Russia’s central bank recently warned about the growing financial risks to the Russian economy from Saudi Arabia encroaching upon its traditional export market for crude oil. Russia sends 70 percent of its oil to Europe, but Saudi Arabia has been making inroads in the European market amid the oil price downturn.
The result is a heavier discount for Russia’s crude oil, the so-called Urals blend. Bloomberg reported that the Urals typically lands in Rotterdam, a major European destination, at a discount to Brent of around $2 or less. But the discount has widened to $3.50 lately due to increased competition from Saudi Arabia. “Oil supplies to Europe from Saudi Arabia are probably adversely affecting Urals prices,” the Russian central bank warned in a recent report.
Russian officials have accused Saudi Arabia of “dumping” its oil in Europe, a move that Rosneft chief Igor Sechin said would “backfire.”
Russia’s economy has been battered by the collapse in crude prices, compounded by the screws of western sanctions. The Russian economy could shrink by 3.2 percent this year.
Oil exports account for around half of the revenue taken in by the Russian government. And for an economy so dependent on oil, it is no surprise that the plummeting crude oil price has led to a dramatic depreciation of the ruble, although over the past month the currency regained some lost ground. The weakening currency has pushed up inflation, which creates a conundrum for the Russian central bank.
To stop the ruble from plunging further and to keep inflation from spiraling ever upwards, the Russian central bank took aggressive action by hiking interest rates to as high as 17 percent at the beginning of 2015. However, that has negatively impacted the economy. As the ruble stabilized, the bank dialed the interest rate back to 11 percent, where it stands today.
In response to the tough financial circumstances that Russia has found itself in, it sees no choice but to squeeze as much oil out of its aging fields as it can. So far, it has succeeded to some extent. Russian oil production is expected to rise by a modest 70,000 barrels per day in 2015, averaging 10.75 million barrels per day (mb/d) over the course of this year. Output hit a post-Soviet record of 10.78 mb/d in October, according to OPEC’s latest monthly report.
However, the upside to Russia’s oil production is limited. The Russian government needs revenue, so is not keen to cut taxes. The government is mulling a delay in the planned cut in export taxes, which, according to OPEC, could result in oil companies paying an additional $2 to $3 billion more in taxes. That could modestly cut into overall Russian oil production, perhaps pushing output down by 0.1 to 0.2 mb/d. In any case, Russia probably can’t boost output any further. OPEC predicts Russia’s oil production will remain flat through next year.
Globally, the competition between oil exporters won’t ease in the near term. There are still too many barrels of crude floating around. OPEC predicts that non-OPEC supply will contract by just 0.13 mb/d in 2016, a rather trivial amount considering the extreme cut backs in investment and drilling activity.
Despite the fact that OPEC officials have consistently put on a brave face in public, insisting that markets will balance relatively quickly, OPEC’s numbers tell a different story. The cartel sees U.S. shale contracting by just 100,000 barrels per day in 2016 from 2015, a volume that is nearly offset by several new projects beginning operations in the Gulf of Mexico.
Which brings us back to Europe. Saudi Arabia could be playing a longer game, intensifying its market share strategy by encroaching on Russia’s traditional market in Europe. An increase in Saudi oil flowing to Europe threatens to undermine Russia’s principle market. In its November report, OPEC reported that the Urals discount to Brent “almost tripled in October amid plentiful supplies, sagging refinery margins and wide availability of alternative grades from the Middle East.”
By Nick Cunningham of Oilprice.com
By: Cliff Kincaid
Accuracy in Media
On November 13, the same day as the terrorist attacks in Paris, USA Today ran a full-page ad from billionaire Tom Steyer’s group NextGen Climate highlighting the alleged global threat from climate change. As hundreds of people were being injured or killed in Paris, the ad featured these quotes about the “climate crisis:”
- Hillary Clinton: “An existential threat”
- Bernie Sanders: “The greatest threat facing the planet”
- Martin O’Malley: “Critical threat to our economy”
In a new development, we have just learned from Judicial Watch that Hillary Clinton was characterized by her Muslim-connected aide, Huma Abedin, as being “very confused” about the world leaders she was supposed to be communicating with as secretary of state. The confusion may also be reflected in Mrs. Clinton’s bizarre utterance that so-called climate change is an “existential threat” that is somehow comparable to Russian nuclear weapons, which could reduce America to a burned-out cinder.
Mrs. Clinton is not alone, however. All of the Democrats running for president, plus former Democratic presidential candidate Al Gore, want to treat changes in the weather as something to be addressed through new treaties, international agreements and global tax schemes. This campaign has taken precedence over defeating international terrorism.
At the Democratic Party debate this past weekend, Sanders claimed that “Climate change is directly related to the growth of terrorism and if we do not get our act together and listen to what the scientists say, you’re going to see countries all over the world—this is what the CIA says—they’re going to be struggling over limited amounts of water, limited amounts of land to grow their crops and you’re going to see all kinds of international conflict…”
So from one disputed claim about people causing climate change, they have reached another disputed claim that climate change is causing people to commit terrorism.
On the same day as the Paris attacks, former Democratic presidential candidate Al Gore was staging his 24-hour climate change telethon from the foot of the Eiffel Tower to focus attention on this month’s United Nations climate summit in Paris. The attacks forced him to pull the plug on the event after five hours.
In advance of his ill-fated climate change telethon, People magazine asked Gore which Democrat he was endorsing for president. “It’s still too early, in my opinion, to endorse a candidate or pick a candidate,” he said.
But why is his endorsement worth anything? Al Gore has become a very rich man, a one percenter. He and his partners sold Current TV (Gore personally netted an estimated $100 million of the $500 million sale price) to the terrorist-supporting Middle Eastern oil and gas dictatorship of Qatar.
A member of Apple, Inc.’s board of directors, Gore is today worth as much as $170 million. Even the New York Times has wondered if his climate change campaign is designed to make himself rich, while preserving his lifestyle as an elite member of the one percent.
His telethon carried the official title of “Live Earth: 24 Hours of Reality.” The reality of terrorism got in the way of the broadcast, featuring various rock stars and co-sponsored by Arianna Huffington’s television channel, HuffPost Live.
Gore and his partners sold Current TV to Qatar so another Al Jazeera spin-off could be piped into American homes. The Al Jazeera America channel was the result, and it is now publishing nonsense like the piece by Rami G. Khourientitled, “Military responses alone will not defeat ISIL.”
Khouri acknowledges that “Religion is critical for shaping the theological concept of the Islamic State and the wider Caliphate…” But, he says, “it may not be the most important reason why individuals go there to live, work and do battle.” He lists “eight reasons why people across Islamic societies join or support ISIL.”
But none of the “reasons” for the rise of the Islamic State, in his analysis, consists of the hate-filled passages from the Koran which guide their beliefs and actions.
Instead, we are told, in reason number four, that their motivations include “To live among like-minded people in a society defined by camaraderie, peace, justice and wholesome family life.” Reason number six is “To find meaning, direction and purpose to one’s personal life, or to escape family or personal problems, loneliness or alienation.”
We are supposed to believe this may be why terrorists opened fire on people in Paris. This is why the Islamic State beheads people or burns them alive?
It is easy to forget that the website publishing this material is financed by a Middle Eastern dictatorship that promotes Islamic terrorism. Like the notion of the “existential threat” allegedly posed by climate change, Al Jazeera America constitutes a diversion from what really threatens America, our way of life, and our people. Perhaps that was the intention all along.
As serious as this is, the problem of foreign propaganda in the U.S. media market could get far worse. Television producer Jerry Kenney notes that the Federal Communications Commission (FCC) is planning to remove the barriers to broadcast station ownership by foreigners, a move that would enable American broadcasters to sell out to foreign interests, just like Gore did. The FCC could allow the sale of local broadcast stations and other media properties to the Chinese, Russian and Mexican governments, or to the Muslim Brotherhood.
The public must respond to what the FCC is planning to do by December 21.