Unintended consequences of a short-sighted move: Sanctions boost Russian oil sales to the US
Below is our translation of an article from rueconomics.ru on the fate of the Venezuelan oil business after the US sanctions on the oil company PDVSA and the price the US is paying, ironically, for those sanctions. Commentary and notes in brackets are by Vince Dhimos.
“The reason for this [the increase in sales of Russian oil in the US] was the shortfall caused by the sanctions against Venezuela and the drop in oil production in that country. "Because it’s not there. Venezuela is not producing…”
And this in turn was due to the short-sighted idea to force all oil revenues into accounts controlled by Juan Guaidó, giving the duly elected president no incentive to sell any oil to the US and its satellites, eg, in Europe.
I had already shown here how the US sanctions were boomeranging, putting those US refineries specialized in the unique variety of Venezuelan oil out of business.
Despite the veritable ban on sales to the US due to the short-sighted US policy, Maduro does, however, have every reason to keep selling to China and Russia, for example, particularly since these countries have signed contracts worth $5 billion (China) and $6 billion (Russia) and expect the loans to be paid in oil and petroleum products.
Now, Satanovsky forgot to explain why the US is reliant on Russia and not on Saudi Arabia or the Gulf statelets to make up the shortfall.
To find clues to this riddle, you need to go back and look what oil experts have been saying about the Saudis’ ability to pump extra oil to make up for new demand – to make up for the Iranian shortfall, for example. The consensus, according to a Bloomberg analysis of last September, is that Saudi, while still flush for the time being, simply doesn’t have enough oil left – or at least available pumping capacity – to manage emergency demand. So why wouldn’t Satanovsky tell us that? Because in Russia, it is not kosher to say negative things about Saudi Arabia. Putin sees Saudi as a close OPEC partner and sees potential in MBS to enter the Russian-Chinese orbit (in fact, it is almost there), and particularly, to wean itself off the dollar. Remember how Putin high-fived MBS during the G20 summit in Argentina even as other Western leaders shrank back from MSB, still shocked at the accusation that he had ordered the gruesome murder of Jamal Kashoggi (forgetting that Saudi had been financing terror with US complicity at least since the onset of the Syrian war). The obtuse explanations of clueless Western journos for the high-five – highlighting the meaningless narrative that both Putin and MBS share a bond because both are supposedly ruthless killers – showcased the mentality that makes America mediocre in economic, political, intellectual and other terms when compared to countries aligned with China and Russia. Since most Western journos haven’t a clue as to how close Saudi is to ditching the dollar and what this implies for the US economy.
This abandonment of the USD by Saudi would be a tragedy for the USD but a great day for world peace.
Satanovsky spoke about the US oil fiasco with Venezuela, plunging the US into dependence on Russia
March 12, 2019, Moscow
The situation provoked by the USA in Venezuela caused a shortage of oil in America, and Washington had to buy it from Russia. This was revealed by political scientist Yevgeny Satanovsky.
According to the expert, Russian "oil refining" paradoxically benefited from the situation in Venezuela, where the US is trying to overthrow the Nicolas Maduro regime. America, according to Satanovsky, overplayed its hand in Venezuela to such an extent that Russia sharply increased the volume of deliveries of oil and oil products to the United States.
The reason for this was the volume that went missing because of the sanctions against Venezuela and the drop in oil production in that country. "Because it’s not there. Venezuela is not producing! They have brought down its production to such a state that it turned out: the king is naked, and the market is bye-bye," the political scientist described the situation.
For the USA, the only country with sufficient volumes of oil of adequate quality was the RF. "It turned out that there is no available products. One country has it. The country is Russia. They could, of course, lift the sanctions against Iran, but then Trump might as well go hang himself. Very funny. The guys shot themselves in the leg," Satanovsky said.
The situation with oil caused a serious scandal in the States, the expert said. Washington has gradually realized the consequences of pressure on leading exporters of oil, as well as the advantages it gives to the nominal geopolitical opponent of the United States - Russia.
“They suddenly realized that by strangling Venezuela and talking about strangling Iran (the purchase of Iranian oil was reduced by sanctions by 25%), now they have only Russia left for hope and support. The “Regional” economy, as it is known, is “shredded,”and let’s add a lot of smileys at the end of that sentence,” Satanovsky said ironically on the air of Vesti radio.
Earlier, US Secretary of State Mike Pompeo accused Rosneft of buying oil from Venezuela in violation of US sanctions. Russian Foreign Minister Sergei Lavrov described this market dictate of Washington as unacceptable and stressed that such behaviour by the US "will not lead to anything good."
Author: Grigory Egorov
US imports from Russia of crude oil and petroleum products
Translated article confirmed by this report
Wikileaks confirms US-Saudi colluded in 76 to collapse oil proces
Oil Price article confirms repeated US-Saudi collusion to cut oil prices to hurt Russia, China
So why is the US reliant on Russian oil? Why not Saudi? Here are some big clues: