Vince answered a question at Quora.
Q: HAS THE WAR BETWEEN RUSSIA AND SAUDI ARABIA OVER CRUDE OIL SHAKEN [sic]? WHAT WILL HAPPEN NOW?
Vince Dhimos, Editor-in-Chief at New Silk Strategies (2016-present)
I am reasonably certain that there never was a conflict between Russia and Saudi. In fact I suspect that they both wanted low oil prices and Putin volunteered to take the fall. After all, as soon as Russia backed away from its agreed-upon obligation to continue with the cuts, Saudi followed suit and started pumping full throttle.
And after all, both countries had their possible motives, good ones too. Perhaps they were waiting for such a black swan event as COVID-19 to stomp the US economy good and hard.
Russia has been badly abused by the West ever since about 2014 when it allowed Crimea to accede to the RF. Then when Russia entered the Syrian war in Sept 2015 and immediately made significant gains against terror, this embarrassed the US, which was forced to stop pretending and actually fight terror. As a result, the US trumped up “chemical weapons” charges against Assad as a pretext to make Russia look bad and provide a phony excuse to attack Assad’s forces (though Russia intervened with negotiations between the sides and saved the da). And then, of course, the US slapped sanctions on Russia for helping defeat their terrorists.
So that gave Russia a solid motive to want to smack down the US oil business. But they bided their time. Putin is famous for his patience.
But what about Saudi you say? They have a solid reason as well. Recently a coup plot was uncovered there and MBS declared it was supported by the US. I suspect Putin may have whispered this rumour to MBS and they then mutually decided to call off the oil production cuts that had been in place for a long time as support for US shale oil. Both countries had been extremely nice to the US but hegemons aren’t nice back because they think they don’t have to be.
Shale oil has a high break-even price — a minimum of $50/ barrel, and Putin had been honouring Saudi’s request to cut production to keep the oil prices up. But since the rumour of US support for the palace coup plot surfaced, MBS no doubt decided he had had enough and would no longer help prop up the US economy. And now it’s come to this and Trump is desperate and is blaming Saudi and Russia for sabotaging the US oil business. He ought to know that voters want results, not excuses. In fact, Trump has said on more than one occasion that he likes winners and hates losers. Will he start hating himself now? And what will happen to the Democrat accusation that the Russians support Trump? Will the Republicans blame the Russians if Trump loses? How can the Russians be supporting both parties simultaneously?
Remember that Russia has been the subject of anti-Russian smears in US politics and sanctions for years. Probably the meanest and most uncouth thing any diplomat ever said came from Nikki Haley, Trump’s misfit ambassador to the UN, who famously said: We don’t trust Russia and we don’t trust Putin and we never will. And: We will slap them [Russia] as needed.
Ok, Nikki. You had your fun and you figured the US is powerful enough it don’t need no stinkin’ diplomacy, not even for its diplomats. What went around came around. Diplomatic protocol is for preventing countries from hating you. But if you want to shoot from the hip and say reckless things, go right ahead. Just remember: When you live in a glass house, better not throw stones.
The American glass house was the enormous dependence on shale oil and gas, which, unfortunately require very high market prices to stay afloat — because shale oil requires the very expensive process of fracking for its extraction. Thus even with the wind at their backs, US shale drillers were going bankrupt on a regular basis. A little humility from the presidency would have gone a long way under these circumstances.
But you reap what you sow. Shale oil required a break-even price of $50 a barrel. The price is now around 40 and still dropping. April oil futures are reportedly selling at below 30!
Barring a miracle, nothing will save US oil (and gas) now. And energy was the industry that Trump pointed to as the creator of all those new jobs.
Kremlin residents have been overheard saying “it couldn’t have happened to a nicer guy.”ar.