Moon of Alabama Brecht quote
March 30, 2020

Trump, Putin Will Discuss The End Of U.S. Shale Oil

Three weeks ago, when the Russian and Saudi war on U.S. shale oil started, we wrote:

In the first week of January crude oil reached $69/bl but it has since dropped to $45/bl as the coronavirus crisis destroyed the global demand. The Saudis tried to make a deal with Russia, the second largest exporter after Saudi Arabia, to together cut oil production to keep the price up. But Russia rejected a new OPEC cut. It wants to keep its production up and it will use the crisis to further undermine U.S. oil fracking production. As the whole fracking boom in the U.S. is build on fraud the move might well be successful.

Russia does not have a budget deficit and is well positioned to survive lower crude oil prices without much damage. Saudi Arabia is not.

Only a week later oil was already at $30/barrel and we predicted that it would go down to $20/bl.

On Monday the U.S. WTI oil price index reached that mark. Oil prices in other places are falling even further:

Canadian heavy crude has become so cheap that the cost of shipping it to refineries exceeds the value of the oil itself, a situation that may result in even more oil-sands producers shutting operations.

Western Canadian Select crude in Alberta dropped to a record-low close of $5.06 a barrel on Friday, according to Bloomberg data going back to 2008 ...

The corona virus crisis has led to drop in global demand by some 20%. The world production and consumption in normal times was at about 100 million barrel per day. Consumption is now below 80 million bl/d. But after the OPEC+ agreement failed Saudi and Russia both started to pump as much as they could to regain market shares. Together they are increasing their production by some 3-4 million barrels per day. All that oil has to go somewhere.

Trump announced that he would use the cheap prices to fill the U.S. strategic oil reserve. But the spare room in the reserve storage at that time was only some 150 million barrels. As it can only be filled at a rate of 2 million barrels per day the topping off of the reserve is insignificant in the current market.

The oil producers at first pumped their oil into storage tanks to be sold later. When those filled up they rented supertankers to store the oil at sea. But empty supertankers are now also getting rare and the price for them is increasing:

The CEO of the world’s largest tanker owner, Frontline Ltd., said on Friday that he’d never known such demand to hire ships for long-term storage. Traders could book ships to put 100 million barrels at sea this week alone, he estimated, but even that could accounts for less than a week’s oversupply.

The only solution will be a shut down of the more expensive oil fields. Canada and Brazil are already doing it. U.S. shale producers who are bleeding cash will now have to follow.

That is clearly what Russia wants:

As soon as U.S. shale leaves the market, prices will rebound and could reach $60 a barrel, Rosneft’s Igor Sechin said recently. As fate would have it, in what many would have until recently considered an impossible scenario, a lot of U.S. shale might do just that.

Breakeven prices for U.S. shale basins range between $39 and $48 a barrel, according to data compiled by Reuters. Meanwhile, West Texas Intermediate (WTI) is trading below $25 a barrel and has been for over a week now.

The Trump administration has asked the Saudis to produce less oil but as the Saudi tourist industry is currently also dead the Saudi clown prince needs every dollar he can get. The Saudis will continue to pump and they will sell their oil at any price.

The White House is now concerned that it will completely lose its beloved shale oil industry and all the jobs connected to it.

Russia of cause knows this and a few days ago it made an interesting offer:

A new OPEC+ deal to balance oil markets might be possible if other countries join in, Kirill Dmitriev, head of Russia’s sovereign wealth fund said, adding that countries should also cooperate to cushion the economic fallout from coronavirus.
...
“Joint actions by countries are needed to restore the(global) economy... They (joint actions) are also possible in OPEC+ deal’s framework,” Dmitriev, head of the Russian Direct Investment Fund (RDIF), told Reuters in a phone interview.
...
“We are in contact with Saudi Arabia and a number of other countries. Based on these contacts we see that if the number of OPEC+ members will increase and other countries will join there is a possibility of a joint agreement to balance oil markets.”

Dmitriev declined to say who the new deal’s members should or could be. U.S. President Donald Trump said last week he would get involved in the oil price war between Saudi Arabia and Russia at the appropriate time.

A logical new member of an expanded crude oil cartel would be one of the biggest global producer that so far was not a member of that club - the U.S. of A.

We now learn that Trump is ready to talk about that or other concepts:

As Ria reports (in Russian) the topics of upcoming phone call [between Putin and Trump] will be Covid-19, trade (???) and, you guessed it, oil prices.

Trump, who sanctioned the Russian-German Nord-Stream II pipeline while telling Germany to buy U.S. shale gas, is now in a quite bad negotiation position. Russia does not need a new OPEC deal right now. It has many financial reserves and can live with low oil prices for much longer than the Saudis and other oil producing countries. Trump would have to make a strategic offer that Russia could not resist to get some cooperation on oil prices.

But what strategic offer could Trump make that would move Putin to agree to some new deal?

Ukraine? Russia is not interested in that unrulable, bankrupt and fascist infested entity.

Syria? The Zionist billionaires would stop their donations to Trump if he were to give up on destroying it.

Joining an OPEC++ deal and limit U.S. oil production? That would be an anti-American intervention in free markets and Congress would never agree to it.

And what reason has Russia to believe that Trump or his successor would stick to any deal? As the U.S. is non-agreement-capable it has none.

The outcome of the phone call will therefore likely be nothing.

The carnage in the oil markets will continue and will ravage those producer countries that need every penny while the corona virus is ravaging their people. Meanwhile the U.S. shale market will go bust.

Posted by b on March 30, 2020 at 17:25 UTC | Permalink

Comments
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This is what defeat looks like, when every available option is bad.

Posted by: Trisha | Mar 30 2020 17:33 utc | 1

It will be interesting to see how Putin uses this. Trump is intent on attacking Iran, Venezuela and China but Putin has Trump and his beloved oil industry over a barrel.
The only numbers looking good in the US at the moment is confirmed coronavirus cases. Hospitals swamped with dying patients may cause Trump enough domestic headaches that he wont launch attacks on Iran or Venezuela.

Posted by: Peter AU1 | Mar 30 2020 18:07 utc | 2

Hugo Chavez suggested a 60$ peg, saying let's not be greedy. Now will it cost too much to defend? Just thinking of our brave boys and girls defending the illegal off-shore rigs. I wish with all of the super abundance of nat gas production sea ice for desalination and then hydrogen makes all comforts possible. You're welcome,but danks B

Posted by: failure of imaginati | Mar 30 2020 18:08 utc | 3

Not to worry. There is enough Covid bailout bucks to fill and over flow the poor beleaguered oil industry pockets. Wait for it.

Posted by: diveshopingoa | Mar 30 2020 18:10 utc | 4

poor Iran and Venezuela; maybe saving the shale oil industry is not the top priority for everyone in the US

Posted by: claudio | Mar 30 2020 18:11 utc | 5

US financial companies had a big exposure to the Shale Oil frackers.

Good thing trillions of dollars of 'liquidity' has been shoveled their way.

<> <> <> <> <>

Lender of last resort: the unborn.

!!

Posted by: Jackrabbit | Mar 30 2020 18:14 utc | 6

FWIW:
One aspect of the crude complete collapse is to keep an eye on futures and the serious contango at the moment: contango=prices on future contracts are higher than current contract.

e.g. May 2020 CL contract=~$20, May 2021 =~$35.50.

Someone or someones are betting that the crude market will improve, i.e. they are storing crude in very large crude carriers (VLCC) @>$200k per day lease cost. That is a serious commitment/bet on future price/mkt improvement.

Posted by: Thomas Minnehan | Mar 30 2020 18:15 utc | 7

Long cold winters teach one how to plan, prepare, and survive. The Russians have well learned those lessons, while US elites prefer to party and spread disease at Mardi Gras and Florida beaches. Fools.

The situation in Canada is interesting. For years the petro promoters have been trying to build more pipelines to deliver bitumen-based synthetic crude that no one wants, while illogically insisting that the price is low due to delivery bottlenecks. Everywhere else in the world, buyers will pay more when supply is limited, but somehow it's different in Canada.

Trudope already bailed out the industry two years ago when the government purchased the 65 year old Trans Mountain Pipleline for $4.5 billion. The government claimed its intent was to expand the pipeline then sell it. What is the value of a very old pipeline when oil is $5 a barrel? Zero? I speculate it will soon be sold, maybe even back to the original owners, hehe.

p.s. I know something about long cold winters; I am still looking at 2 feet of snow, and more on the way. But it will be meteorological spring in three weeks when the average low temperature rises to 32F.

Posted by: Trailer Trash | Mar 30 2020 18:27 utc | 8

Unmentioned is the connection between Fracking Fraud and the Bond Market Bubble with Congress actively intervening/abetting the Fraud by providing more money to the Ponzi Scheme.

Posted by: karlof1 | Mar 30 2020 18:32 utc | 9

Love it, b. Thank you for making it clear to me.

For Trump to succeed and truly MAGA, he would have had to convince the American public that systemic changes were both needed and were going to hurt at the outset of his presidency.

Instead, he took the lazy, easy road and has come to a dead end.

To what end would a man like Trump try for reelection when what he will lead is in absolute shambles by the end of the year. Then he will have to really wound in order to heal. Maybe he realizes this and is just looking to get his foot in the door of another four years.

Bahhhhh. Probably not.

Posted by: Nemesiscalling | Mar 30 2020 18:38 utc | 10

Well, Trump does have a Trump card (I know). What if the conversation with Putin goes like this:

DT: You know I hear a lot of people would like to not have any more problems with Erodgan.

VP: What do you mean?

DT: Erdogan is bugging me to help him out in Syria. What should I do?

VP: What do you mean?

DT: It would be really nice if I had a good reason not to help him, capeesh?

VP: Oh.

DT: I hear a lot of people want their oil in Syria.

VP: Oh.

DT: I hear a lot of people would like Iraq to be left alone.

VP: Oh.

DT. Anything you can help out with in the oil markets?

Pax Americana: Between Iraq and A Hard Place

Trump has a lot of leverage.

Posted by: Kali | Mar 30 2020 18:38 utc | 11

Gas?
A couple of weeks ago there was a small news item that "the Russian pipe laying ship, expected to complete the North stream 2 project, was seen "off course" and heading to Madagascar" I didn't know what to make of it then and still don't. But if the Russians want to delay the startup of the Gas line - the weather is playing into their hands as it is freezing cold in the EU at the moment, and Madagascar would be warmer. (and out of Covid-19?)

Posted by: Stonebird | Mar 30 2020 18:38 utc | 12

Kali

If it were Iraq and Syria threatening Trump's fracking industry then he would have leverage, or at least something to make a deal with, but in this case if any were offering a deal, it would be Putin offering to ease up on US fracking if Trump pulls out of those countries. Russia can allow the situation in the Middle east to stay as it is for quite some time if necessary, whereas Trump's frackers need prices up very fast. Trump has nothing to bargain with and will have to pay top dollar for whatever he wants from Russia.

Posted by: Peter AU1 | Mar 30 2020 18:54 utc | 13

"but as the Saudi tourist industry is currently also dead the Saudi clown prince needs every dollar he can get."

By "Saudi tourist industry" you must mean pilgrimages to Mecca for Hajj and 'Umra. Anything else is insignificant.

Posted by: Laguerre | Mar 30 2020 18:59 utc | 14

But if the Russians want to delay the startup of the Gas line - the weather is playing into their hands as it is freezing cold in the EU at the moment, and Madagascar would be warmer. (and out of Covid-19?)

Posted by: Stonebird | Mar 30 2020 18:38 utc | 12

Maputo (not Madagascar) was the last port that Akademik Cherskiy visited. Because Maputo is very close to RSA, the vessel is approaching Cap of Good Hope. This route may be more auspicious than Red Sea and Mediterranean if you are afraid of sabotage.

Posted by: Piotr Berman | Mar 30 2020 18:59 utc | 15

According to the statement, Trump told Putin about the difficult situation in Venezuela and stressed the importance of a democratic transition in the Latin American country. (Sputnik)

Do I detect that Trump threatened Putin about attacking Venezuela if he didn't agree to stop pumping? Silly move (or maybe desperation?).

Posted by: Stonebird | Mar 30 2020 19:00 utc | 16

The US could cancel sanctions against Russia, which would be a win-win. And what if Iran were to flood the oil market as well?

Posted by: farm ecologist | Mar 30 2020 19:01 utc | 17

Just watched an interesting talk by Harris Kupperman.
1) He estimates the "excess" crude oil could go to 2 or 3 billion barrels, even disregarding production increases
2) "steady state" back to normal would see perhaps 5 million barrels/day demand beyond capacity
3) Old tankers - more than 10 years old - are returning 4x capital in 1 year due to $11 contango
4) Newer tankers - charging $300K/day. Literally unprecedented. Returning 150% capital in 1 year @ $100K/day.
Basically, the huge crude oversupply isn't going away any time soon.
And tanker company stock are valued at 1/2 NAV...when a $25M old tanker can yield $20M cash in 1 year.
Note: Strategic Petroleum reserve is a rounding error compared to the magnitude of the surplus...

Posted by: c1ue | Mar 30 2020 19:04 utc | 18

The 80's are calling ...

There are Americans (maybe I'm an American't) who think it's the 1980's

1. Reagan / Saudi's destroy Russia's oil revenue ...
https://jamestown.org/program/russians-grapple-with-oil-price-war-at-a-time-of-pandemic/
"The timing could not have been worse for Russia to provoke a spat with Saudi Arabia over oil production quotas in early March...." [ you can guess how the rest of this gem continued and you would not be disappointed. Russia collapses 2.0 ]

2. Bush arrests Manuel Noriega ...
I still cannot get over William Barr having the gall to indict Maduro. Even the most dimwitted fraud on cable TV has to see through this charade, oh wait, I am talking about Brian Kilmeade and Sean Hannity, never mind.

Posted by: Christian J Chuba | Mar 30 2020 19:08 utc | 19

Bad spelling. Better ones: Dias called the cape Cabo das Tormentas ("Cape of Storms"; Dutch: Stormkaap), which was the original name of the "Cape of Good Hope". (Wiki)

I like the sound of Cabo das Tormentas. It seems that Akademic Cherskiy sails north now.

Posted by: Piotr Berman | Mar 30 2020 19:09 utc | 20

"Syria? The Zionist billionaires would stop their donations to Trump if he would give up on destroying it."

The Syrian oil-fields are currently in the hands of the US, and not benefiting the Syrian people. Even if they were, the production is not great enough to do more than supply Syrians. The slow collapse of the US position in Iraq means that the US is not going to hold those oil-fields for too long.

Posted by: Laguerre | Mar 30 2020 19:14 utc | 21

It was time. The shale industry already was a huge bubble even when oil prices were at USD 60.00 (because it had to borrow a lot to invest, and the more wells drilled, the lower was the oil output per USD invested), which insiders in Wall Street were already discussing how to burst it.

And this is a 100% intentional by the Russians. If American shale really go down, then it would be ironic, since it was the oil crisis of 1975 that effectively ended the Soviet Union.

Vengeance is dish best served cold indeed.

Posted by: vk | Mar 30 2020 19:18 utc | 22

An interesting part of this is that it is constantly termed as a oil war or price war between KSA and Russia. US has made enemies of both Russia and KSA and will be by far the biggest loser if its fracking industry is broken. In the past couple of years OPEC plus Russia have made number of output cuts to hold prices up, whereas the US uses this to increase its out put. Cui bono says this is Russia and KSA vs US frackers.

Posted by: Peter AU1 | Mar 30 2020 19:23 utc | 23

Lets not forget thedrop in oil prices a couple of years back created by the Saudis increasing production. At the time it surely looked like an intentional move to hurt Venezuela and Russia. I believe that it was intentional. Again, revenge by a black belt.

Posted by: arby | Mar 30 2020 19:23 utc | 24

thanks b... in a roundabout way i smell WAR... sorry... it just seems that when things go like this, the atmosphere is ripe for war.. some kind of war..

@ 7 Thomas Minnehan.. thanks for that... sometimes those future traders bet wrong.. maybe it is the fed buying the oil futures? speculation.. i know..

@ 8 trailer trash.. yeah, the canuck gov't basically blew away a lot of money on the pipeline... i doubt it is coming back.. as a b.c. person - good riddance..

Posted by: james | Mar 30 2020 19:26 utc | 25

Another factor going against the shale fracking pipe dream is that the Strategic Petroleum Reserve (SPR) is filled with real oil. Fracking produces light condensate (not oil) that does not meet this criteria, and thus the frackers will not benefit from filling the SPR (unless Trump changes the rules)

Besides, Exxon wants to crush the independent oil shale players and pick up the pieces at pennies on the dollar. Furthermore, former ExxonMobil head Lee Raymond once stated that "Exxon U.S. is not a "company and I don’t make decisions based on what’s good for the U.S.”
https://www.desmogblog.com/2020/03/27/shale-bailout-trump-oil-exxon-strategic-petroleum-reserve

Posted by: Krollchem | Mar 30 2020 19:28 utc | 26

Posted by: vk | Mar 30 2020 19:18 utc | 22

Yeah, it sounds like shale-oil is going to be the victim, as the costs of production are so high.

However, most of the economy is going to be up-ended by the corona-virus shut-down, and it's very difficult to predict how it's going to pan out.

Posted by: Laguerre | Mar 30 2020 19:34 utc | 27


A study by the Wall Street Journal concluded that in one ten year period, the shale oil companies' total costs had exceeded their revenues by two hundred and eighty billion dollars. They have stayed in business by issuing new stock and more debt to cover their losses. Their prime fields are seeing production declines. Their costs are rising as the price of is oil tanking. Collapse is imminent. It's going to have far-reaching consequences.

Posted by: David | Mar 30 2020 19:35 utc | 28

Posted by: james | Mar 30 2020 19:26 utc | 25

"thanks b... in a roundabout way i smell WAR... sorry... it just seems that when things go like this, the atmosphere is ripe for war.. some kind of war.."

Posted by: james | Mar 30 2020 19:26 utc | 25

Nah, the situation is too torn up for that. People genuinely don't know which way things are going to go.

Posted by: Laguerre | Mar 30 2020 19:39 utc | 29

As for me, any scenario that involves the stoppage of Fracking is a plus for the environment. Retrain the people laid off to build solar or wind equipment, to make it more affordable....


IF, we had a forward thinking Gov. we could get that done...

Posted by: ben | Mar 30 2020 19:51 utc | 30

Thank you President Putin. You are indeed doing Gods work.

Posted by: so | Mar 30 2020 19:54 utc | 31

@ 29 laguerre.. i hope you are right!

Posted by: james | Mar 30 2020 19:56 utc | 32

I think b is right about this: Trump has no bargaining power.

Leading me to believe that Trump's call with Putin was about something else.

I agree with james @25: the atmosphere is ripe for war.. some kind of war..

That's what the talk was about. Idlib, Iraq, and Yemen are hotspots.

I also suspect that Netanyahu may use that war and the world's focus on coronovirus to take the West Bank.

!!

Posted by: Jackrabbit | Mar 30 2020 19:58 utc | 33

I'm reading a lot of articles on the usual websites and there is quite a lot of detail information and informed speculation on a whole range of current problems.
What I have not see is thoughts on where we are going to be in a year or two. This could cause the kind of economic damage to the US that happened to Britain in WW2.
Like many readers I have long been a believer that we were flying on empty and yet believing it to be coming has in no way prepared me for what is about to go down.

There are lots of smart people on this site, what do others have to say?

Posted by: Ramon | Mar 30 2020 19:58 utc | 34

I apologize in advance for this ...

FOX news must have a direct line to some CIA (and Hasbara trolls) because their stories are such over the top propaganda, almost comical ... They claim that China is lying about Coronavirus being under control in Wuhan, that 'local sources' are telling them that they are cremating 500 people a day
https://www.foxnews.com/world/wuhan-residents-say-coronavirus-figures-released-by-china-dont-add-up

Why do I think this is propaganda.
1. We are collectively infuriated at the thought that China did something better than us so we have an emotional need to slander them, this hits all of the buttons ... lying totalitarian govt that is carelessly endangering their local population for their own reputation sake.

2. It's on FOX. Weren't western journalists booted out of Wuhan, who would be the source of this info.

What's behind this new Cold War against China, embarrassment about our (U.S.'s) shortcoming in handling the epidemic or fury that China stands in the way of our world domination. They are able to buy Iranian oil and get away with it.

Posted by: Christian J Chuba | Mar 30 2020 20:01 utc | 35

Notice how the language in China all along has been about saving lives and secondarily the economy, whereas in the West the language is all about the markets and getting business back and secondarily saving lives. In fact there is no apparent concern for the lives of US citizens on the part of the ruling imperial oligarchy.

You know, there is not a Syrian war, or an Afghan war, or a war on Venezuela, there is one and only one war, the war of the ruling oligarchy of Western civilization against ALL the people of the world.

Posted by: Babyl-on | Mar 30 2020 20:02 utc | 36

Yet another example of the utter intellectual bankruptcy of the US ruling class. They've been playing a rigged game for so long, they've forgotten how to think.

As others here have pointed out, not to worry, the US fracking industry will get bailed out.

The real thing the US might do, is not to join an expanded OPEC+, but to limit imports of foreign oil and protect the domestic industry. Contrary to current 'free trade' dogma, protectionism does work (example A: the United States from 1776 to 1970. Any questions?), but classically you want to limit imports of MANUFACTURED goods and keep the cost of raw materials low. Increasing the relative costs of raw materials in the US while still allowing mass importation of manufactured goods from low-wage nations is anti-Hamiltonian and will crush what remains of US domestic manufacturing..)

Posted by: TG | Mar 30 2020 20:04 utc | 37

Meanwhile Western Canadian Select is now going for $5 a barrel - less than the price of a coffee and muffin at Starbucks.

Posted by: Krypton | Mar 30 2020 20:06 utc | 38

Meanwhile Western Canadian Select is now going for $5 a barrel - less than the price of a coffee and muffin at Starbucks.

Posted by: Krypton | Mar 30 2020 20:06 utc | 39

Not sure the US shale market can "go bust" as such. The owners can go bankrupt, but that just means banks and bondholders become the new owners, and their debt investment suddenly turns into equity investment with zero gearing. Once that happens the US shale producers become solid companies financed with zero debt and no incentive to hold back on production. They pump and pump and pump until the pumps no longer work.
Sure, no new developments, but the existing infrastructure will last a few years yet.

Posted by: Michael Droy | Mar 30 2020 20:11 utc | 40

I don't see a way out for the US fracking industry. Their product is too expensive in the current times, and those setting the rules in these times (Russia and Saud Arabia) have no good reason to help.
The social damage from a collapse in the US will be papered over with printed money. I don't know how that will play out.
One scenario is time being called on the US's forever-wars in the Middle East, but would they be replaced by an invasion of Venezuela? There is good stuff down there, as well as the heavy stuff they've been pulling out. And just across the border into Brazil there is some high ground that looks like a good spot to build a command post.
The US could cut its losses in the wider world, something that seems to be happening anyway, and return to America, north and south. I don't see it just quietly going down the gurgler, but the European Union might.

Posted by: Hal Duell | Mar 30 2020 20:15 utc | 41

That MAGA ship of fools must be loving all that winning. Rest assured stable genius is playing multi-dimensional chess... If anything, it's all Keyfabe and a hoax by russia just like the covid-19 was a democratic hoax to undermine the great white hope. Didn't Chump just brag last week about how low oil price were a very great thing for his cult of deplorables ? Zugzwang is a b*tch.

Posted by: Sol Invictus | Mar 30 2020 20:19 utc | 42

That MAGA ship of fools must be loving all that winning. Rest assured stable genius is playing multi-dimensional chess... If anything, it's all Keyfabe and a hoax by russia just like the covid-19 was a democratic hoax to undermine the great white hope. Didn't Chump just brag last week about how low oil price were a very great thing for his cult of deplorables ? Zugzwang is a b*tch.

Posted by: Sol Invictus | Mar 30 2020 20:19 utc | 43

Well if you f*ck with Nord Stream II, the favour is returned. One day the US will learn the limits to their stupidity.

Posted by: Jezabeel | Mar 30 2020 20:24 utc | 44

In this agreement, it must include OPEC members Venezuela and Iran, and Russia must insist that economic and oil embargo be lifted to all countries. The lowering of crude oil prices has the same painful effect on the economies to those countries that we economically siege, like Cuba, Iran, North Korea, and Venezuela. Its a poetic revenge.

Posted by: El Cid | Mar 30 2020 20:31 utc | 45

Piotr Berman | Mar 30 2020 19:09 utc | 20

Much better; Cabo das Tormentas

I had actually thought of the sabotage angle, but assumed that the objective at the time was dictated by urgency and was not necessarily to take the scenic route or cause a delay in finishing the pipeline)

--------
james | Mar 30 2020 19:26 utc | 25

thanks b... in a roundabout way i smell WAR... sorry... it just seems that when things go like this, the atmosphere is ripe for war.. some kind of war..

Of course it is already a war. The question I ask is, who is fighting and against whom?
The tactical aim at the moment is the end of the petro-dollar. A secondary aim is finding a limit to US militarism. Which in turn depends on the pork.... soorry.... the grifting of large sums of unlimited largess. Third, is trade and domination of markets including sanctions and "treaties". Fourth, is the "domination" of population dissent and overriding Judicial systems.

So the US, China and Russia are at it "hammer and tongs" (old saying but apt). Covid is just one means to an end, regime change another. Who else is in the fight? I would suggest that the Oligarchy and the Termites, the Fed and the deep parallel financial pool, the uncontrolled but unified intelligence "agencies", all have their own agendas.

Posted by: Stonebird | Mar 30 2020 20:35 utc | 46

Laguerre @29

james happens to live close enough to the US that he can smell it when the wind is blowing the wrong way. I am concerned that he might be correct with his suspicion that war is in the air. While rational people may do as you suggest and wait until they better understand conditions, that's not historically how Americans think. When confused and panicked Americans are liable to shoot first and sort things out later.

Posted by: William Gruff | Mar 30 2020 20:37 utc | 47

Posted by: Laguerre | Mar 30 2020 19:14 utc | 21

"The slow collapse of the US position in Iraq means that the US is not going to hold those oil-fields for too long."

Remember where this oil is going to. During the previous presidential term, it was discovered that the oil was going into Turkey, aided and abetted by the profiteers Erdogan and his son, and then onto oil tankers that shipped it to Occupied Palestine. Current production is also going into Jordan, where it is being shipped by pipeline into the refinery in Eliat(?). I can only surmise the price to be extremely cheap.

So the inhabitants of Occupied Palestine will expect the US to maintain this flow as long as they can, come hell or dead GIs.

Posted by: naiverealist | Mar 30 2020 20:40 utc | 48

The problem with shale became clear right after the first wells were drilled.

If I understood the reports from the "shale bubble" website correctly, originally the magic over shale gas and oil came from the fact that Wall Street was involved since the beginning (so it was a "coastal elites/heartland rednecks alliance" from birth) and the expectation was that a horizontal well would perform the same way as the traditional vertical well.

A traditional vertical well follows are normal curve graphic, imitating a hill. It starts low, but keeps growing until reaching a peak, maintains this peak for a while (some decades) and then begin a suave fall, which also takes decades.

No wonder, then, the huge euphoria that started in Wall Street when those horizontal wells begun pumping out oil at absurd quantities - they imagine that was the output floor of such wells, and that productivity would only rise after the decades. Indeed, it was predicted at the time that the USA not only was firmly walking towards self-sufficiency - many also predicted it would become the world's greatest oil exporter (yes, above Saudi Arabia, Venezuela, Russia etc.).

But this euphoria was short-lived, as, some years later, productivity of the horizontal wells begun to suddenly fall. It was then realized, after further research, that those wells performed differently than the vertical wells: they begun directly with peak production, then immediately started to fall. Their output graphic looks like an upside-down, slightly inclined letter L.

Even after this discovery, the investors didn't immediately give up. They thought: let's just drill longer wells. And they did. It was then that another problem came out: it seems that, after 3-5 miles, those horizontal wells suddenly lose a lot of pressure necessary to pump the oil out of it. To make things worse, after this length, they begin to suck out pressure from the neighboring wells as well. Therefore, it is a self-defeating enterprise to extend the horizontal wells beyond 3 miles length. And the situation is even direr because shale reserves are usually concentrated in one specific area - it's not like you can drill one horizontal well in Ohio and another one in Florida and so on: the rule of thumb that the oil and gas "must be there" to be extracted in economically viable quantities still do apply to horizontal wells.

After that, all that kept the American shale industry alive was Wall Street and its rotten papers recycling machine.

Posted by: vk | Mar 30 2020 20:41 utc | 49

The US unilateral economic siege on Venezuela and Iran has the affect of cutting world oil supply that benefits US shale and fracking industry.

Posted by: El Cid | Mar 30 2020 20:44 utc | 50

Question: But what strategic offer could Trump make that would move Putin to agree to some new deal?

Answer: The return of Alaska to Russian sovereignty! Call it Trump's Folly!

Posted by: ak74 | Mar 30 2020 20:48 utc | 51

A very timely topic b for what lies ahead. Thank you.

Hehe hehe. Just wondering if Putin had his bowl of popcorn during the Trump call to discuss oil prices.

What are the options? Is oil the next Industry sector to lockdown and enjoy a bailout?

Oil glut and no where left to store it. So, here is a question raised days ago by Goldman Sachs, one of the two Governors of global money supply.

We have read about Negative Interest Rates. What happens if Oil Prices Go Negative? -- oil glut and the COVID-19 demand shock as lockdowns continues.

How low Can Oil Go? One Forecast cited by Bloomberg Sees $5 a Barrel. The worst is yet to come.
LINK

Oil traders struggling to navigate one of the biggest oil crashes in history say the worst is yet to come.

Even after plunging about 60% this year to the lowest since 2003, prices will likely drop further to $20 a barrel or below, according to a survey of traders from some of the world’s biggest oil companies and merchants. Analysts from Goldman Sachs Group Inc. to Citigroup Inc. also expect prices to extend declines in the coming months, with some even speculating certain regional prices could go negative as markets try to send signals to halt supply.[.]

Demand shock beyond June 2020 and workers will curtail non-essential travel as they pay down debt.

Virginians ordered to "Stay at Home" until June 10. We see timelines are changing. How about maybe July?

Posted by: Likklemore | Mar 30 2020 20:48 utc | 52

@ 12 Stonebird

The ship is not off course. Russians changed course from passage through the Suez Canal and Mediterranean (where the US could interdict easily or stall it for a hundred reasons). It is now on course down around the Horn of Africa and up the South Atlantic, with RF Naval escort, probably submarine.

The AKADEMIK CHERSKIY, Russian pipelaying vessel.
Here's the latest location:https://goradar.ru/tracking..

Reports have it to port in Congo before it continues up toward Germany to complete the Nord Stream 2.

Posted by: Red Ryder | Mar 30 2020 20:49 utc | 53

Posted by: Kali | Mar 30 2020 18:38 utc | 11

"But even better question is what realistically the United States can "give" Putin and Russia and this is a point at which this whole quid-pro-quo things runs into trouble, because realistically, there is nothing the United States can offer which will not be either taken or will fall as a ripe apple into Putin's hands. I could, of course, speculate on the prolongation of the START treaty as a viable commodity, but Russia is well positioned to be just fine without this prolongation. "

Andrei Martyanov a few hours ago @ his blog.
He seems to have a better grasp of reality then you have. I understand that murcan exeptionalism is hard to recover from, heck even Heroin withdrawal must be childsplay in comparison. I enjoyed reading your fantasies tho, knowing how exeptionalists think and dream is the only way us "normies" get a view into their heads.
Stay safe and enjoy the covid quarantine.

Posted by: Per/Norway | Mar 30 2020 20:51 utc | 54

A friendly reminder to all barflies that fracking within the Outlaw US Empire also takes more energy to operate than the energy extracted. The business was bankrupt before it began, and nothing can change that fundamental fact.

Posted by: karlof1 | Mar 30 2020 20:56 utc | 55

@ 40 Michael Droy

I think you make a valid point, but it goes a bit beyond just the shale companies themselves. What happens to for example all the contractors the shale companies need for their day-to-day operations? Will they stick around for what is essentially a kamikaze run?

Posted by: Eric | Mar 30 2020 20:58 utc | 56

Trump has no chips and no cards to play. He shot his wad by scaring the Swiss pipe-laying company to cease operations on the Nord Stream 2. Natural Gas is the bloodline for Russia. Might as well fire missiles at them.

MBS overplayed his hand with oil production increases, also, trying to force Russian customers to switch to Saudi oil. This was the second time SA went after the Russian client market.

So, two dumbasses made their moves and Putin has thrown both to the mat.

He is protecting his oil revenues, his natural gas pipeline revenues and his LNG revenues.

There's no room in the equation for compromise.

He has to break both competitors.

It's like a street fight. You have to break bones to end the threat.

He grew up a street fighter in St. Petersburg. Snap! Snap!

Posted by: Red Ryder | Mar 30 2020 21:01 utc | 57

Michael Droy 40 "They pump and pump and pump until the pumps no longer work."

That is the problem with shale. To pump and pump they have to drill and drill.
A couple of years and current new wells will have slowed to a trickle and while those wells are being pumped dry at a large loss, nobody will be drilling new wells.

Posted by: Peter AU1 | Mar 30 2020 21:01 utc | 58

Michael Droy-40

Shale will come back but on a smaller scale. The bankruptcies will expose the realities of shale oil. The costs are high because the wells deplete quickly. The most productive areas are already providing a diminishing return. The fracking companies used some questionable accounting practices to mask their losses. Investors have gotten badly burned. It won't be easy to find more suckers to buy fracking company's debt or stock issuances.

Posted by: David | Mar 30 2020 21:05 utc | 59

Likklemore @52--

Thanks for your replies on other threads I missed!

Frontline, the tanker company, reports the leasing of as many empty VLCCs as possible for storage purposes to the point where very few are now available for that purpose. So, extraction rates must be reduced as there's no storage on or offshore. IMO, the rise in China's demand won't be enough to offset further demand destruction, so the price will continue to slowly degrade until the virus is in remission come the end of Summer.

China might offer to pay Saudi a premium price above the market provided it can use Yuan or perhaps T-bills that will soon be worthless.

Posted by: karlof1 | Mar 30 2020 21:10 utc | 60

Why would there be any phone call to Trump except from the Palestine Occupation junta. There is no compelling reason for Putin or Xi to call Trump.

The USA is not agreement capable.

The USA breaches all agreements.

The call might happen if Trump is begging for medical aid.

The call might happen if Trump is revoking all USA sanctions and crimes against humanity.

The call, if real, will discuss the weather. And Trump will claim the deal of our time, and the clouds will continue on their journey.

Posted by: uncle tungsten | Mar 30 2020 21:10 utc | 61

Interlude: https://www.youtube.com/watch?v=3d3wCPYCGJ0

Posted by: Mina | Mar 30 2020 21:16 utc | 62

karlof1 #55

The business was bankrupt before it began, and nothing can change that fundamental fact.

EXACTLY THAT. Its a ponzi scheme and good riddance to the entire ugly industry. Gross environmental destruction unleashed on the land so a few thieving fat cats can rip off pension fund investors.

Why would any world leader even answer a phone call from Trump. Leave it to some Deputy Foreign Minister to take the call and a write a brief dot point record.

Posted by: uncle tungsten | Mar 30 2020 21:19 utc | 63

vk @49

The primary reason for horizontal wells is to limit the number of well sites and hence the revulsion and rebellion of the locals. (If you've ever seen aerial photos of vertical wells in similar shale deposits, you'll see what I mean - ugliest fucking thing you ever saw.) Don't know much about the liquid aspects of shale deposits, but the gas is bound to the interstitial surfaces of the shale and was accumulated there over millions of years of decay. The reason the production curves look as they do has nothing to do with horizonal versus vertical, but with the freeing of gas which took ages to create and accumulate. The shale will continue to make gas at depth and pressure, but it will be very many ages of man before enough accumulates again to be economically viable. I live in the heart of the Marcellus and Utica, and have worked on this gas boom.

Posted by: vinnieoh | Mar 30 2020 21:23 utc | 64

Let them go bust. The US creditor banks will ask for more bail outs.
Instead VP will offer those banks a pile of Russian bonds, based on energy.
Oh, and VP has still another ace under sleeve: he can promise not to interfere in any further US elections.

Posted by: augusto | Mar 30 2020 21:26 utc | 65

If the Americans decide some sort of military adventure is necessary in reaction to the coronavirus disaster, then a regime-change operation directed against Venezuela would likely be the first choice, as there is no internal consensus on striking Iran and the build-up of forces required against Iran in context of U.S. social unraveling due to the virus could create serious domestic unrest. A surgical strike on Venezuela's political leadership followed by "limited military support" towards a "democratic transition" could plausibly be sold to US decision makers as a quick fix, opening resource extraction spigots which could help the US financial sectors regain some of their footing. It could be assumed as well that the serious adversaries, Russia and China, would be less inclined to be involved in Venezuela's defence. The pitfalls of such a move are quickly obvious, but the gamble is enticing enough to be seriously considered.

Posted by: jayc | Mar 30 2020 21:28 utc | 66

The present shut-down, even if not yet so much for the USA, is going to have incalculable consequences for the world economy. I wouldn't like to predict now what those effects are going to be.

Posted by: Laguerre | Mar 30 2020 21:32 utc | 67

US shale and Canadian tar Sands oil will quickly go bankrupt, so the question becomes... will the United States blow up the middle east to save our domestic oil production? Iraq is producing just under 5 Million barrels a day, take that of the market and fracking is temporally saved.

Posted by: Gregory P | Mar 30 2020 21:54 utc | 68

For those thinking more war is going to be launched by the Outlaw US Empire, please note the USN is having to quarantine its vessel's crews due to COVID. And you can bet the other service branches are facing the same problem. What's being revealed is the effectiveness of non-lethal bio-chem agents that demobilize the opforces. Imagine the effect of a few infected brothels next to NATO bases in Germany prior to their infection being discovered. A similar effect's occurring to all national police forces and firefighters.

Posted by: karlof1 | Mar 30 2020 21:56 utc | 69

karlof1 | Mar 30 2020 21:10 utc | 60
[So], extraction rates must be reduced as there's no storage on or offshore.

There no storage: Oil market fears U.S. is running out of crude storage capacity
and,
Texas Or Canada: Where Will Oil Hit $0 First

* * * *
China might offer to pay Saudi a premium price above the market provided it can use Yuan or perhaps T-bills that will soon be worthless.

Shhhh. for many years now, I bet MbS has been saying gimme Yuan to hold on to market share when this happened 5 years ago.
Oh my, how times have changed. After a very slow recovery from COVID-19 disruption...
China will ‘compel’ Saudi Arabia to trade oil in yuan — and that’s going to affect the US dollar
from CNBC, Oct.2017

“I believe that yuan pricing of oil is coming and as soon as the Saudis move to accept it — as the Chinese will compel them to do — then the rest of the oil market will move along with them,” Carl Weinberg, chief economist and managing director at High Frequency Economics, told CNBC

Also, recall the recent ARAMCO IPO, reportedly China took a 5 % stake. Hmmm. Was it with USTs?

Posted by: Likklemore | Mar 30 2020 22:00 utc | 70

@ Posted by: vinnieoh | Mar 30 2020 21:23 utc | 64

Thanks for the correction. Yes, I used the term "pressure" coloquially, knowing it was objectively wrong just to simplify the narrative, but I didn't know there were vertical wells in shale exploration.

--//--

@ Posted by: arby | Mar 30 2020 19:23 utc | 24

Yes, both you and b are correct. This is clearly a vengeance for 2014. Didn't resist the poetic irony with 1975, though.

--//--

It will be interesting to see Trump's reaction after the negotiations, because his administration - as two official reports related to national defence make it clear - has a doctrine which states the USA is to fight to the end to maintain its status as the sole world superpower for the forseeable future. Will he revise his own doctrine?

Posted by: vk | Mar 30 2020 22:03 utc | 71

Yes, the Saudi play of 2014-15 where they flooded the market with cheap oil in an attempt to cripple the US shalegas industry. They had another, more dear to their heart target though - Iran and the P5 had just signed the JCPOA and there was the promise of Iran re-entering the world markets as something other than a pariah. The Saudis were intent that there would be no economic recovery for Iran.

Russian jujitsu by a black belt? Try this one on for size. After the US fomented coup in Ukraine and the probable loss of the gas transmission potential to Europe I found a map of the known extents of the shale gas deposit in the Donbass: it almost exactly overlays those areas controlled by the Russian separatists. En Garde and touché, US State Dept.

What the Saudi monkeywrenching in '14-'15 exposed here in the US though was that many investors were already spooked by the unprofitability of shalegas and wanted out and there were many vulture capitalists of an Asian persuasion ready to oblige, at literally pennies on the dollar. Several large pooled fields here are now owned by Asian investors. This time around it could be even more extensive...

UNLESS

The US nationalizes those holdings and the industry in general. We're throwing money around like it grows on Trump's ample ass, so why not a coupla' trillion to ensure real US energy security? These wells may be undesirable now due to low market price, but a vast amount of money has been spent consolidating leasholdings, laying pipelines, and the other preparatory work. When prices rise to a certain level you can bet those foreign investors will put it all back into production - and ship it to their shores, and a big FU to the US.

If that makes me sound like a typical xenophobic ultra US nationalist, I am not. I suspect that the volume that is claimed is not there, we will need it here, and I sincerely do not wish to see all those GHG's that will be produced in the liquification and transport of LNG.

Posted by: vinnieoh | Mar 30 2020 22:03 utc | 72

Does anyone know why as of this afternoon no longer Financial times/ John Hopkins no longer includes Iran on it’s corona progress and death in the world. Was that an order coming one from SOS PumpeGoh (in Persian meaning Shit Pump) strange a leading newspaper and a leading research university will avoid showing Iran under sanctions is faring much better fighting the Coronavirus than most of leading sanctioning western countries including USA, France, Spain , Italy, UK. Shame on FT and John Hopkins

Posted by: kooshy | Mar 30 2020 22:05 utc | 73

@Christian J Chuba

Not just FoxNews seem to have a direct line to the CIA.

Yesterday, Matt Stoller went on a tirade against China in an interview with Michael Tracey calling China a fascist country ruled by Han-supremacists and compared President Xi Jingping to Hitler.

Posted by: Vato | Mar 30 2020 22:06 utc | 74

Sorry here is the link to the graphs that now not including Iran
https://www.ft.com/coronavirus-latest

Posted by: kooshy | Mar 30 2020 22:07 utc | 75

I'm a little surprised that so many have this idea that phone calls between Trump and Putin and Xi are 'useless'. They say that the USSA is 'non-agreement capable' and so on. But even if that is true, such communication can be extremely helpful, whether agreements are made or not.

Remember too, 'agreements' are relativity-based. So if you are some down-and-out po-bucker who has an 'agreement' with some fat Landlord who happens to own half the town, your agreement is likely worth nothing at all. But tomorrow when the papers announce that your fat-cat Landlord is under indictment for cheating Chase Manhattan Bank out of $12 million, you may find your 'agreement' to provide a wee bit of leverage.

It involves changing fortunes, and many other variables.

So let's just let Orange Jesus continue with those phone calls.

Posted by: blues | Mar 30 2020 22:09 utc | 76

For some time now I have believed that as the US influence and presence inevitably wanes in Eurasia, that the US will turn its vengeful eye to Central and South America. Venezuela, There You Go Again (an old Leo Kottke tune.) Poor southern states: So near the US and so far from God.

Posted by: vinnieoh | Mar 30 2020 22:19 utc | 77

@ Posted by: vinnieoh | Mar 30 2020 22:03 utc | 72

Nationalization makes sense, but it only happened once in America's history if I'm not mistaken. It was done by Truman, and was done to squash a strike in the steel mills.

FDR took control of the private sector and effectively made the USA a socialist economy between 1942 and 1944. But those were truly exceptional times.

Posted by: vk | Mar 30 2020 22:20 utc | 78

@ karlof1 69

Gone into deep secret mode -
Pentagon Orders EUCOM Not to Report Military Coronavirus Cases Over Security Concerns

and a further step, American taxpayers will not be told -

Pentagon Asks US Congress to Classify Future Years Defense Program Spending


Posted by: Likklemore | Mar 30 2020 22:31 utc | 79

vk @78

Agree on all points (Truman was overruled by the Supremes though, if I'm not mistaken.)

As to your last though, many are wondering if there can or will be any return to what was, after this human trial we're still in the First Act of. A long journey ahead, and I doubt I'll be around to see what emerges on the other side.

Posted by: vinnieoh | Mar 30 2020 22:37 utc | 80

The solution, from a Ziocon point of view, is to halt all Iranian oil production, now how can they do that? Bomb the supply and increase the demand. However the US is now resembling a failed state and is in no condition to wage another proxy war for Israel.

Slightly off topic, interesting article from the Sydney Morning Herald on Coronavirus:
https://www.smh.com.au/national/the-perfect-virus-two-gene-tweaks-that-turned-covid-19-into-a-killer-20200327-p54elo.html

Posted by: Paul | Mar 30 2020 22:42 utc | 81

Where is Sarah Palin when we need just need her: Pump baby pump.
I believe it is not reasonable to think that earth atmosphere is a finite space, and putting 100 million barrels a day to it will definitely suffocate the mother. Let's get off oil please.

Posted by: Sakineh Bagoom | Mar 30 2020 22:55 utc | 82

@ 47 william gruff... that was funny! thanks... actually the wind comes off the pacific ocean... we're more likely to get the fukushima eons then not..but as others like stonebird and someone else noted, we're essentially in a war already, it just isn't a hot war at the moment..

seems like a perfect storm - oil collapse and covid 19... i might be wrong, but one way to distract is to make war.. i think it is a really bad idea, but i think this about all wars generally.. my views are partly based on astrology.. i was predicting an important year for 2020 for at least the last 6 years based on the saturn--pluto and jupiter-saturn conjunctions that both happen this year...i suggested a top or bottom in the market and the possible demise of saudi arabia.. neither of these have happened yet.. maybe the later one won't, but the set up looks good for it.. today is essentially the mars-saturn conjunction - also war signature in trad astrology from the past.. so, although we might not be seeing this directly, it is fairly apparent even without an announcement... the mars-saturn conjunction is the quickest moving of the 3.. it remains to be seen how the players act all of this out.. like i say - it just seems like one way to distract from all the rest of the dynamics at play at present to justify a lot more bullshit.. hopefully i am wrong..

Posted by: james | Mar 30 2020 23:19 utc | 83

"Shhhh. for many years now, I bet MbS has been saying gimme Yuan to hold on to market share when this happened 5 years ago.
Oh my, how times have changed. After a very slow recovery from COVID-19 disruption...
China will ‘compel’ Saudi Arabia to trade oil in yuan — and that’s going to affect the US dollar
from CNBC, Oct.2017

“I believe that yuan pricing of oil is coming and as soon as the Saudis move to accept it — as the Chinese will compel them to do — then the rest of the oil market will move along with them,” Carl Weinberg, chief economist and managing director at High Frequency Economics, told CNBC
Also, recall the recent ARAMCO IPO, reportedly China took a 5 % stake. Hmmm. Was it with USTs?

Posted by: Likklemore | Mar 30 2020 22:00 utc | 70"

+++
The minute the Al Saud family begins accepting yuan for oil their days are numbered.

The US put them there, put the Saudi in Saudi Arabia. Any move to accept yuan will be seen as betrayal, and the Al Sauds will be removed, either replaced or simply obliterated.

They know that.

Maybe they're dumb enough to take that risk but I seriously doubt it

Posted by: Realist | Mar 30 2020 23:21 utc | 84

I tino Putins strength lies in that he has no vested interest inn what happens outsider of Russia.

Alos likely Trump has about 6 months left in Office and is useless and cant be Trusted and his replacement Will be worse

Putin is winning some points in Europe.

Ponlo pintura Putin light want to make is that guy pompeo is an idiotez and not worth Lavrovs time.

Posted by: jared | Mar 30 2020 23:27 utc | 85

Well, here's America's chance to buy American!

Posted by: Norogene | Mar 30 2020 23:48 utc | 86

utc@47

"...or sort things out later"

or not.

Posted by: bigchin | Mar 30 2020 23:51 utc | 87

From where I'm sitting and, that's no-where's-ville Australia, there seems to be an orchestrated and fruitful subliminal message in play of 'China-Hate' emanating from every person I speak with.
It was unheard of just a month ago.
This is what I'm thinking the future will hold. A war against China at the least. I'm sure they can find a few other countries to add to their list of 'nefarious devils who tirelessly work against us and our way of life to sap us of our natural bodily fluids.'

I really do think that we'll eventually come out of this lockdown minus many of the toys we took for granted. Like people are gonna lose their vehicles, businesses, savings, homes. Then, they're gonna want to direct their anger at someone and it looks like China is being set up to take that anger.
They will be the guilty party to blame. Let's see how wrong I am. Give it a 18months - 2years.

Posted by: Pestercorn | Mar 31 2020 0:07 utc | 88

The minute the Al Saud family begins accepting yuan for oil their days are numbered.
The US put them there, put the Saudi in Saudi Arabia. Any move to accept yuan will be seen as betrayal, and the Al Sauds will be removed, either replaced or simply obliterated.
Posted by: Realist | Mar 30 2020 23:21 utc | 86

+++

If Saudi Arabia shifts to the Yuan, it would have to diversify away from buying US arms. They might be the undisclosed buyer of high-end Chinese missiles, said to have an "urgent need" for them, as per Chinese media on 2020/3/29. This news might be functioning as diplomatic signalling.

Chinese high-end missile sees first export delivery despite pandemic
https://www.globaltimes.cn/content/1184117.shtml

It was the first time a third-generation anti-tank weapon system developed by the Chinese company has been exported, according to the statement.

As the client was in urgent need of the missiles, the successful delivery had significant meaning for establishing Norinco's (China North Industries Group Corporation) market position and further opening up the market, the company said.

Norinco did not disclose more details on the deal in the statement, including the name of the buyer, the quantity purchased and the value of the deal.

Posted by: occupatio | Mar 31 2020 0:16 utc | 89

Babyl-on @ 36 said;"You know, there is not a Syrian war, or an Afghan war, or a war on Venezuela, there is one and only one war, the war of the ruling oligarchy of Western civilization against ALL the people of the world."

This is what it is, IMO also. It's not rocket science, but, the sordid history of humanity.

Posted by: ben | Mar 31 2020 0:28 utc | 90

@ Realist 86

[.] " The minute the Al Saud family begins accepting yuan for oil their days are numbered.

The US put them there, put the Saudi in Saudi Arabia. Any move to accept yuan will be seen as betrayal, and the Al Sauds will be removed, either replaced or simply obliterated.

You hug that thought. Newsflash: The horses camels have already bolted. China is expanding its presence/influence in ME.

These 35 agreements with KSA,'centered around ways to align the Saudi Vision 2030 with the Chinese Belt and Road Initiative' will not be in USD - unless China is unloading USTs. There is nothing US can do except sell more arms to the kingdom. Reuters, WSJ reported the big signing and likely, CNN, Fox, ABC buried it.


"Saudi crown prince signs raft of cooperation agreements with China
Feb.22, 2019
BEIJING: Crown Prince Mohammed bin Salman on Friday met with Chinese Vice Premier Han Zheng to discuss ways of further developing relations between the Kingdom and China.

The meeting took place in the grand surroundings of the Great Hall of the People in the Chinese capital Beijing. After their talks, the crown prince headed the Saudi delegation at the third session of the China-Saudi Arabia High-Level Joint Committee which he co-chaired with Zheng.

Delegates at the meeting discussed moves to strengthen cooperation between the two countries on trade, investment, energy, culture and technology, as well as the coordination of political and security matters. The committee also reviewed plans for greater integration between China’s Belt and Road development strategy and the Saudi Vision 2030 reform program.

After agreeing on the minutes of the meeting, the Saudi royal and Zheng took part in the signing of a range of agreements, memorandums of understanding (MoU), investment projects and bilateral cooperation accords between the Kingdom and China:[.]

MoU between the Kingdom’s Ministry of Energy, Industry and Mineral Resources and the National Development and Reform Commission in China, signed by Saudi Energy Minister Khalid Al-Falih and Ning Jizhe, vice chairman of the National Development and Reform Commission.

MoU between the Chinese Ministry of Commerce and Saudi Ministry of Commerce and Investment to form a working group to facilitate trade, signed by Abdul Rahman Al-Harbi, the Kingdom’s deputy minister of commerce and investment, and Qian Keming, Chinese vice minister of commerce.[.]

Posted by: Likklemore | Mar 31 2020 0:37 utc | 91

No, it was the Brits who enabled the House of Saud to gain control over the Arabian Peninsula after WW1. But then, most every barfly knows that.

Posted by: karlof1 | Mar 31 2020 0:42 utc | 92

james | Mar 30 2020 23:19 utc | 85

seems like a perfect storm - oil collapse and covid 19 ...yep.

karlof1 | Mar 30 2020 21:56 utc | 69 55 etc
In debt to your insights over several weeks -thank you.


Thank you b, what a conflagration, it has game changer potentials: Exxon has cut 1,800 contractors from Baton Rouge refinery and planning to cut production. Goldman Sachs reports US oil production falling 1.4 mn bpd over five quarters from 2nd quarter 2020. Goldman's further estimate Chevron needs $50 per barrel in order to cover spending and its dividend. ExxonMobil, on the other hand, needs something like $70, so labour cuts. U.S. oilfield activity will collapse with oil prices well below $30 West Texas Intermediate. Boeing on the floor....

We may be seeing Putin's masterpiece of statecraft start to unfold and the irony of Saudi Oil, rebels defeating Empire mirrored back at Imperial Amerika into the mix, genius. West’s flailing hail Mary - the ponzi theatre of foie gras stuffed markets backed by mil.steroid muscle. The victor has to take the remaining fields to stay in the game. Yemen, Somali Basin, The Mound & Zageh Fields Iran, West Qurna Field Iraq, Venezuela Brazilian offshore and the Kashagan Fields of Kazakhstan -unlocking the 7 gates... Will Putin offer Trump a trade on the vaults on the Beltway Swamp creatures, is Trump even a player in this? Does Putin have a pacifier from the Russian oligarch Judaic houses to soften Israel? Will Europe pivot east and welcome Russia into the EU as cash saviour? Was Sars -CoV 2 a table reset? Yet Russia remains last man standing? It’s too early to call if we could possibly be seeing some of the most brilliant military deception since Ghengis Khan... we shall see.

Posted by: dennis | Mar 31 2020 1:08 utc | 93

@Paul #82
Not credible.
We're looking at a *daily* demand shortfall of 10 to 20 million barrels per day.
Making Iran and Venezuela magically disappear would remove *maybe* 6 million barrels per day - of which more than half is offset by Saudi, UAE and Russian increased production.
Did you even read what I posted above? 1-3 *billion* extra barrels of oil piling up due to nCOV induced demand shock?

Posted by: c1ue | Mar 31 2020 1:11 utc | 94

And yet despite the trojan work of Harry St John Philby it was the yanks that stole Al Saud right from under the Brits noses in 1945, and kept them in power and made them what they are now. There ain't thousands of Brit squaddies permanently posted there, now are there?.
WW2 resulted in the US taking over from Brits Empire, as any fule knoe

+++++

"You hug that thought. Newsflash: The horses camels have already bolted. China is expanding its presence/influence in ME.

These 35 agreements with KSA,'centered around ways to align the Saudi Vision 2030 with the Chinese Belt and Road Initiative' will not be in USD - unless China is unloading USTs. There is nothing US can do except sell more arms to the kingdom. Reuters, WSJ reported the big signing and likely, CNN, Fox, ABC buried it.


"Saudi crown prince signs raft of cooperation agreements with China
Feb.22, 2019 "

+++++

I guess then we've found our next war

Posted by: Realist | Mar 31 2020 1:11 utc | 95

As some businesses board up their store fronts as if a Cat.6 hurricane is making landfall, this is a very sobering (estimated 'back-of-the-envelope') unemployment number from the St.Louis Fed:

the Second-Quarter Unemployment rate projected at an eye-watering 32.1% !!!!
There are caveats that may mitigate. And no, imho, the recovery will not be quick.


Concluding commentary:
"Moreover, one can argue that the expected duration of unemployment matters more than the unemployment rate itself, especially if the recovery is quick (and so duration is short). These are very large numbers by historical standards, but this is a rather unique shock that is unlike any other experienced by the U.S. economy in the last 100 years."

Posted by: Likklemore | Mar 31 2020 1:27 utc | 96

If Saudi Arabia shifts to the Yuan, it would have to diversify away from buying US arms.

Posted by: occupatio | Mar 31 2020 0:16 utc | 91
+++++

Well, they had better get their skates on then, hadn't they?

Posted by: Realist | Mar 31 2020 1:34 utc | 97

I really do think that we'll eventually come out of this lockdown minus many of the toys we took for granted. Like people are gonna lose their vehicles, businesses, savings, homes. Then, they're gonna want to direct their anger at someone and it looks like China is being set up to take that anger.
They will be the guilty party to blame. Let's see how wrong I am. Give it a 18months - 2years.

Posted by: Pestercorn | Mar 31 2020 0:07 utc | 90

+++++

That's precisely the point I ve been making over the last 24 hrs or so, while dodging the childish barbs of the hilarious Holey Comrade Trinity

Posted by: Realist | Mar 31 2020 1:39 utc | 98

Deciphering the mental processes of MBS is always speculative, but it is very hard for KSA to deliver on the threat to increase the deliveries by 2.5 mln bbl/day. As we can see, planes fly only a fraction of pre-virus level, people on quarantine drive much less, you can offer fuel for free and it will not sell more. Now, if you could offer some hand sanitizer and facial tissues with each "full tank", perhaps it could work... But stopping oil production is troublesome for some reasons, to the ignorant me it seems that if you interrupt flow dynamic of oil, it is troublesome to restart it, shale oil may suffer from something similar. Thus tanker ships are being filled up and used for storage as destination ports refuse to take cargoes invoking "higher power". Hapless KSA cannot find enough tankers, and when they find them, hard to find a port to accept them. So KSA combative threat could impact psychology of the traders, but the virus made a dent in demand of several times larger magnitude.

Nobody knows how long the demand will stay low, but as it does, storage will be bursting, renting tanker ships became expensive. so the glut it will take time to dissipate (folks renting the tanker ships will be pressed to get rid of the cargoes at the first opportunity), and with no coordination to cut the production, low prices may stay for a year or more. This seems necessary to cut shale oil and other high cost oil project down to size. Periodic down period of pricing does not change long term calculations, but long periods will drive a lot of small players out of business. This means so-called consolidation, creditors become owners and sell it to vultures (regular folks cannot own something that costs more to maintain than it brings revenue). And what do the vultures do? "Paring excess capacity". Happened to many industries in the past. And even brainless bankers will give it two thoughts before lending money for projects in high cost oil production.

BTW, Putin is doing a gently MBS-like manouver, with the assist from Trump. To wit, Russia started to tax repatriated profits -- no need to imprison the account holders in Ritz Carton. But why would they be motivated to repatriate the profits back to Mother Russia? A patriotic virus? Or pestering with account freezes that Trumpian robbers are so fond of doing?

One mystery for me is why Canadians bother to produce oil with single-digit prices. Stopping tar oil production should be simple, just mothball the equipment.

One rumour in the oil patch is that USG will give them bail out. That could be a boon for green thinking idealists who are hostile to carbon energy production, because many deplorables do not like bailout (unless they are the beneficiaries). This could allow Trump to be defeated by a brain dead opponent.

Posted by: Piotr Berman | Mar 31 2020 1:46 utc | 99

Pestercorn 90

Australia's turn against China began with the yank admiral Harris Trump set to Australia and his great wall of sand.
https://theconversation.com/why-the-world-is-wary-of-chinas-great-wall-of-sand-in-the-sea-40070

The oz MSM pushed the anti China meme from that point and most people I know began to turn against China whereas previously they had a neutral view of China.
I was talking to my daughter (a nurse) yesterday about the lockdown how well hospitals are prepared and so forth and even she has taken on the shit about china police state blah blah, and then another family member just minutes ago.
Everyone now believing the Trump Pompeo shit.

The new world split is taking place. five-eyes vs the rest.

Posted by: Peter AU1 | Mar 31 2020 1:51 utc | 100

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