Saudi-Initiated All-Out Oil War Could Lead To Collapse Of Kingdom Itself

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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.

It all began on March 8 when Riyadh cut its April pricing for crude sales to Asia by $4-$6 a barrel and to the U.S. by $7 a barrel. The Kingdom expanded the discount for its flagship Arab Light crude to refiners in northwest Europe by $8 a barrel offering it at $10.25 a barrel under the Brent benchmark. In comparison, Russia’s Urals crude trades at a discount of about $2 a barrel under Brent. These actions became an attack at the ability of Russia to sell crude in Europe. The Russian ruble immediately plummeted almost 10% falling to its lowest level in more than four years.

Another side that suffered from Saudi actions is Iran. The Islamic country is facing a strong US sanctions pressure and often selling its oil via complex schemes and with notable discounts already.

Saudi Arabia is planning to increase its output above 10 million barrel per day. Currently, it pumps 9.7 million barrels per day, but has the capacity to ramp up to 12.5 million barrels per day. According to OPEC and Saudi sources of The Wall Street Journal, Riyadh’s actions are part of an “aggressive campaign” against Moscow.

The formal pretext of this campaign became the inability of the OPEC+ (a meeting of representatives of member states of the Organization of the Petroleum Exporting Countries and non-OPEC members) to extend output agreements.

Saudi Arabia was seeking up to 1.5 million b/d in further oil production cuts, but this proposal was rejected by Russia. After the inability to reach the new OPEC+ deal, Saudi Arabia became the frist and only power that took aggressive actions on the market. However, it is hard to imagine that Saudi Arabia would go for such an escalation without at least an order or approval from Washington.

This came amid the detention of two senior members of the Saudi royal family – Prince Ahmed bin Abdulaziz, the younger brother of King Salman, and Mohammed bin Nayef, the king’s nephew – on March 7. This development took place just ahead of the Saudi offensive on the oil market, and was likely a tip of the ongoing undercover struggle between the pro-US and pro-national factions of the Saudi elites; and the pro-US bloc seems to have the upper hand in this conflict.

In this case, the real goal of the Saudi campaign is not only to secure larger share of the oil market and punish Moscow for its unwillingness to accept the proposed OPEC+ deal, but to deliver a powerful blow to Washington’s geopolitical opponents: Russia and Iran. Pro-Western and anti-government forces existing in both Russia and Iran would try to exploit this situation to destabilize the internal situation in the countries.

On the other hand, Saudi Arabia may soon find out that its actions have backfired. Such economic and geopolitical games amid the acute conflict with Iran, military setbacks in Yemen and the increasing regional standoff with the UAE could cost too much for the Kingdom itself.

If the oil prices fall any further and reach $20 per barrel, this will lead to unacceptable economic losses for Russia and Iran, and they could and will likely opt to use nonmarket tools of influencing the Saudi behavior. These options include the increasing support to Yemen’s Houthis with intelligence, weapons, money, and even military advisers, that will lead to the resumption of Houthi strikes on Saudi oil infrastructure.

On top of these, the Saudi leadership may suddenly find that the internal situation in the Kingdom is being worsened by large-scale protests rapidly turning into an open civil conflict.

Such a scenario is no secret for international financial analysts. On March 8, shares of Saudi state oil company Aramco slumped below their initial public offering (IPO) and closed 9.1% lower. On March 9, it continued the fall plunging another 10%.  There appears to be a lack of buyers. The risks are too obvious.

At the same time, the range of possible US actions in support of Saudi Arabia in the event of such an escalation is limited by the ongoing presidential campaign. Earlier, President Donald Trump demonstrated that a US military base could become a target of direct missile strike and Washington will not order a direct military action in response. Taking into account other examples of the US current approach towards non-Israeli allies, Riyadh should not expect any real support from its American allies in this standoff.

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  • occupybacon

    So aramco dumped 9%, the european and usa oil markets with 11% and 7% while Gazprom and Rosneft shares with 24% each. Congrats, Putin, you played yourself.

    • BMWA1

      Did you read article carefully…it fell a further 10 percent on ninth…19 percent and falling for Aramco. Nine plus ten equals 19 outside of Anglosphere information bubble.

      • occupybacon

        I admit I didn’t read the article, all my numbers are from Monday. How are doing Russian oil shares now btw?

        • BMWA1

          The market was closed for holidays yesterday so down today.

      • Kananda

        the article is full of stupidities.

        oń SF never read economical analyses. these are bullshits.

        • fatfcks-go-home

          you are just too dumb mf to understand.

      • Assad must stay

        Hahahaha that was too funny and true hundred percent!

      • cechas vodobenikov

        where anything is possible except social mobility, thinking, feleing, justice, democracy

  • Kitosan My

    russia is well prepared to face off price de escalation as they are prepared for it unlike 4 years ago. the US Shale Oil producers that has very high operating cost per barrel shall be the first to take the plunge if this scenario persists for several months … and many countries depending on oil shall be “venezuela -ed” and we see more turmoil in the world news …. russia is biting back at US Sanctions for the Nord Stream Oil Project and throws the OPEC+ off balance for now … iran will also take the brunt of this . while the thief of Syrian Oil ( turkey / usa / israel ) will also be thrown back if it is worthwhile to purse their looting of syrian oil ..

    • Concrete Mike

      It will also hurt tar sands producers big. Venezuela and Canada are going to eat it pretty hard.

      But maybe the quebec idiots will allow a pipeline from west to east now.

      Its a shame as the largest refinery in the country is in good ole Saint Jonh New Brunswick.

      • cechas vodobenikov

        nonsense—neither tar sands nor shale accounts the vast majority of oil in Venezuela

        • Jake321

          Whatever works to take our enemies down. We particularly like the ones like Putz Putin’s RF that shoot themselves in the foot to help us bring them down. But when Biden and the Dems sweep it in November, we will be in high gear to give the Putz and his RF a big push down the slide to keep your Russian Soviet Empire company in the dustbin of history. Bye bye…

    • Kananda

      dreamer

      • fatfcks-go-home

        fu..er

    • cechas vodobenikov

      nordstream will be completed by Russian enterprises this year—now escorted by Russian warships…of course new discoveries of oil and gas in the east and north of Russia ensures energy security for the next century…nobody wants the inferior and expensive amerikan shale trash

  • Constellation 2023

    Replace the word Kingdom with Russia in the title and you have the facts!
    Washington is screwing Moscow. LOL

    • 1691
      • cechas vodobenikov

        u bother w the CIA idiots here—good luck….cannedada, jackie, little billy
        http://www.sott.net/article/430498
        the USA is the big loser here

        • Jake321

          LOL…that site you link to is so credible that your link goes not to an article or evidence to back your bull crap but to a page offering the site domain for sale. You are really funny when drunk, Igor, which seems most all the time. Oh, if the US can buy oil form Russia on the cheap, great. It will help our economy but hurt Russia since the current price of Russian oil is well below the price needed to support the Russian budget. So thanks. We like twofers. Helps us, hurts you. Bring more of this on as you go down the oil slide to the dustbin of history to keep your thankfully dead Russian Soviet Empire company.

  • Ryan Glantz

    Remember guys, Antartica and US Navy / Air Force / Space Force Star Fleet.
    Disclosure is coming #FullDisclosure2020

    • fatfcks-go-home

      its coming for 15+ years and still FUCKO

  • Kananda

    don´t be fool! saudis for % of aramco shares gat more mnoey then the russian whole budget + reserves.

    when saudi arabia falls russia did it already 5 times.

  • Boxman

    Saudi didn’t collapse from the 2014-2016 oil collapse, indeed they were only somewhat inconvenienced by it, so this is wishful thinking.

    • Bill Wilson

      Saudi Arabia did the same shit in 2014 to drive down oil prices.

    • fatfcks-go-home

      the world is different now dummy

      • Jake321

        The world is always different in some ways. You didn’t say how this will make this any better for your Russia.

        • fatfcks-go-home

          tell it to your troll friend above dummy

          • Jake321

            You do know a lot about trolls, Igor.

          • cechas vodobenikov

            please don’t insult trolls….

    • Cronos Sin Apellidos

      There was a coup in those years, and another attemp in 2017. So they did not collapse, but are really deteriorating fast.

      • Boxman

        I’d certainly love to see Saudi collapse, but the fact is, they’re still profitable even at $10/barrel due to their lucky geology. The monarchy can always afford to pay the police, the security apparatus, and can always field armies of mercs if they encounter large scale dissent. Plus USIsreali support. I hate the Saudis and everything they stand for, but I’m realistic enough to see they’re not going anywhere.

        • Cronos Sin Apellidos

          It`s not the same. They could sell at 10, but the earnings fall, and their expenditure do not decrease, or, if they decrease, they will have unrest. There is a limit to the amount of people they can arrest, the amount of “princes” they can exile, and the amount of violence they can endure.

      • cechas vodobenikov

        the SA foreign debt has increased dramatically in the past decade

    • verner

      but today and with the yemen war, the budget deficit is horrendous and not even the 15% sell of aramco won’t help save the day for mbs.

  • Xanatos

    The Saudi puppet dictator is not a us puppet. They are an Israeli puppet. Isreal is trying to force Russia’s hand, both in Syria and in Iran, and in Palestine.

    Isreal ordered Saudis to pay turkey to attack Syria to weaken Russia.
    Israel ordered Saudis to cut oil prices to weaken Russia.
    Israel ordered Saudis to finance coup in Algeria to hurt Russian arms sales.
    Israel ordered Saudis to finance coup in Sudan to hurt Russian arms sales.

    All this is to force Russia to surrender its sphere of influence in the middle East and avoid organising existing pro Palestinian sympathy in the region. A region that Israel is consolidating with a network of puppet dictators – all financed with Saudi money.

    • Jake321

      LOL…and chocolate milk comes from brown cows. You tinfoil hat loony toons are really funny.

      • fatfcks-go-home

        and you are still sad, dumbass troll

        • Jake321

          Hey, Igor. Welcome. Your Putz Putin the Poisoner Troll friends here needed more help.

          • Squeeth

            Time will tell, sad boy.

          • verner

            joke321 is a jew out of tel aviv even if he pretends to be from somewhere else but he is mostly of the leper colony trying to disrupt honest exchanges on southfront and should thus be ignored.

        • cechas vodobenikov

          Jackie’s jokes r stale–she asserts that lower oil prices will reduce gas prices in the US….utter stupidity. it will only befit the US oligarchy/aristocracy…the US police state has the greatest income/wealth disparities of all industrialized nations…only exceeded by a few African nations (Allianz 2015)…and in the previous 5 years this has worsened

    • verner

      tend to agree – israel or the squatters are getting more and more isolated and have absolutely no friends around and are getting antsy when the usual suspects don’t turn up when the squatters cry tallyho which means the end of the jews once and for all.

    • Assad must stay

      which is why now more than ever russia needs to hit saudis and their masters ten times harder

  • Jake321

    By the numbers, it is way more likely to undermine further Islamist Iran, want-to-be Socialist Venezuela and Putz Putin’s RF. It will really hurt the US shale producers but they can be bailed out by their friend Trump. However, it will help the US economy by significantly lowering gasoline prices.

  • cechas vodobenikov

    naturally Iran is secure having discovered a huge gas field last year—China continues to buy vast amounts from Russia and Iran—oil prices r not relevant to the US fake economy—they produce nearly nothing…nations that produce—Russia, China, India, etc will benefit from reduced energy costs
    PS: it appears that several CIA trolls have reappeared here—these functionally illiterate automatons r farcical

    • Jake321

      LOL…the drunk Russian proudly spouts his ignorance again. The US is the largest producer of oil and gas in the world. The cost to produce a barrel of conventional oil in the US is about the same as in Russia. However, the US doesn’t rely on oil and gas revenues much for its budget. Russia relies on them for almost half its budget and over two-thirds of its export revenues. This will hurt the US shale producers but help the US economy. This will devastate Russia’s budget and export revenues and hurt its economy. It will be even worse for Islamist Iran and Venezuela. But be good news for China who can use all the economic good news it can get given the hit it has taken from the Coronavirus. Try to keep up and hit the bottle less.

      • fatfcks-go-home

        this script was already played in 2014…

        how much flakka you need to buy today to vomit this trolling shit here ?

        • Jake321

          You tell me what a troll gets paid, Igor.

        • verner

          joke321 is of the leper colony group interesting in disrupting the threads provided by southfront – thus joke321 has nothing to do on these threads but being a jew he feels entitled, like all jews feel entitled to the wealth of others.

        • cechas vodobenikov

          he he he….nobody purchases low quality amerikan trash, nor their gas/oil—Russian oil/gas prices r locked in w contracts…today the US purchases more Russian oil /gas than from all other nations except Canada—Russia purchases nearly no amerikan trash, nor does Europe, Asia, Latin Amerika…the US economy is a bursting bubble—-indebted and reliant on printing fake money…a 23 trillion$ debt…soon the burgers and Mercedes will cost even more in the US—marijuana will be inexpensive—amerikans require this to escape from reality

      • TTdr

        You have indeed analyzed the oil situation well iff China is dead while USNato get no impact by COVID.

        But thing has changed since China already contained the ZUSNato-Israel-India launched biowarfare COVID extremely well.

        Its production will be fully back to order in a month and greatly boost as the global supply chain clipped by COVID global outbreak.

        US will be in great chaos & riots once supply run short. Wall street hyper inflated bubbles will burst. Its shale oil will collapse at $30~50 cost with no funding from wall street, and cut 10M barrels supply. These will fully offset all Saudi increase.

        Global oil demand will drop by 40% with paralyze global economy, while China pick up all global manufacturing to supply the world with extra oil demand.

        So China will call the shot in global oil buying, and help sustain Russia, Iran & Venezuela with long term contract price at $25 for half of its needs. Saudi & Gulf will be pressured to sell at RMB, bleeding deeply to compete another 50% order at below $20.

        Russia has deep pocket no debt to sustain low price for a year. Iran & Venezuela infrastructures are invested mainly by China & Russia, so they will still get by with some revenueunder China help.

        Saudi on the other hand has $50B p.a. payable debt, a costly Yemen war, with production easily disrupted regularly by a few Huthus drones with Iran-Russia help. When harsh economy bite hard, MBS will face great resistance. China can cut its order suddenly to collapse its economy when needed.

        Syria war will get a great boost as Turkey economy collapse by COVID outbreak, with low oil price eliminate USNato war revenue from stolen Syria oil. Once USNato mercenary terrorists don’t get paid, they return to their home nests to roost.

        The geopolitical game is getting more interesting with USNato-Israel-India COVID attack backfired. Sit tight with seat belt fasten, all AngloZionist jews.

    • verner

      and Iran is building a new export terminal southsoutheast of the hormuz strait so that they can continue its shipments of crudes after the hormuz is closed down.

  • Brother Thomas

    “ SAUDI-INITIATED ALL-OUT OIL WAR COULD LEAD TO COLLAPSE OF KINGDOM ITSELF”
    If by Kingdom you mean the House of Saud, let’s hope so. It’s the only country a family named after itself.

    • Jake321

      But Trump will try the same if he gets re-elected.

    • Squeeth

      Funnily enough, I call it Arabia.

  • Per

    let us pray that the heroes in Yemen will surprise us with another attack on oil instalations “owned” by the piggly wiggly al-saud terror regime!!!

    • verner

      the houthis have told the world that they can disrupt deliveries of crude from saudi’s ras tanura, which in combination with Iran’s ability to close the hormuz strait which should be enough to tell dunny the dunce that a full scale war in the middle east, for and on behalf of the illegal squatters in palestine and regardless of how much aipac and the other american jews are paying, is a bad bad bad idea bound to backfire and make the disunited states of idiots toothless and bankrupt.

      • Per

        that would be true if we were dealing with rational human beings, sadly i do not believe there are any rational human beings in the ksa,usa,uk governments anymore..

        • verner

          hope you’re wrong – even dunny the dunce seems to get the fact that Iran is sitting on the Hormuz strait and can close it at a minute’s notice and that it’s a large country with some 80 million people capable of defending themselves. and a closure of the Hormuz would put an end to the house of saud and not even Yanbu could save them.

          • Per

            i hope i am wrong too! I really hope im wrong tbh.

  • TTdr

    Thing has changed since China already contained the ZUSNato-Israel-India launched biowarfare COVID extremely well. New increase cases is only in two digits inside Wuhan & imported cases, zero outside.

    Its production will be fully back to order in a month and greatly boost as the global supply chain clipped by COVID global outbreak.

    US will be in great chaos & riots once supply run short. Wall street hyper inflated bubbles will burst soon. Its shale oil will collapse at $30~50 cost with no funding from wall street, cutting10M barrels supply. These will fully offset all Saudi increase & global glut.

    Global oil demand will drop by 40% with paralyze global economy, while China pick up all global manufacturing to supply the world with extra oil demand.

    So China will call the shot in global oil buying, and help sustain Russia, Iran & Venezuela with long term contract price at $25 for half of its needs. Saudi & Gulf will be pressured to sell at RMB, bleeding deeply to compete another 50% order at below $20.

    Russia has deep pocket no debt to sustain low price for a few year. Iran & Venezuela infrastructures are invested mainly by China & Russia, so they will still get by with some revenue under China help.

    Saudi on the other hand has $50B p.a. payable debt, a costly Yemen war, with production easily disrupted regularly by a few Huthus drones with Iran-Russia help. When harsh economy bite hard, MBS will face great resistance. China can cut its order suddenly to collapse its economy when needed. Whole Gulf will get a shake up.

    Syria war will get a great boost as Turkey economy collapse by COVID outbreak, with low oil price eliminate USNato war revenue from stolen Syria oil. Once USNato mercenary terrorists don’t get paid, they return to their home nests to roost.

    Israel losing all export West markets with weaken economy, will hard press to continue its military aggression. Massive protests will demand a change of its costly expansionism Yinon plan.

    India with literally no industry and $300B peanut export mainly to US for precious stone cutting and pharma genetic drugs, will collapse. 20M Indians in US H1B & 20M elsewhere will lost all their jobs, drying up India $80B p.a. remittance revenue. Its unsustainable growing debts at 70% ratio to GDP will see interest shoot up to roof as Moody’s rating cut its current BBB- speculative status to junk. India will find no more easy loan to sustain its $500B import with widen $200B trade deficit, climbing 5% inflation, increasing 5% budget deficit…

    Its already fragile economy will collapse. Uncontrollable COVID outbreak and highest unemployment in 40yrs will fuel nation wide massive riots. Some states will demand independent. India occupied lands in Kashmir, Nagaland, Manipur, Nepal, Bhutan, Sikkim, Assam, South Tibet, …will revoke. Bangladesh, Sri Lanka, Maldives, Mauritius under India subversion control will ditch it like poison snake to join BRI.

    The geopolitical game is getting more interesting with USNato-Israel-India COVID attack completely backfired. Sit tight with seat belt fasten, all AngloZionist jews & Indians. The Anglosaxons Mission of London look really bad after China recovered from its cold.