In the following is our translation of an article from rueconomics.ru with notes [in brackets] by Vince Dhimos.
Russia dictates new rules of the oil market game to OPEC and US
How much Russia gains or loses as a result of the oil war will depend on the final parameters of the Big OPEC + deal. The deputy director for the energy section of the Institute of Energy and Finance Alexey Belogoryev reported on this to FBA Ekonomika Segodnya.
Russia agreed under the OPEC+ deal to reduce oil production by 14% – or about 1.6 million barrels per day – from the level of the first quarter of 2020. This figure will be discussed at the upcoming negotiations within the framework of "Big OPEC +," according to the first insiders from the RF Ministry of Energy. The decrease is assumed to be proportional to the share in the total production of countries that agree to stabilize prices. The deal could include the United States, Mexico, Norway, Canada and other countries with a total production of 70 million barrels per day.
The main condition for Moscow is that the leading oil producing countries - Russia and Saudi Arabia - will be joined by the United States, which in 2019 became the world leader in oil production (currently the US produces about 13 million barrels per day). "The Russian Federation is ready to cut production in proportion to its share in total production, and taking into account a joint decrease of 10 million barrels daily," preliminary reports read. Negotiations will start today at 17.00 Moscow time.
“How much Russia will gain in the ongoing oil war will become clear from the outcome of the deal, if it is concluded,” said the analyst. “A worldwide problem was created due to an imbalance. While Russia and Saudi Arabia limited production for years, the Americans actively increased it. Thus, while some were striving for a balanced market and reasonable prices, the States were actively making money on these concessions.
It is still not obvious that the United States will become full participants in the new deal. A 1.6 million barrel reduction for Russia is a huge figure. If the oil market goes on a fair track when everything is reasonably cut, this is acceptable. Otherwise, making such a concession to Moscow does not make sense – it will be unprofitable. And obviously today's talks will not be easy."
It was US President Donald Trump who acted as an intermediary between Moscow and Riyadh so that after the collapse of the OPEC+ deal, they would again sit at the negotiating table and discuss the conditions for a new reduction in production. However, Washington did not express directly that the States were ready to participate in the deal. On the contrary, Trump said that America could introduce duties on oil from the Russian Federation and Saudi Arabia, thereby switching to its own crude, which would support American producers. [This would be risky. Russia and/or Saudi might decide to even the score by charging extra to their US partner. The US would have little recourse since it will not be producing enough to cover its own needs].
Nevertheless, the US Department of Energy lowered its production forecast for 2020 by 1.4 million barrels, to 11.8 million per day, in 2021 the decrease will be another 0.7 million barrels. per day. And the head of the Texas state regulator (responsible for developing oil fields in the largest oil producing state in the USA), Ryan Sitton, said on the eve: the United States will “naturally” reduce production by at least 4 million barrels per day for three months.
“In general, Russia's participation in OPEC + was initially comfortable - the country increased production in 2016 to a historic maximum, after which it agreed to reduction quotas. And for four years this manoeuvre supported the country's oil industry, while keeping the world price of Brent at $65-75. It was profitable for domestic oil companies.
But now, if the agreements go beyond the terms set by Moscow, the new deal threatens to become burdensome for the Russian oil industry. On the other hand, a preliminary short-term deal for 2-3 months is now tentatively discussed, and this summer its parameters may again be revised. But we must remember that 1.6 million barrels – this is, for example, the entire output of the Russian company Lukoil – is a huge volume.
And it is not yet clear how the new cuts in Russia will be distributed among oil drilling companies. They will definitely feel a certain discomfort,” Belogoryev emphasizes.
The deal will create new oil realities
The new potential reduction of 1.6 million barrels is five times more than the previous level (0.3 million barrels per day), to which Russia agreed to reduce its production in December 2019 as part of the OPEC+ deal. Then the total reduction in the parties to the transaction amounted to 1.7 million barrels per day. And Saudi Arabia promised to further reduce its production by another 0.4 million barrels (or 2.1 million barrels per day). It is expected that this will gradually restore world prices acceptable to all players.
Now the oil market cannot be called healthy – so much crude has been extracted that there is an ever-growing shortage of storage facilities. In addition, with the introduction of quarantine measures due to the coronavirus epidemic, the consumption of oil and oil products in the world has significantly decreased. And no one in the world can say when demand will recover.
"If the deal is nevertheless concluded, it will definitely affect the price per barrel – quite quickly. The oil market became financial long ago, and in an effort to profit from the news, speculators will begin to raise quotes at auction. Most likely, prices will reach $40 and higher. [Good news for the US? According to CNN, the break-even price for US shale oil is in the range of $48-54 per barrel, whereas according to oilprice.com, it is $40 in Russia and a whopping $84 in Saudi, which makes you wonder where MBS’s head was when he offered discounts on oil even while the price was less than half that! Oilprice does add a proviso, though, namely, Russia can cope with oil prices as low as US $25 per barrel from a budget and foreign asset reserves perspective for up to 10 years; Saudi can manage 2 years at most. Oilprice doesn’t bother to tell us how long the US can hold out. Shale drillers have had a steady string of bankruptcies since the get-go because shale is notoriously low-profit and every year less money is invested in this risky venture. There is no light at the end of this tunnel.]
However economic realities need to be taken into account. The coronavirus pandemic has created an excess supply in the market, and how long it will last is not known.
A steady rise in oil prices before the summer, it seems, cannot be expected. It is necessary that countries remove quarantine and resume production at last year’s level. But we can confidently say that the "big OPEC +" deal will keep the price per barrel in the crisis period at a level above $0, which in itself will be a positive effect. But much will depend on what the parties will arrive at based on the results of today's negotiations,” concludes Aleksey Belogoryev.
Author: Maxim But
Syrian MP claims OPCW allegations are part of US war plan in Syria
By News Desk 2020-04-09
BEIRUT, LEBANON (8:40 P.M.) – Faisal Shaker Khoury, a member of the Defense and National Security Committee in the Syrian Parliament, said that the aim of the U.S.’ allegations that Damascus launched a chemical weapons attack in Hama was to give excuses to continue destroying Syria.
He told Sputnik Arabic that the” whole world knows with certainty” that in 2013 and 2014 Damascus destroyed its chemical weapons because it does not need the,.
Khoury asked why Pompeo did not provide evidence of his words and accusations.
Khoury indicated that the aim of these accusations is to find new excuses to continue destroying Syria, pointing out that Syria will remain steadfast in the face of these accusations.
The member of the Defense and National Security Committee in the Syrian Parliament added that the relevant committees of the Organization for the Prohibition of Chemical Weapons were refraining from referring to the perpetrator of chemical crimes in Syria, whether in Douma or the northern part of the country.
The U.S. Secretary of State, Mike Pompeo, said that the new report by the OPCW is the latest addition to “a large and growing body of evidence” that the Syrian government “uses chemical weapons against its people.
YOU SHOULD ASSUME THE US IS LYING WHEN IT GIVES YOU A REASON FOR WAR:
You really should know better than to allow the US government (whether a Democrat or Republican regime) to drag you into another of its disastrous wars. Without your childlike trust, they couldn’t get away with it.
There is always an excuse, like the Gulf of Tonkin story, which turned out to be an intentional hoax but started the Vietnam War. Or the WMD story that made millions of gullible Americans support the Iraq War, which saddled the US with trillions in debt that is still on the books and is now being defrayed with the issuance of unbacked dollars.
This site shows that terrorist organizations have access to chemical weapons:
Further, this site shows that ISIS and Al Qaeda have been working hard at developing CWs:
“ISIS and al Qaeda before it have been working since at least the 1990s to obtain biological and chemical weapons.”
Strangely, though, whenever chemical weapons use has been alleged or proven in Syria, the US immediately blames the Assad government. Even though ISIS has not be eradicated in Syria, the State Department’s knee-jerk response to any report of a chemical weapon attack has always been to blame Assad and disregard the possibility of an attack by terrorists.
Just stop believing the lies and you will deprive the Washington War Party (on both sides of the aisle) of an excuse to kill civilians and steal more Syrian oil.
Saudi-led Coalition announces new ceasefire in Yemen
By News Desk -2020-04-081
BEIRUT, LEBANON (9:40 P.M.) – Sources told Reuters on Wednesday that the Saudi-led Coalition will announce a nationwide ceasefire at midnight, to begin on Thursday, April 9, 2020.
Three sources confirmed that the Saudi-led coalition will announce the cessation of military operations in Yemen to support the United Nations ceasefire initiative.
Two sources said that the suspension of military operations is expected to enter into force on Thursday, noting that it was partially agreed to avoid a possible spread of the coronavirus emerging in Yemen.
Since August 2014, Yemen has witnessed confrontations between the government forces loyal to President Abd Rabbu Mansour Hadi and the Ansarallah Movement.
The violence in Yemen would increase significantly in March 2015 when the Ansarallah Movement began a large-scale campaign to capture the capital city, Sana’a.
Iranian threat to US forces in Iraq remains ‘significant’: diplomat
By News Desk 2020-04-10
BEIRUT, LEBANON (12:00 A.M.) – A senior U.S. diplomat said on Thursday that the Iranian threat to American forces in Iraq is still present.
David Schenker, a senior diplomat for the U.S. State Department on Middle East affairs, stated that the threat of violence from Iranian-backed groups remains ‘significant’.
He added that Washington is cautiously dealing with the ceasefire announced by the Iranian-backed Kata’ib Hezbollah forces.
David Schenker, the assistant secretary of state for Near Eastern affairs at the US State Department, praised the previous work of Mustafa al-Kazimi, the head of Iraqi intelligence, who was appointed prime minister on Thursday.
Kazimi, however, has been accused by several Iraqi paramilitary forces of playing a role in the assassination of Quds Force commander, Major-General Qassem Soleimani, and Hashd Al-Sha’abi’s Deputy Head, Abu Mahdi Al-Mohandes, on January 3rd in Baghdad.
Following these assassinations, the Islamic Revolutionary Guard Corps (IRGC) responded by firing as many as 18 missiles towards the U.S. wing of the ‘Ayn Al-Assad Airbase in the Al-Anbar Governorate.
Since then, tensions between Tehran and Washington have been at a decade-long high, with the U.S. deploying their Patriot air defense system to Iraq in order to confront a possible Iranian-backed attack.
The US is in the oil-rich governate of Deir Ezzor purportedly to protect the oil resources from ISIS. This is absurd because the Syrians have a very effective military aided by the Russian air force. They absolutely do not need Americans getting in their way. To add insult to injury, US officials have claimed the right to shoot Syrians on their own soil should they approach the illegal US base. Vince Dhimos
Syrian Army kills several ISIS terrorists in fiercest battle this month
By News Desk 2020-04-09
BEIRUT, LEBANON (11:30 P.M.) – The Islamic State (ISIS/ISIL/IS/Daesh) launched their heaviest attack of the year, today, targeting the Syrian Arab Army’s (SAA) positions in the vast desert region between the Deir Ezzor and Homs governorates.
According to a military report from the Homs Governorate, the Islamic State launched several attacks on the Syrian Army’s positions during the early morning hours, resulting in a fierce battle that would last for much of the day.
The report said the Islamic State primarily concentrated their attacks on the Badiya Al-Sukhnah and Badiya Al-Sham regions.
Following hours of intense firefights, the Syrian Arab Air Force (SyAAF) entered the battle, carrying out several strikes on the Islamic State terrorists.
These strikes would prove effective, as the Syrian Arab Army and their allies from the National Defense Forces (NDF) and Liwaa Al-Quds were able to restore order.
The Syrian Army and their allies were able to kill and wound several Islamic State fighters during the clashes, forcing the latter to eventually abandon their assault and flee further into the desert.