US SANCTIONS ON RUSSIA FOR OIL PRICE SLUMP WILL SHUT DOWN NARRATIVE OF TRUMP-PUTIN BROMANCE
In the following you will find our translation of an article from rueconomics.ru with comments and notes [in brackets] by Vince Dhimos.
This report puts paid to the “Russian likes Trump” allegations. In fact, the Russian refusal to continue the OPEC production cuts, which triggered an oil price crash, shows that Russia is in a mood to punish Trump for his sanctions, notably those that stopped the Nord Stream 2 pipeline to Germany. If there ever was a Putin-Trump bromance, it is over and this leaves the Democrats without a platform, which had always consisted chiefly of allegations that Russia was supporting Trump. They will now have to debate over voter-relevant issues. Do they remember how?
US threatens Russian sanctions in attempt to avoid bankruptcy of oil shale workers in Texas
March 20, 2020
US threats to impose sanctions against Russia due to falling oil prices show that America is extremely dissatisfied with the current situation. This opinion of the FBA "Economics Today" was voiced by a leading expert of the National Energy Security Fund, a teacher at the Financial University under the Government of the Russian Federation, Stanislav Mitrakhovich.
The American publication The Wall Street Journal, citing White House officials, said: Donald Trump’s administration is considering introducing new sanctions against Russia. The purpose of such measures is to "stabilize the oil market." At the same time, it is not specified what restrictive measures will be aimed at and what step on the part of Moscow might provoke them.
The newspaper also believes: Washington wants to force Riyadh to return to previous volumes of oil production, which were observed before the OPEC + deal was broken. The US Administration intends to call on the Saudis. The day before this the trump said that "in due time" he is going to join in a discussion of the situation around the differences between Russia and Saudi Arabia on oil. And he suggested that low hydrocarbon prices are "destructive" to the Russian economy.
“Sanctions are an element of general pressure on Russia, an attempt to force Moscow to restrict foreign policy activity,” the analyst notes. “Over the past 6 years, we have observed that restrictions are imposed on Moscow for any reason, but the effectiveness of these measures is extremely low – Russia does not change its political course and it’s not following the West’s lead, and the United States can both tighten restrictions already imposed and come up with something new.
For example, the Russian Federation can be cut off from the international interbank payment system SWIFT or another industry can be shut off to buyers. Extreme measures could be the seizure of Russian assets, or company accounts abroad. We have seen for years that the US sometimes doesn’t even bother to find a reason for new restrictions. And now there is indeed a reason, and quite a serious one – Russia is not just affecting the world oil price per barrel, but is clearly not going to succumb to pressure in this matter.
American dominance in the world took a long time to establish, but now it is gradually dwindling away, but this process is not rapid. If in the 1970s the United States produced half of the world's GDP, while now it is only a quarter. So the influence of US sanctions is already limited, and the White House is forced to calculate each time how its restrictions will affect the allies and the US economy. The imposition of sanctions due to oil prices looks arrogant, but such a scenario cannot be ruled out."
Price per barrel affects US elections
The OPEC+ deal was concluded several years ago by an oil producing cartel with a number of non-member countries. All parties to the agreement committed to reduce production to maintain an acceptable barrel price level. The United States chose not to enter into the deal and actually increased its production, receiving profits from the self-restraint of other market participants. But this situation allowed the cost of a barrel of Brent to be kept at a stable level of $60-70.
After April 1, OPEC+ will ceases to function, since Saudi Arabia in early March demanded that Russia reduce production by an additional 300 million barrels per day, which would generally limit the Russian Federation to 600 million barrels. Moscow categorically refused, which brought down world exchanges. Today, Brent is trading around $30. At the same time, Urals oil, the proceeds of the sale of which form the budget of the Russian Federation, has fallen in price, according to Argus Media, to $18.4 per barrel. This is the lowest level since 2002.
“When the OPEC+ deal was cancelled, we saw Trump getting excited about it, saying that gas prices in the US would go down. [Trump was clearly bluffing. This is his standard reaction to price drops – he also said this when Saudi started overproducing after the Senate issued a statement blaming him for Kashoggi’s murder. He knew that if these prices held, US shale oil companies, his pride and joy and the source of most of the touted new jobs, could be ruined. In fact, there has been a steady string of bankruptcies in the shale sector since day 1]. Some of the economy wins – for example, carriers. But it soon became clear that the elation was premature. Low barrel prices and oversupply oil in the world market hit another sector of the American economy - oil production, more precisely - the shale industry.
And in the fall, the presidential election will be held in the United States – the most important political event in the country. And if some Americans are satisfied with Trump’s actions, then a whole industry is left without work and income – and this is a huge number of voters. And the White House is clearly worried about this situation. The problem is real – shale companies in Texas are on the verge of ruin.
So Trump’s policy now resembles a toss of the dice – he either calls the collapse of OPEC+ a good event for America, or he is suddenly going to bring back these agreements in some form by trying to force Moscow and Riyadh to abide by them. Russia has already proved that talking with it via threats, ultimatums and restrictions is senseless. It is hard to say what the Trump administration will actually do,” concludes Stanislav Mitrakhovich.
END OF TRANSLATION
Latest news from Al Masdar.
US is ready to undermine Idlib agreement: Russia
By News Desk
March 29, 2020
Russian Foreign Ministry spokeswoman Maria Zakharova told reporters on Friday that the US, which is frustrated over the Moscow-Ankara accord on the Idlib settlement, uses any pretext to promote anti-Russian hysteria.
She said that the Ministry has paid attention to “the intensification of contacts between American politicians and the quasi-humanitarian organisation White Helmets operating in Syria”.
“Such contacts usually end up with big problems in the region in the form of provocations and provocative actions. On 17 March, US Deputy Secretary of State Stephen Biegun met the White Helmets leader despite restrictions on contacts with foreigners introduced by the State Department in connection with the spread of the coronavirus,” Zakharova said.
She also recalled that on 11 March, the White Helmets leader delivered a speech in the US Senate, in what was preceded by the group’s representatives meeting the US Special Representative for Syria near the Turkish-Syrian border.
According to her, these meetings took place against the backdrop of Washington’s new anti-Russian information campaign over the situation in the Idlib de-escalation zone.
“Of course, it is surprising that the White Helmets, which position themselves exclusively as a humanitarian organisation, are again at the centre of the West’s information manipulations that are aimed at distorting the real situation in Idlib […]. It seems that the possible implementation of the Russian-Turkish agreements, and the very idea of the Idlib de-escalation zone, causes such irritation in Washington that they are ready to use any excuse to unleash anti-Russian hysteria and undermine Syrian political settlement”, Zakharova emphasised.
NSS comment: The government has warned that the virus-related shutdowns could last 18 months at least. If this is so, then Trump may refrain from counter-attacks for that long. The Iraqi militias could force the US out of Iraq at this rate.
Trump refrained from launching larger attack in Iraq over coronavirus
By News Desk
President Trump is seen showing little expression with his arms crossed in the image
NBC News has cited several unnamed US sources as saying on Thursday that the coronavirus pandemic prompted President Donald Trump last week to refrain from ordering a more aggressive response to an Iraqi paramilitary group’s recent attack on American troops in Iraq. The US sees Kataib Hezbollah as an Iranian proxy.
According to the sources, Trump told his senior national security advisers that such a retaliation could tarnish the US’s image now that Iran is grappling with COVID-19, which has already claimed the lives of more than 1,000 people in the Islamic Republic.
“The president has a pretty good sense of what type of action to take in response to these attacks”, one of the sources said, referring to the US military’s retaliatory steps as “proportional”.
The sources warned of Washington’s “proactive” actions aimed at preventing another attack, adding, “we recognise that there’s an ongoing threat; we don’t always have to be counterpunching”.
National security adviser Robert O’Brien, for his part, told Fox Business on Monday that the White House’s “eye is not off the ball” due to the COVID-19 pandemic.
“While we are focused on corona at home […] we are keeping an eye on those who would do us harm. If anyone thinks America is less determined, they are making a big mistake”, he pointed out.
The remarks come after the US Department of Defence confirmed in a statement last week that American forces had conducted “defensive precision strikes” against five Kataib Hezbollah weapons storage facilities to “significantly degrade their ability to conduct future attacks against Operation Inherent Resolve (OIR) coalition forces”. Kataib Hezbollah is an Iraqi Shia paramilitary group.
ALSO READ New video shows suspected US warplanes attacking Iraqi and Iranian forces in Syria
“These strikes were defensive, proportional, and in direct response to the threat posed by Iranian-backed Shia militia groups (SMG) who continue to attack bases hosting OIR coalition forces”, the statement said.
The strike followed a Kataib Hezbollah firing a number of rockets at Camp Taji, an Iraqi base north of Baghdad where US and coalition troops are stationed. At least two US servicemen were killed and 14 other people wounded in the 11 March attack.
‘MODERATE REBELS’ BITE HAND THAT FEEDS THEM. 2 TURKISH SOLDIERS KILLED IN IDLIB
Syria entered the second half of the week with a new spike of tensions in Greater Idlib. This escalation has been widely expected because militant groups are sabotaging key parts of the Russian-Turkish agreement on de-escalation in the area.
Radicals kept their positions along the M4 highway, where a security zone was set to be created, and blocked planned joint Russian-Turkish patrols there. On March 19, they expanded their strategy with direct actions against Turkish and Russian forces. At least two improvised explosive devices exploded en route of the Turkish military column near the village of Muhamabal. 2 Turkish soldiers were killed and several others were injured. Opposition sources initially reported that Horas al-Din, one of multiple al-Qaeda-affiliated organizations in Idlib, was behind the attack. Nonetheless, Horas al-Din itself denied responsibility for the incident. There is no surprise that the group indirectly receiving support from Turkey denied such a move. Later, pro-militant media adapted their version of events blaming ISIS cells and even Assad agents. The March 19 developments demonstrated that Ankara does not fully control terrorist organizations that it is protecting from the Syrian Army in an attempt to solidify own influence in the region. Therefore, in some conditions, Turkish-backed terrorists become a threat to Turkey and its forces themselves.
The Turkish leadership fully understand that the ceasefire will not survive too long without the neutralization of terrorists. So, the Turkish Army continues its military buildup in the area. Turkish forces set up new positions near Ram Hamadan and al-Jinah. Additionally, three Turkish convoys, consisting of dozens battle tanks, armored vehicles, rocket launchers and howitzers crossed the Turkish border with the Syrian province of Idlib. Turkish units also conducted a modest attempt to de-block the M4 highway by removing earth mounds left by militants.
The situation on the frontline is also escalating. Late on March 19, the Syrian Army repelled an attack on its positions near Hizareen. Syrian state media claimed that militants suffered heavy casualties in the clashes. Wa Harid al-Muminin, a coalition of small al-Qaeda-linked groups, claimed responsibility for the attack. It released own statement saying that 15 “regime troops” were killed.
Meanwhile, the Syrian Army and the National Defense Forces started reinforcing their positions in southern Idlib and northern Lattakia with fresh troops and military equipment. Pro-government sources claim that Jisr al-Shughur, the town controlled by the Turkistan Islamic Party, will become the target of the army offensive, if the ceasefire collapses.