشعبية في الانتخابات المقبلة.

الموضوع اذاً بالنسبة للبيت الابيض هو اقتصادي في جانبه المتعلق بإنتاج النفط وتحديد اسعاره، وهو أيضاً سياسي لعلاقته بالانتخابات الرئاسية في تشرين الثاني المقبل، وهو أيضاً استراتيجي جيوبوليتيكي لتعاطفه مع حالة التنافس الشديد مع روسيا، وتحالفاتها في ايران والصين.

الأمر الذي يوضح ان رفع الانتاج السعودي هو قرار اميركي لكن العودة عنه لم تعد كذلك بل اصبحت معادلة تحتاج الى موافقة روسيا ومنظمة الاوبيك وهناك تكمن المشكلة، لان الروس يقبلون بالخفض بمعدل يواكب تداعيات كورونا على تراجع الاقتصاد العالمي لكنهم يشترطون ان يسري هذا الخفض على النفط الاميركي ايضاً بما يؤدي الى عرقلة عودة النشاط النفطي الى الاقتصاد الاميركي.

لذلك فإن اقتصار هذا الخفض على السعوديين لن يؤدي الى النتائج الاميركية المطلوبة، فجاء التهديدان الاميركيان للسعودية بمثابة إنذار لروسيا لحلحلة تصلبها وخطاباً عاطفياً للناخبين الاميركيين بأن الحزب الجمهوري الاميركي لن يتورع عن معاقبة صديقة بلاده الاساسية اي السعودية اذا اكملت سياسة رفع انتاجها الموازية لشركات النفط الصخري وآلاف الاميركيين العاملين فيها، الامر الذي يكشف انهما ليسا اكثر من دبلجة لغوية غير قابلة للتطبيق العملي لان السعودية هي البقرة الاميركية الحلوب التي تنعش الاقتصاد الاميركي وتؤمن للسياسة الاميركية مدى اسلامياً واسعاً يزداد انصياعاً لواشنطن عندما يستعمل آل سعود أهمية بلادهم الدينية والتغطية في خدمته.

اما على المقلب الآخر الذي يذهب الى التساؤل حول امكانية آل سعود مقاومة الاميركيين بطلب خفض انتاج نفطهم فيثير الضحك لان آل سعود لم يبنوا دولة متماسكة تؤمن بشعبها وتعمل على رفع مستويات النمو والتقدم، بل عملوا على مفهوم من القرون الوسطى يعتبر ان الارض والناس والثروات والمياه هي ملك للسلطان يوزعها على من يشاء ويمنعها عما يريد، فهو ولي الامر واحكامه مطبقة على السمع والطاعة.

هناك نقطة اضافية وهي ان الحكم السعودي لم يؤسس منظومة تحالفات عربية واقليمية تعينه في اوقات الشدة، فهو يعادي ايران معتمداً على اميركا لاسقاط جمهوريتها ويعبث بالامن الاجتماعي والسياسي للعراق متلاعباً بمكوناته وطوائفه ويرتكب مجازر في اليمن تطال مئات الآلاف في هجوم مستمر من خمس سنوات ويدعم الارهاب في سورية ويعادي قطر متدخلاً في ليبيا والسودان والجزائر ومتعاوناً مع «اسرائيل».

فكيف يمكن لبلد من هذا النوع يفتقد لتأييد شعبه مثيراً كراهية جواره السياسي ان يقاوم الاوامر الاميركية وهي اصلاً غير موجودة حتى الآن؟

يتبين ان السعودية لا تزال حاجة ماسة للاميركيين بوضعيتها السياسية الحالية، وهذا يعني ان آل سعود مرتاحون ويواصلون سياسة الاسترخاء السياسي مع خنق شعبهم بأساليب القرون الوسطى.

Political Maneuver or Economic Move: What Caused the Oil Price Collapse?

Sputnik

10.03.2020

On 9 March, oil prices plunged by over 30 percent after OPEC member states failed to agree on production cuts. Analysts are now seeking to take stock of the situation, determine what factors caused the crash, and forecast the impact of the downswing on the global economy.

A three-year pact between OPEC and Russia ended on Friday after Moscow refused to support an additional 1.5 million barrels per day cut to oil production to cope with the outbreak of coronavirus. OPEC, led by key swing producer Saudi Arabia,  responded by removing all limits on its own production, leading oil prices to plummet.

The Shale Sector

Goran Radosavljevic, Secretary General of the National Petroleum Committee of Serbia, argued that Russia’s move essentially means that Moscow “no longer wants to subsidize US shale oil production”.

“That’s what was happening de facto during the last several years, when we witnessed the United States pumping more and more oil, reaching its maximum capacity due to oil market stabilization and the decrease of oil production in OPEC+”, he explained.

Dr Huang Xiaoyong, Director of the Center for International Energy Security Studies of the Chinese Academy of Social Sciences, also mentioned the situation in the shale sector as one of the possible reasons for the current collapse of oil prices (with other possible factors being the effect of the ongoing coronavirus outbreak and a possible conflict of interests between Russia and Saudi Arabia).

“Saudi Arabia announced that they’re investing $100 billion in the launch of projects related to shale oil and gas extraction. The United States not only controls a significant share of that market, but (shale) also has high oil extraction expenses. Therefore, lower oil prices might contribute to the US being ‘pushed out’ of the market”, he suggested.

Deja Vu

Energy analyst Jeloca Putnikovic  argued that a similar situation already occurred during the past decade, when “Saudi Arabia was responsible for oil becoming cheaper”.

“As you may recall, Saudi Arabia and the United States made a deal in a bid to halt Russia’s economic growth via crude oil prices – back then, the price of oil fell to nearly $30 per barrel”, she claimed, noting that Russia and other major oil producing countries eventually agreed to coordinate on output levels with the “Saudi cartel”, in order to maintain oil prices at a level that would be acceptable to all.

Putnikovic argued that the decision made by Saudi Arabia to ramp up oil production seems to be a political rather than economic move given that Riyadh previously spoke of $80 per barrel as an acceptable price.

The MISSING Six Million BARRELS

Augusto Tandazo, an oil industry analyst from Ecuador, posed the following question in order to try and explain the current state of affairs at the oil market: if the global demand for crude oil is 100 million barrels per day, and the non-OPEC countries produce 64 million barrels per day while OPEC countries officially account for 30 million barrels per day, where do the “missing” six million barrels per day come from?

According to Tandazo, there’s a “hidden excess supply of oil from certain states, such as Saudi Arabia, Kuwait and Iraq, that is aligned with the developed countries”.

“The oil price is being manipulated and controlled by the developed countries. They present themselves as fearless defenders of the free market, but they manipulate the price via excessive supply”, he postulated.

Future Prospects

And Rafael Quiroz, a professor at the Central University of Venezuela and an oil industry expert, warned that we may witness an even bigger oil price tumble, “especially if Saudi Arabia keeps its word and opens its taps even more”.

“This would lead to excessive supply of oil that would be greater that the global demand for energy resources, and therefore would lead to an immediate and devastating collapse of oil prices”, Quiroz said.

He also dismissed earlier claims made by US President Donald Trump, who blamed the current state of affairs on disagreements between Russia and Saudi Arabia, with Prof. Quiroz arguing that Trump simply regards OPEC as an enemy of the free market and open economy, and therefore tries to meddle in the organization’s affairs.

© REUTERS / BRYAN R SMITHUS Stock Market Closes With Record 2,000-Plus Loss Amid Coronavirus Panic

On 9 March, oil prices fell by over 30 percent after OPEC member states failed to agree on production cuts amid the ongoing coronavirus outbreak.

Earlier, the organization and its non-member allies, known collectively as OPEC+, convened in Vienna to discuss a potential cut of another 1.5 million barrels per day in addition to their existing pact to reduce oil production.

The views and opinions expressed in the article do not necessarily reflect those of Sputnik.

SAUDI-INITIATED ALL-OUT OIL WAR COULD LEAD TO COLLAPSE OF KINGDOM ITSELF

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. On March 9, Brent crude plunged over 28.5% to $32 per barrel, while WTI fell 31.5% to $28.27 a barrel. The crisis erupted as the economic fallout from the coronavirus hysteria continued to reverberate throughout the financial markets.

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 sanction 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. Despite the inability to reach the new OPEC+ deal, Saudi Arabia became the 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 (Ansar Allah) with intelligence, weapons, money, and even military advisers, and the resumption of strikes on Saudi oil infrastructure (by the hands of the Houthis for sure).

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.

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