Venezuela is the 11th largest oil producing country in the entire world, and it has just announced that it is going to stop using the petrodollar. Most Americans don’t even know what the petrodollar is, but for those of you that do understand what I am talking about, this should send a chill up your spine. The petrodollar is one of the key pillars of the global financial system, and it allows us to live a far higher standard of living than we actually deserve. The dominance of the petrodollar has been very jealously guarded by our government in the past, and that is why many are now concerned that this move by Venezuela could potentially lead us to war.
I don’t know why this isn’t headline news all over the country, but it should be. One of the few major media outlets that is reporting on this is the Wall Street Journal…
The government of this oil-rich but struggling country, looking for ways to circumvent U.S. sanctions, is telling oil traders that it will no longer receive or send payments in dollars, people familiar with the new policy have told The Wall Street Journal.
Before we go any further, we should discuss what we mean by the “petrodollar” for those that are not familiar with the concept. The following comes from an excellent article by Christopher Doran…
In a nutshell, any country that wants to purchase oil from an oil producing country has to do so in U.S. dollars. This is a long standing agreement within all oil exporting nations, aka OPEC, the Organization of Petroleum Exporting Countries. The UK for example, cannot simply buy oil from Saudi Arabia by exchanging British pounds. Instead, the UK must exchange its pounds for U.S. dollars. The major exception at present is, of course, Iran.
This means that every country in the world that imports oil—which is the vast majority of the world’s nations—has to have immense quantities of dollars in reserve.
As will be explained below, the fact that virtually everyone around the world has to use our currency to buy oil is a massive advantage for us. Venezuela knows this, and so in response to new sanctions being imposed upon them, they are hitting us where it hurts…
Oil traders who export Venezuelan crude or import oil products into the country have begun converting their invoices to euros.
The state oil company Petróleos de Venezuela SA, known as PdVSA, has told its private joint venture partners to open accounts in euros and to convert existing cash holdings into Europe’s main currency, said one project partner.
The new payment policy hasn’t been publicly announced, but Vice President Tareck El Aissami, who has been blacklisted by the U.S., said Friday, “To fight against the economic blockade there will be a basket of currencies to liberate us from the dollar.”
If more nations start to follow suit, it would be absolutely disastrous for the United States.
In other articles, I have detailed why the petrodollar is so incredibly important to our economy and our financial system. The following is an extended excerpt from one of those previous articles…
Well, it creates a tremendous amount of demand for the U.S. dollar all over the globe. Since everyone has needed it to trade with one another, that has created an endless global appetite for the currency. That has kept the value of the dollar artificially high, and it has enabled us to import trillions of dollars of super cheap products from other countries. If other nations stopped using the dollar to trade with one another, the value of the dollar would plummet dramatically and we would have to pay much, much more for the trinkets that we buy at the dollar store and Wal-Mart.
In addition, since the U.S. dollar is essentially the de facto global currency, this has also increased demand for our debt. Major exporting nations such as China and Saudi Arabia end up with giant piles of our dollars. Instead of just letting them sit there and do nothing, those nations often reinvest their dollars into securities that can rapidly be changed back into dollars if needed. One of the most popular ways to do this has been to invest those dollars in U.S. Treasuries. This has driven down interest rates on U.S. debt over the years and has enabled the U.S. government to borrow trillions upon trillions of dollars for next to nothing.
But if the rest of the world starts moving away from the U.S. dollar, all of this could change.
History has shown that when the status of the petrodollar is threatened, the U.S. is swift to take action.
And it is very interesting to note that President Trump will be meeting with Latin American leaders next week, and the main topic for discussion will be “the Venezuela crisis”…
U.S. President Donald Trump has invited three Latin American leaders to dine with him next week in New York as he seeks to address the Venezuela crisis and build bridges with the region after an acrimonious start with neighbor Mexico.
The political and economic turmoil in Venezuela, source of 10 percent of the oil consumed by the United States, will almost certainly top the agenda when he receives the center-right presidents of Peru, Colombia and Brazil at Trump Tower on Monday evening, diplomats said.
Could this latest move by Venezuela be enough to potentially spark a military conflict?
Having threatened China today with exclusion from SWIFT, we suspect Washington is rapidly running out of any great ally to sustain the petrodollar-driven hegemony (and implicitly its war machine). Cue the calls for a Venezuelan invasion in 3…2..1…!
It would be absolutely no surprise at all if John McCain and Lindsey Graham start appearing on the major news networks calling for war with Venezuela, but hopefully President Trump will not listen to such nonsense.
No matter how important the petrodollar is, there is absolutely no reason to go to war to protect it.
And if war talk does begin, the American people need to make their voices heard very, very loudly. We have been in useless wars before, and we certainly do not need another one.
In the wake of the horrible bombings in Brussels, Barack Obama is insisting that there is no need to change our approach in the fight against ISIS. He believes that Islamic terror is not a fundamental threat to our way of life, and he wants all of us to be convinced that the way that he is handling ISIS right now is just fine. Well, in this article you are going to learn some very shocking things about Obama and ISIS that are likely to make you very angry. It turns out that our allies Saudi Arabia and Turkey have been arming, funding and aiding ISIS and other radical jihadist groups such as the al-Nusra Front (al-Qaeda in Syria), and Obama has known about it all along. The goal was to take down the Assad regime in Syria, and the American people were never supposed to find out the truth.
Earlier today, Barack Obama told reporters that ISIS is not “an existential threat to us” during a news conference down in Argentina. You can see video of him making these remarks right here. But at the same time, he is promising “to continue to go after” ISIS until they are “finally destroyed”…
The United States will “continue to go after ISIL aggressively until it’s removed from Syria and from Iraq and finally destroyed,” Obama said, using another name for ISIS.
“The world has to be united against terrorism,” Obama said, adding that “that’s a top priority of ours.” He added that “we can and we will” defeat terrorism.
So what precisely is Obama actually doing to pursue this “top priority”?
We are told that the U.S. military is bombing ISIS targets, but in all the months that this has been happening, U.S. aircraft never targeted the endless convoys of ISIS oil trucks that were transporting stolen oil into Turkey. It has been estimated that ISIS sold 800 million dollars worth of oil in Turkey, and Obama knew about it the entire time.
Why didn’t Obama say anything about this or do anything to stop it?
When the Russians came in, they showed satellite evidence of what was happening to the entire world and they immediately began bombing those oil convoys into oblivion.
But why hadn’t the U.S. already done that?
Massive convoys of oil trucks that stretched as far as the eye could see would go back and forth over the Turkish border completely unmolested and Obama did nothing.
In fact, if the Russians had not come in and bombed the living daylights out of those convoys it would still be happening.
In addition, Obama knows that both Saudi Arabia and Turkey continue to provide advanced weaponry to ISIS and the al-Nusra Front.
He also knows that ISIS fighters use Turkey as a home base, and that when they are injured fighting in Syria they hop back over the border where they are treated at hospitals inside Turkish territory.
But have you heard Obama say anything about these things?
Has he done anything to stop any of this from happening?
The reason why Obama hasn’t done or said anything is because ISIS and the other radical jihadist groups were supposed to win in Syria. Once they had overthrown Assad, then the U.S., the Saudis and the Turks were going to come in and set up a Sunni puppet government. Of course Russian intervention has completely changed the game, and so now the Sunni militants are losing. That is why Saudi Arabia and Turkey are in such a panic about what is going on in Syria right now.
And we are also learning that western intelligence agencies had advance knowledge of the attacks in Brussels. The following comes from a Haaretz report…
The Belgian security services, as well as other Western intelligence agencies, had advance and precise intelligence warnings regarding the terrorist attacks in Belgium on Tuesday, Haaretz has learned.
The security services knew, with a high degree of certainty, that attacks were planned in the very near future for the airport and, apparently, for the subway as well.
Despite the advance warning, the intelligence and security preparedness in Brussels, where most of the European Union agencies are located, was limited in its scope and insufficient for the severity and immediacy of the alert.
So what are we to make of this?
Was this terror attack allowed to happen?
Could it be possible that someone out there helped make it happen?
Don’t get me wrong – I don’t want to minimize the threat of Islamic terror one bit. I just wonder sometimes which side our government is actually on.
And ISIS is warning of more attacks in the near future. In fact, they are telling us that what is coming “will be more devastating and bitter”…
Even if we were somehow able to completely wipe out ISIS, the threat of Islamic terror would be far from over.
All over the planet, radical Islam is on the rise. These jihadists have a fanatical hatred for Christians and for Jews, and their ultimate goal is world conquest.
And an act of terror does not have to result in mass casualties.
Examples of what I am talking about are all over the place. Earlier today, I came across a Christian Post article that talked about how two radical Muslims hacked a 68-year-old Christian convert to death with machetes in the nation of Bangladesh…
Unidentified attackers hacked a Christian convert to death this week in northern Bangladesh in the latest attack in the Muslim-majority country.
The incident occurred Tuesday morning in the northern city of Kurigram, where 68-year-old Hossain Ali was hacked to death by two assailants wielding machetes.
Tobarak Ullah, the police chief of Kurigram, told the AFP that the militants were able to carry out the heinous crime by using distractions and a getaway vehicle.
Many in the western world may dismiss a story like this because it was the death of only one man.
But what happens when these radical jihadists start getting their hands on bigger weapons?
Former president Ronald Reagan once made the following statement…
“I don’t think you can overstate the importance that the rise of Islamic fundamentalism will have to the rest of the world in the century ahead-especially if, as seems possible, its most fanatical elements get their hands on nuclear and chemical weapons and the means to deliver them against their enemies.”
The use of a single chemical, biological or nuclear weapon in a major western city would set off panic on a scale that would be unlike anything we have ever seen before.
Even something as basic as sarin gas could accomplish what I am talking about. Sarin gas has been used in both Syria and Iraq in the past, and it is exceedingly deadly. The following comes from the Huffington Post…
Inhaled or absorbed through the skin, the gas kills by crippling the respiratory center of the central nervous system and paralyzes the muscles around the lungs.
The combination results in death by suffocation, and sarin can contaminate food or water supplies, according to the US Centers for Disease Control and Prevention (CDC), which notes that antidotes exist.
“Sarin is 26 times more deadly than cyanide gas. Just a pinprick-sized droplet will kill a human,” according to the World Health Organization.
Of course there are other chemical weapons that are many, many times more lethal than sarin gas, and it is inevitable that terrorists will get their hands on biological and nuclear weapons at some point as well.
Yes, terror organizations such as ISIS most definitely do represent “an existential threat” to our way of life.
Unfortunately, we have a man in the White House that does not seem particularly inclined to protect us from this threat.
The ceasefire in Syria is a joke. Turkish military units continue to mass along the border, and militants are pouring across the border to attack targets in northern Syria. The Prime Minister of Turkey is now openly admitting that his government is supporting the militants that are trying to overthrow the Syrian government, and the Turkish government has also made it abundantly clear that they have no plans to stop shelling the Kurds on the other side of the border. So despite the “ceasefire”, the truth is that the threat of World War 3 breaking out in the Middle East is greater than ever.
At times it is difficult to see the dividing line between the Turkish military and the radical jihadists that are hopping back and forth across the border with the full support of the Turkish government. Over the weekend, militants from Turkey that crossed over into northern Syria were supported by artillery fire from the Turkish military as they attacked a key Kurdish town…
In the Raqqa province, a group of some 100 fighters crossed into Syria from Turkey. The group later joined forces with other militants and attacked the Kurdish town of Tell Abyad.
The 250-strong group was supported by artillery fire from the Turkish territory, a fact that Russia said the US should explain. The Kurdish YPG militia fended off the attack, the report said.
This is an act of war, and yet the Obama administration does not seem to mind.
If Turkey will not even honor the ceasefire, what hope is there that anything will be able to stop them from acting so aggressively?
At this point, the Turks are not even pretending anymore. Just the other day, Turkey’s Prime Minister Ahmet Davutoglu openly admitted that his nation is backing the militants that are trying to overthrow the Assad regime…
“How would they be able to defend themselves if there was no Turkish support of the Syrian people? … If there’s today a real moderate Syrian opposition, it’s because of the Turkish support. If today the [Assad] regime isn’t able to control all the territories [it’s] because of Turkish and some other countries’ support,” he told Al-Jazeera earlier this week.
Obviously this ceasefire is not going to work. Turkey has not even pressed pause in their relentless campaign against the Assad regime and the Kurds.
The Turkish government has become absolutely obsessed with their neighbor to the south, and that is a very dangerous thing for the rest of the planet. The only way that Turkey, Saudi Arabia and their allies are going to be able to win the war now is to conduct a massive ground invasion of Syria. Such a move would lead to direct conflict with Iran, Hezbollah and the Russians, and since Turkey is a member of the NATO alliance, that could threaten to drag the U.S. and western Europe into the war as well. The following comes from the International Business Times…
The wider consequences of any disagreement between Ankara and Moscow could lead to a standoff between Russia and NATO. Jen Stoltenberg, secretary general of the Brussels-based organization, said in late 2015 that it would be prepared to defend the member state of Turkey if it were attacked by Russia.
“NATO will defend you, NATO is on the ground, NATO is ready,” Stoltenberg said in the aftermath of repeated breaches of Turkish airspace by Russian jets and just one month before Ankara shot down a Russian jet in November.
The 28-country alliance is bound by Article 5 of its treaty to collectively defend its members. “Collective defense means that an attack against one ally is considered as an attack against all allies,” the article states.
Saudi Arabia does not appear ready to back down either.
Saudi Arabia is prepared to send troops to Syria if President Bashar Assad doesn’t resign and leave his war-torn nation peacefully. Saudi Foreign Minister Adel Al-Jubeir warned Sunday that his country will take military action if Syria violates the terms of a ceasefire agreement.
“I believe that abiding by the truce would be an important indicator of the seriousness to reach a peaceful solution to the Syrian crisis that would include setting up a transitional council and the transfer of power from Bashar to this council,” he said during a joint press conference with his Danish counterpart Kristian Jensen in the Saudi capital of Riyadh.
Al-Jubeir warned that Saudi Arabia has prepared a “Plan B.” If “the coalition decided to send ground troops into Syria, Saudi Arabia is ready to contribute,” he said.
The goal since 2011 has been to get rid of Assad so that Syria could become a full-fledged Sunni nation with a Sunni government.
Saudi Arabia, Turkey and their allies have poured enormous amounts of money and resources into this conflict, and they don’t appear to be willing to walk away now that the tide of the war has turned. In fact, how the Saudis have been behaving lately has been causing a tremendous amount of anxiety in the Middle East…
Saudi Arabia’s recent actions have caused a great deal of anxiety within its region. On February 4, a military spokesman suggested that Saudi Arabia was ready to send troops ground troops to fight ISIS in Syria. A week later Saudi Arabia announced that it will send combat aircraft and soldiers to Turkey to participate in the U.S.-led coalition against ISIS.
Three days later the Saudis launched “Northern Thunder,” described as the “largest military exercise in the history of the Middle East.” Participants from 20 countries sent troops to the maneuvers run over three weeks in Hafar al Batin in northern Saudi Arabia, not far from the Iraqi and Kuwaiti border. According to a Saudi media outlet, some 350,000 troops were expected to participate in the maneuvers.
So if Saudi Arabia, Turkey and their allies are preparing for war, then what is the purpose of the ceasefire?
Well, first of all the goal was to stop the bleeding. The Sunni militants were losing ground steadily, and this pause will enable them to regroup and get resupplied.
Secondly, this pause in the action gives “the coalition” time to move forces into position for a potential ground invasion of Syria.
But more than anything else, this ceasefire seems to be a trap. It appears to be inevitable that the U.S. and other western powers will accuse Russia, Iran, Hezbollah and the Syrian government of breaking the ceasefire, thus providing “legal justification” for “the coalition” to militarily intervene.
Watch developments in Syria very closely. Many had hoped that this ceasefire would bring the five year civil war to an end, but the truth is that it could just be setting the stage for something far, far bigger.
Saudi Arabia already has nukes, Iran probably does, and the Russians are one of the two great nuclear powers on the entire planet. So if Saudi Arabia, Turkey and their Sunni allies do decide to conduct a full-blown ground invasion of Syria, could someone ultimately decide to use nuclear weapons when their backs get pushed up against a wall? As you read this article, there are thousands of military vehicles and hundreds of thousands of troops massed along the southern border of Turkey and the northern border of Saudi Arabia. If the command is given and those forces start streaming toward Damascus, it is inevitable that the Syrians, the Iranians, Hezbollah and the Russians would fight back. It would literally be the start of World War 3, and the Saudis and the Turks are trying very hard to convince the United States to be involved. But the truth is that we don’t want any part of this conflict, because it could very easily become the very first nuclear war in the history of the Middle East.
Perhaps you didn’t know that the Saudis already have nukes. Of course the official position is that they don’t, but it is a fact that they were the ones that funded the development of Pakistan’s nuclear program. It is an open secret that the Saudis have the bomb, but nobody is really supposed to talk about it.
Earlier this week a Saudi political analyst told RT’s Arab network the kingdom has a nuclear weapon.
Dahham Al-‘Anzi made the claim while saying Saudi Arabia is engaged in an effort to “minimize the Iranian threat in the Levant and Syria.”
Although Saudi Arabia has officially denied it has a nuclear weapons program and has publicly stated it opposes nuclear weapons in the Middle East, it has funded a military nuclear program and received scientific assistance from the United States and Pakistan.
If the fur started flying in Syria and Russia and Iran decided to start bombing Saudi airbases, would Saudi Arabia resort to using their nukes?
Let’s hope not.
In the event of a massive ground invasion by Saudi Arabia, Turkey and their allies, it is actually more likely that Russia may decide to be the first one to use nukes. An invasion force of hundreds of thousands of troops would vastly outnumber the relatively small Russian force that is already inside Syria, and so the Russians may feel that the only way that they can keep the Sunni powers out of Damascus is to use tactical nukes.
If Turkey (with hundreds of thousands of troops massed near the Syrian border) and Saudi Arabia (with its sophisticated air force) follow through on threats and intervene militarily to save their rebel clients, who include Al Qaeda’s Nusra Front, from a powerful Russian-backed Syrian government offensive, then Russia will have to decide what to do to protect its 20,000 or so military personnel inside Syria.
A source close to Russian President Vladimir Putin told me that the Russians have warned Turkish President Recep Tayyip Erdogan that Moscow is prepared to use tactical nuclear weapons if necessary to save their troops in the face of a Turkish-Saudi onslaught. Since Turkey is a member of NATO, any such conflict could quickly escalate into a full-scale nuclear confrontation.
Given Erdogan’s megalomania or mental instability and the aggressiveness and inexperience of Saudi Prince Mohammad bin Salman (defense minister and son of King Salman), the only person who probably can stop a Turkish-Saudi invasion is President Obama. But I’m told that he has been unwilling to flatly prohibit such an intervention, though he has sought to calm Erdogan down and made clear that the U.S. military would not join the invasion.
Are you starting to understand how serious this is?
With all of the talk of a potential invasion in recent days, the Russians are on high alert and are rapidly preparing for a direct conflict with both Saudi Arabia and Turkey. The following comes from Infowars…
Still, the Russians are taking no chances and they have put all their forces into high alert. They have very publicly dispatched a Tu-214r – her most advanced ISR (Intelligence Surveillance Reconnaissance) aircraft. You can think of the Tu-214R as an “AWACS for the ground”, the kind of aircraft you use to monitor a major ground battle (the regular Russian A-50Ms are already monitoring the Syrian airspace). In southern Russia, the Aerospace forces have organized large-scale exercises involving a large number of aircraft which would be used in a war against Turkey: SU-34s. The Airborne Forces are ready. The naval task forces off the Syrian coast is being augmented. The delivery of weapons has accelerated. The bottom line is simple and obvious: the Russians are not making any threats – they are preparing for war. In fact, by now they are ready.
In addition, it is important to remember that it is quite likely that the Iranians have nuclear weapons as well.
Of course the U.S. government and the Iranian government both insist that Iran does not have nukes, but many of those in the know insist otherwise.
For instance, you may want to consider what retired U.S. Army Major General Paul Vallely and U.S. Air Force Lt. Col. Dennis B. Haney are saying. The following comes from an article that was authored by Jerome Corsi of WND…
In a joint statement, Vallely and Haney say an accumulation of available evidence shows a coalition of Russia, China and North Korea have assisted Iran since 1979 in achieving a nuclear weapon, despite sanctions, under the guise of a domestic nuclear energy program.
Vallely explained to WND that he and Haney have taken a systematic approach to evaluating each component needed to deliver a nuclear weapon, from the development and testing of a ballistic missile system, to the design of a nuclear weapons warhead, to the development of the weapons-grade uranium needed to produce a bomb.
“To come to our conclusion that Iran is a nuclear weapons power right now, we supplemented publicly available research, plus information from intelligence sources, including Iranian resistance groups such as the National Council of Resistance of IRAN, NCRI,” Vallely explained.
I happen to agree with Vallely and Haney. I cannot prove it, but all of the intel that I have received indicates that Iran already has nukes.
Hopefully I will not be proven accurate any time soon.
It had been hoped that a cease-fire could be negotiated that would at least temporarily defuse tensions in Syria. Unfortunately, it does not look like the shooting is going to stop, and this is going to put immense pressure on both Saudi Arabia and Turkey to do something to rescue the radical Sunni militants that are on the verge of defeat. The Saudis, the Turks and their allies have poured enormous amounts of money and resources into this war over the past five years, and now they are faced with the choice of either accepting defeat or directly intervening in this conflict themselves.
But in order to conduct a full-fledged ground invasion, they are going to need justification for doing so. There are some that are suggesting that we could soon see a false flag attack that would provide that justification, so that is something to watch out for.
I can’t remember a time when our planet has been so close to World War 3 potentially beginning.
And if it does break out, I believe that it is quite likely that nuclear weapons will be used.
So what do you think?
Do you agree with me?
Please feel free to share your thoughts by posting a comment below…
As you read this article, Turkish forces are massing along the border with Syria, and the largest “military exercises” in the history of the Middle East are being held in northern Saudi Arabia. The Saudis are publicly warning that Syrian President Bashar al-Assad “will be removed by force” if a political solution cannot be found, and Turkey is claiming that it may have to establish a “safe zone” in northern Syria “for humanitarian purposes”. Saudi Arabia, Turkey and their Sunni allies have poured massive amounts of money and arms into the conflict in Syria, and now that their Sunni insurgents are on the verge of total defeat, they are trying to come up with a way to justify going in there and doing the job themselves.
For the Saudis, their focus is on trying to convince everyone that Syrian President Bashar al-Assad is an extremely dangerous dictator that must be removed at all costs. The following comes from the London Independent…
Syrian President Bashar al-Assad will be removed by force if the peace process fails, Saudi Arabia’s Foreign Minister has said.
“Bashar al-Assad will leave – have no doubt about it,” Saudi Arabia’s Foreign Minister Adel al-Jubeir told CNN. “He will either leave by a political process or he will be removed by force.”
So precisely who will be doing the “removing” if force is necessary?
Are the Saudis ready to send in ground troops?
Apparently they are. Just consider what Saudi Arabia’s Foreign Minister Adel al-Jubeir told CNN…
Saudi Foreign Minister Jubeir made clear that his country’s troops would not go it alone.
“I can tell you that there is some serious discussion going on with regards to looking at a ground component in Syria, because there has to be a possibility of taking and holding ground, that one cannot do from the air.”
“We are saying we will participate within the U.S.-led coalition, should this coalition decide to send ground troops into Syria, that we are prepared to send special forces with those troops.”
But if the Saudis try to take Damascus and remove Assad by force, the Syrians and their allies will certainly fight back. That means that the Saudis will be fighting Hezbollah, the Iranians and the Russians.
Needless to say, Saudi Arabia is going to need a lot of help to do that.
So that may explain why Saudi Arabia has organized the largest “military exercise” in the history of the Middle East. CNN finally reported on this gigantic gathering of military forces in northern Saudi Arabia earlier today…
Saudi Arabia launched a massive military exercise that will include troops from 20 nations, state media reported Monday.
The drill, dubbed North Thunder, involves Arab and Muslim countries, according to the Saudi Press Agency. It’s taking place in King Khalid Military City in northeastern Saudi Arabia.
The news agency did not provide much information on what the exercise entails but called it “the largest in the region’s history.” The agency said it will involve air, sea and land forces.
This is the list of nations that are reportedly participating in these “exercises” so far…
-United Arab Emirates
As I discussed yesterday, 350,000 soldiers, 20,000 tanks, 2,450 warplanes and 460 military helicopters are reportedly gathering for these “military exercises”.
To me, that seems to be a great deal of overkill if the goal is just “training”.
The Saudi state agency made the announcement on Sunday, adding that participating troops will begin arriving in “the next few hours.”
The oil-rich nation described the exercises as “the largest and most important” military drills in the region’s history.
The so-called “Northern Thunder” exercise will take place in the north of the country and will include air, sea and land forces. SPA said that it will show that Riyadh and its allies “stand united in confronting all challenges and preserving peace and stability in the region.”
So are these forces massing for a ground invasion of Syria?
We shall see.
In the end, we probably won’t have to wait too long before we find out the answer.
Meanwhile, Turkish officials continue to assert that they may have to establish a “safe zone” for refugees in northern Syria. Since thousands of refugees are continually pouring their direction, they claim that they have no other choice but to go in and take control of the situation.
Some 100,000 Syrian refugees are being looked after in camps inside Syria close to the Turkish border, including 35,000 who this month fled a Russian-backed regime offensive in northern Aleppo province, a top Turkish official said Friday.
Turkish Deputy Prime Minister Yalcin Akdogan, whose country has come under increasing pressure to open its border to people fleeing the violence, said the refugees were being accommodated in nine camps just across the border with Syria.
But make no mistake – this is not just about helping refugees.
The truth is that ISIS has been using Turkey as a home base for years, and hundreds of millions of dollars of ISIS oil has been shipped into Turkey where it has then been sold to the rest of the world. Barack Obama knows about all of this, and yet he has refused to do anything to stop it.
At this point the cooperation between ISIS and Turkey has become so obvious that even CNN is admitting that ISIS militants are being resupplied from Turkey…
To the east of Aleppo, Kurdish forces are, with American support, eyeing the remaining ISIS strongholds along the Turkish border — Jarablus and Manbij. The U.S. wants ISIS out, to remove its access to resupply of materiel and fighters from Turkey.
Meanwhile, Turkey, America’s NATO ally that is engaged in a brutal but often unseen war with the Kurds’ allies in Turkey’s southeast, doesn’t want the Kurds to advance, and may stop at nothing to prevent that.
Fortunately, the Russian bombing campaign has pretty much put an end to the endless parade of ISIS oil trucks that were entering Turkey, and now the primary supply line to Sunni militants in the strategically important city of Aleppo is about to be cut off.
The corridor that runs through the city of Azaz is vitally important, and the Prime Minister of Turkey recently insisted that the Turkish government “will not allow Azaz to fall”…
Turkey shelled YPG positions for a third straight day on Monday to try to stop its fighters seizing Azaz, just 8 km from the border. Ankara fears the Kurdish militia, backed by Russia, is trying to secure the last stretch of around 100 km along the Syrian border not already under its control.
“We will not allow Azaz to fall,” Davutoglu told reporters on his plane on the way to Ukraine. “If they approach again they will see the harshest reaction,” he said.
Unfortunately for the Turkish government, it appears that Azaz is already slipping away from the militants. The following was reported by an Iranian news source…
Ankara is likely to take action to counter the Syrian military and allied groups on choking up a supply link on which militants relied to get weapons and logistics.
Syrian troops and Lebanon’s Hezbollah fighters have retaken the town of Azaz, located to the northwest of Aleppo, prompting Saudi Arabia and Turkey to hint at deployment of ground forces to the region.
Asked if Ankara might act to reverse the gains, Turkish Prime Minister Ahmet Davutoglu (seen below) said on Friday, “Wait for the next few days and you will have the answer,” Turkish paper Hurriyet reported.
Wait for the next few days and you will have the answer?
That sounds rather ominous.
Like I said yesterday, I don’t think that I have ever seen a scenario which was more likely to lead to World War III than the one that we are watching play out right now.
Do Saudi Arabia and Turkey actually expect to waltz into Syria and start taking territory without a response from the Syrians, Hezbollah, the Iranians and the Russians?
And if fighting does break out, how is the United States possibly going to stay out of it?
The truth is that Saudi Arabia and Turkey would never invade Syria in the first place without the express approval of the Obama administration.
The next couple of weeks are key. If we can get into early March without an invasion, by that time Saudi Arabia and Turkey may have missed their window. The troops gathered for the massive military exercise in northern Saudi Arabia will start to go home, and by then the Sunni militants remaining in Aleppo will probably be pretty much completely defeated.
But will Saudi Arabia and Turkey really be willing to walk away after pouring so much time, effort and money into the conflict in Syria? They had dreamed of turning Syria into a full-blown Sunni nation, and if they give up now Syria will end up being dominated by Iran and Hezbollah. It will be a result that is far worse than if they never tried to overthrow Assad in the first place.
So my gut feeling is telling me that Saudi Arabia, Turkey and their Sunni allies are not done in Syria. But their obsession with that country threatens to plunge us into World War III, and if that happens the consequences will be felt by every man, woman and child on the entire planet.
350,000 soldiers, 20,000 tanks, 2,450 warplanes and 460 military helicopters are massing in northern Saudi Arabia for a military exercise that is being called “Northern Thunder”. According to the official announcement, forces are being contributed by Saudi Arabia, the United Arab Emirates, Egypt, Jordan, Bahrain, Sudan, Kuwait, Morocco, Pakistan, Tunisia, Oman, Qatar, Malaysia and several other nations. This exercise will reportedly last for 18 days, and during that time the airspace over northern Saudi Arabia will be closed to air traffic. This will be the largest military exercise in the history of the region, and it comes amid rumors that Saudi Arabia and Turkey are preparing for a massive ground invasion of Syria.
If you were going to gather forces for an invasion, this is precisely how you would do it. Governments never come out and publicly admit that forces are moving into position for an invasion ahead of time, so “military exercises” are a common excuse that gets used for this sort of thing.
If these exercises are actually being used as an excuse to mass forces near the northern Saudi border, then we should expect an invasion to begin within the next couple of weeks. If it happens, we should expect to see the Saudi coalition storm through western Iraq and into Syria from the south, and it is likely that Turkey will come in from the north.
The goal would be to take out the Assad regime before Russia, Iran and Hezbollah could react. For the past couple of years, Saudi Arabia, Turkey and their allies have been funding the Sunni insurgency in Syria, and they were counting on those insurgents to be able to take down the Assad regime by themselves.
You see, the truth is that ISIS was never supposed to lose in Syria. Saudi Arabia and her allies have been funneling massive amounts of money to ISIS, and hundreds of millions of dollars of ISIS oil has been shipped into Turkey where it is sold to the rest of the world.
The major Sunni nations wanted ISIS and the other Sunni insurgent groups to take down Assad. In the aftermath, Saudi Arabia and her allies intended to transform Syria into a full-blown Sunni nation.
But then Russia, Iran and Hezbollah stepped forward to assist the Assad regime. Russian air support completely turned the tide of the war, and now the Sunni insurgents are on the brink of losing.
Aleppo was once the largest city in Syria, and Sunni insurgents have controlled it since 2012. But now relentless Russian airstrikes have made it possible for Syrian, Iranian and Hezbollah ground forces to surround the city, and it is about to fall back into the hands of the Syrian government.
If this happens, the war will essentially be over.
Saudi Arabia, Turkey and their allies have invested massive amounts of time, money and effort into overthrowing Assad, and they aren’t about to walk away now.
If the war was to end right at this moment, a weakened Assad regime would remain in power, and Iran and Hezbollah would be the dominant powers in the country for years to come. And once Assad died, it would be inevitable that Iran and Hezbollah would attempt to transform Syria into a full-blown Shiite nation. This is something that Saudi Arabia and Turkey want to avoid at all costs.
So they are actually considering what was once absolutely unthinkable – a massive ground invasion of Syria.
But if Saudi Arabia, Turkey and their allies go in, they run the risk of a full-blown war with Russia, Iran and Hezbollah. Just consider some of the comments that we have seen in recent days…
Reacting to a potential troop deployment, Syrian Foreign Minister Walid al-Muallem said Saturday, “Let no one think they can attack Syria or violate its sovereignty because I assure you any aggressor will return to their country in a wooden coffin.”
Pavel Krasheninnikov, a deputy of Russia’s State Duma, has warned Saudi Arabia that any military ground operation in Syria without Damascus’ consent would amount to a declaration of war, Press TV reported.
We could literally be looking at the spark that sets off World War 3. I can’t believe that Saudi Arabia and Turkey are actually considering this.
And if it does happen, you can rest assured that Barack Obama gave them the green light to go in.
Unfortunately, it sounds like the decision may have already been made. Just consider what Turkish Foreign Minister Mevlut Cavusoglu is saying…
“If we have such a strategy, then Turkey and Saudi Arabia may launch a ground operation,” he added, fueling concerns that a foreign troop invasion may soon further complicate the already turbulent situation in the war-torn country.
Earlier, Saudi Arabia, Bahrain and the UAE voiced their readiness to contribute troops for a ground operation in Syria on the condition that the US would lead the intervention. Damascus and its key regional ally, Iran, warned that such a foreign force would face strong resistance.
And in addition to all of the forces massing in northern Saudi Arabia, the London Independent is reporting that the Saudis have sent troops and aircraft to a military base in Turkey…
The Turkish foreign minister, Mevlut Cavusoglu, confirmed the deployment in a statement to the Yeni Şafak newspaper on Saturday, days before a temporary ceasefire is due to come into force.
There are reports that Saudi officials are saying that the decision to send in ground troops is “irreversible”, and Reuters is reporting that the Syrian government claims that some Turkish troops have already entered the country…
The Syrian government says Turkish forces were believed to be among 100 gunmen it said entered Syria on Saturday accompanied by 12 pick-up trucks mounted with heavy machine guns, in an ongoing supply operation to insurgents fighting Damascus.
“The operation of supplying ammunition and weapons is continuing via the Bab al-Salama crossing to the Syrian area of Azaz,” the Syrian foreign ministry said in a letter to the U.N. Security Council published by state news agency SANA.
Of course the Turkish government is not going to confirm that report, but what we do know is that Turkey is shelling Kurdish forces on the Syrian side of the border. The funny thing is that these Kurdish forces are actually being supported and supplied by the U.S. government.
So the Turks are not supposed to be doing this, but according to Reuters they have been doing it for two days in a row anyway…
The Turkish army shelled positions held by Kurdish-backed militia in northern Syria for a second day on Sunday, killing two fighters, the Syrian Observatory for Human Rights monitoring group said.
Turkey on Saturday demanded the powerful Syrian Kurdish YPG militia withdraw from areas that it had captured in the northern Aleppo region in recent days from insurgents in Syria, including the Menagh air base. The shelling has targeted those areas.
The hostility between Turkey and the Kurds goes back a long, long way. The Syrian Kurds are not threatening Turkey in any way right now, but Turkey is using the instability in the region as an excuse to lob artillery shells at a hated enemy. It is an act of naked aggression that the Obama administration should be loudly denouncing.
Anatolia news agency reported that the Turkish military hit Syrian government forces on Saturday, adding that the shelling had been in response to fire inflicted on a Turkish military guard post in Turkey’s southern Hatay region.
Turkish artillery targeted Syrian forces again late on Saturday, according to a military source quoted by RIA Novosti. The attack targeted the town of Deir Jamal in the Aleppo Governorate.
Needless to say, the Russians are quite alarmed by all of this.
“A ground operation draws everyone taking part in it into a war,” he told the Handelsblatt newspaper.
“The Americans and our Arab partners must consider whether or not they want a permanent war.”
If Saudi Arabia, Turkey and their allies launch an invasion and make a mad dash to take out the Assad regime in Damascus, the Russians will inevitably respond.
And if tactical nuclear weapons are necessary to keep the invading forces out of Damascus, the Russians will not be shy about using them.
I don’t know if I have ever seen a scenario which was more likely to initiate World War 3 than the one that we are watching unfold right now.
So what has the mainstream media been saying about all of this?
Incredibly, they have been almost entirely silent. When he went looking for news about these events, James Bailey could find almost nothing on either Fox News or CNN…
I just visited the home page for Foxnews.com and found not one single mention of the insane events now unfolding in the Middle East. I could not believe it, so I used my Find tool to search for Syria and Saudi Arabia. Not one mention!
Of course that could change at any moment, but nothing there when I checked. Their stories were all about the meaningless Presidential election, which has already been decided regardless of what we think about it, and other stories about entertainment, sports, Congressional political theater, etc.
So I went to CNN and found just about the same thing with one news story about the Syrian cease fire, but when I read it there was no mention of any of the big events that have developed this week. This is truly an amazing media blackout!
But Fox News does have space to run headlines like these…
It looks like it is going to be another chaotic week for global financial markets. On Sunday, news that Iran plans to dramatically ramp up oil production sent stocks plunging all across the Middle East. Stocks in Kuwait were down 3.1 percent, stocks in Saudi Arabia plummeted 5.4 percent, and stocks in Qatar experienced a mammoth 7 percent decline. And of course all of this comes in the context of a much larger long-term decline for Middle Eastern stocks. At this point, Saudi Arabian stocks are down more than 50 percent from their 2014 highs. Needless to say, a lot of very wealthy people in Saudi Arabia are getting very nervous. Could you imagine waking up someday and realizing that more than half of your fortune had been wiped out? Things aren’t that bad in the U.S. quite yet, but it looks like another rough week could be ahead. The Dow, the S&P 500 and the Nasdaq are all down at least 12 percent from their 52-week highs, and the Russell 2000 is already in bear market territory. Hopefully this week will not be as bad as last week, but events are starting to move very rapidly now.
Iran could get more than five times as much cash from oil sales by year-end as the lifting of economic sanctions frees the OPEC member to boost crude exports and attract foreign investment needed to rebuild its energy industry.
The Persian Gulf nation will be able to access all of its revenue from crude sales after the U.S. and five other global powers removed sanctions on Saturday in return for Iran’s curbing its nuclear program. The fifth-biggest producer in the Organization of Petroleum Exporting Countries had been receiving only $700 million of each month’s oil earnings under an interim agreement, with the rest blocked in foreign bank accounts. Iran is striving to add 1 million barrels to its daily crude production and exports this year amid a global supply glut that has pushed prices 22 percent lower this month.
It doesn’t take a genius to figure out what this is going to do to the price of oil.
The price of oil has already fallen more than 20 percent so far in 2016, and overall it has declined by more than 70 percent since late 2014.
When the price of oil first started to fall, a lot of people out there were proclaiming that it would be really good for the U.S. economy. But I said just the opposite. And of course since that time we have seen an endless parade of debt downgrades, bankruptcies and job losses. 130,000 good paying energy jobs were lost in the United States in 2015 alone because of this collapse, and things just continue to get even worse. At this point, some are even calling for the federal government to intervene. For example, the following is an excerpt from a CNN article that was just posted entitled “Is it time to bail out the U.S. oil industry?“…
America’s once-booming oil industry is suddenly in deep financial trouble.
The epic crash in oil prices has wiped out tens of thousands of jobs, caused dozens of bankruptcies and spooked global financial markets.
The fallout is already being felt in oil-rich states like Texas, Oklahoma and North Dakota, where home foreclosure rates are spiking and economic growth is slowing.
Now there are calls in at least some corners for the federal government to come to the rescue.
Is it just me, or is all of this really starting to sound a lot like 2008?
And of course it isn’t just the U.S. that is facing troubles. The global financial crisis that began during the second half of 2015 is rapidly accelerating, and chaos is erupting all over the planet. The following summary of what we have been seeing in recent days comes from Doug Noland…
The world has changed significantly – perhaps profoundly – over recent weeks. The Shanghai Composite has dropped 17.4% over the past month (Shenzhen down 21%). Hong Kong’s Hang Seng Index was down 8.2% over the past month, with Hang Seng Financials sinking 11.9%. WTI crude is down 26% since December 15th. Over this period, the GSCI Commodities Index sank 12.2%. The Mexican peso has declined almost 7% in a month, the Russian ruble 10% and the South African rand 12%. A Friday headline from the Financial Times: “Emerging market stocks retreat to lowest since 09.”
Trouble at the “Periphery” has definitely taken a troubling turn for the worse. Hope that things were on an uptrend has confronted the reality that things are rapidly getting much worse. This week saw the Shanghai Composite sink 9.0%. Major equities indexes were hit 8.0% in Russia and 5.0% in Brazil (Petrobras down 9%). Financial stocks and levered corporations have been under pressure round the globe. The Russian ruble sank 4.0% this week, increasing y-t-d losses versus the dollar to 7.1%. The Mexican peso declined another 1.8% this week. The Polish zloty slid 2.8% on an S&P downgrade (“Tumbles Most Since 2011”). The South African rand declined 3.0% (down 7.9% y-t-d). The yen added 0.2% this week, increasing 2016 gains to 3.0%.With the yen up almost 4% versus the dollar over the past month, so-called yen “carry trades” are turning increasingly problematic.
Closer to home, the crisis in Puerto Rico continues to spiral out of control. The following is an excerpt from a letter that Treasury Secretary Jack Lew sent to Congress on Friday…
Although there are many ways this crisis could escalate further, it is clear that Puerto Rico is already in the midst of an economic collapse…
Puerto Rico is already in default. It is shifting funds from one creditor to pay another and has stopped payment altogether on several of its debts. As predicted, creditors are filing lawsuits. The Government Development Bank, which provides critical banking and fiscal services to the central government, only avoided depleting its liquidity by halting lending activity and sweeping in additional deposits from other Puerto Rico governmental entities. A large debt payment of $400 million is due on May 1, and a broader set of payments are due at the end of June.
It isn’t Michael Snyder from The Economic Collapse Blog that is saying that Puerto Rico is “in the midst of an economic collapse”.
That is the Secretary of the U.S. Treasury that is saying it.
Those that have been eagerly anticipating a financial apocalypse are going to get what they have been waiting for.
Right now we are about halfway through January, and this is the worst start to a year for stocks ever. The Dow is down a total of 1,437 points since the beginning of 2016, and more than 15 trillion dollars of stock market wealth has been wiped out globally since last June.
Unfortunately, there are still a lot of people out there that are in denial.
There are a lot of people that still believe that this is just a temporary bump in the road and that things will return to “normal” very soon.
They don’t understand that this is just the beginning. What we have seen so far is just the warm up act, and much, much worse is yet to come.
Saudi Arabia and Egypt stand poised to conduct a massive ground invasion of Yemen, and the western media will be full of tales about how “Operation Decisive Storm” is liberating that country from the evil Iranian-backed Houthi rebels. And without a doubt, the Houthis are bad guys and so are their Iranian benefactors. But don’t be fooled into thinking that the war in Yemen is a battle of good vs. evil. The truth is that the conflict in Yemen is actually a proxy war between two sets of bad guys that both ultimately plan for Islam to take over the entire planet. On one side, the Iranians are very honest about the fact that they view us as an enemy, and they plan to impose their version of radical Shia Islam worldwide as soon as they can. On the other side, the Saudis pretend to be our friends, but they don’t hide the fact that they believe that their version of Sunni Islam will eventually rule the world. And their version of Sunni Islam includes constant beheadings, the destruction of all churches and the death penalty for anyone caught smuggling a Bible into Saudi territory. At the end of the day, there is very little difference between the Saudis and ISIS. In fact, ISIS gets a lot of funding from Saudi sources, and there is more support for ISIS on Twitter from Saudi Arabia than from anywhere else. Saudi Arabia is a horribly repressive regime where women are treated like dirt, where the secret police conduct a never ending reign of terror and where even a minor deviation from sharia law can mean the loss of a limb. But because our politicians and the mainstream media constantly tell us that they are “our friends”, we cheer them on.
It is being reported that the Saudis have mobilized 150,000 troops for a ground invasion of Yemen, and Egypt says that it is ready to contribute a very large force as well. The Saudis simply were not going to just sit back and watch as pro-Iranian forces took total control of their neighbor. The following is how the Telegraph recently described what the Iranians have been up to in Yemen for the past several years…
For the past four years the Quds force of Iran’s Revolutionary Guards have been smuggling weapons to the Houthis, as well as providing expert military training, with the result that the Shia Houthi militia finally succeeded in seizing control of the capital Sana’a last year, forcing the Western-backed president, Abed Rabbo Mansour Hadi, to seek refuge in Aden.
Last week it was claimed that Tehran was increasing its support for the Houthis with the delivery of a 185 ton shipment of weapons and other military equipment.
This is how Iran likes to fight wars. They like to fund and arm proxy organizations that will do their fighting for them. That way they don’t have to get their hands messy or risk direct retaliation. Hezbollah is a prime example of this.
And the Iranians were winning in Yemen. In fact, they were on the verge of complete and total victory.
So the Saudis felt forced to step in. The Saudis don’t like to fight their own wars either, but in this instance they felt there was no other choice.
But let there be no misunderstanding. This is not a conflict between Saudi Arabia and some rebel group in Yemen. This is part of an ongoing war between Saudi Arabia and Iran, and at this point relations between the two nations are at an all-time low…
“The Saudis were caught off guard by how quick and aggressive the Houthi offensive was and felt they needed a sharp and immediate response,” geopolitical expert Ian Bremmer, president of Eurasia group, told Business Insider over email. “They didn’t want Iran to think they needed Egypt or anyone else to come rescue the Kingdom. This is the worst tension we’ve seen between Iran and Saudi Arabia, period.”
And of course Yemen is far from the only front in this war.
Islamist forces armed and aided by Saudi Arabia are poised for a massive battle in the coming days targeting the Syrian regime and the Iranian-backed Hezbollah organization, according to Egyptian security officials speaking to WND.
The officials said the Saudis have directed the Islamist forces, including the Al Nusra Front, to lead an imminent counterinsurgency focusing on the Syria-Lebanon border, with particular emphasis on the Qalamoun region.
Qalamoun is a strategic site that serves as a supply line to Damascus from Lebanon. Control of the area would give the rebels a base of operations to target Damascus.
In the western media, this ongoing conflict is being characterized as a conflict between “good” Saudi Arabia and “evil” Iran.
But should we really be cheering on Saudi Arabia?
As I mentioned above, more funding for ISIS comes out of Saudi Arabia than anywhere else.
And ISIS also gets more support on social networks such as Twitter from Saudi Arabia than anywhere else…
Part of ISIS’s success is its adoption of social media as a way to spread the group’s messages and find new members. A study by The Independent analyzed the origin of posts supporting ISIS on Twitter, and found that Saudi Arabia provides by far the most.
If you believe that ISIS is wrong for beheading people, you should keep in mind that there is a beheading in Saudi Arabia every four days.
The truth is that ISIS is simply just copying what the Saudis have been doing for centuries.
And for writing what I just did, I could be sentenced to 1,000 lashes if I was living in Saudi Arabia. In fact, that is exactly what happened to one Saudi blogger. Another Saudi man was recently sentenced to death for renouncing Islam.
The Saudis don’t believe that it will happen tomorrow, but they are fully convinced that their version of Islam will eventually dominate every inch of our planet.
Are you ready to live like the Saudis do? In Saudi Arabia, women are not allowed to drive, religious police can drag you away at any time for any reason, and the penalty for smuggling a Bible is death.
If you are tempted to think that the Saudis do not plan to impose their rules on the rest of the world, you should consider what the top religious leader in the entire country recently had to say. Earlier this month, he declared that every single church on the entire Arabian Peninsula (not just Saudi Arabia) must be destroyed…
Saudi Arabia’s top Muslim cleric called on Tuesday for the destruction of all churches in the Arabian Peninsula after legislators in the Gulf state of Kuwait moved to pass laws banning the construction of religious sites associated with Christianity.
Speaking to a delegation in Kuwait, Sheikh Abdul Aziz bin Abdullah, who serves as the grand mufti of Saudi Arabia, said the destruction of churches was absolutely necessary and is required by Islamic law, Arabic media reported.
These are the “good guys”?
The truth is that the Saudis are not our friends. They like our money and they like our military might, and we make a convenient ally for them right now.
But what the Saudis stand for is the antithesis of everything that the United States is supposed to stand for. It is a brutally oppressive regime that is promoting tyranny all over the planet. Barack Obama may be comfortable with such “friends”, but the American people should not be.
So what do you think? Please feel free to share your thoughts by posting a comment below…
Who is to blame for the staggering collapse of the price of oil? Is it the Saudis? Is it the United States? Are Saudi Arabia and the U.S. government working together to hurt Russia? And if this oil war continues, how far will the price of oil end up falling in 2015? As you will see below, some analysts believe that it could ultimately go below 20 dollars a barrel. If we see anything even close to that, the U.S. economy could lose millions of good paying jobs, billions of dollars of energy bonds could default and we could see trillions of dollars of derivatives related to the energy industry implode. The global financial system is already extremely vulnerable, and purposely causing the price of oil to crash is one of the most deflationary things that you could possibly do. Whoever is behind this oil war is playing with fire, and by the end of this coming year the entire planet could be dealing with the consequences.
Ever since the price of oil started falling, people have been pointing fingers at the Saudis. And without a doubt, the Saudis have manipulated the price of oil before in order to achieve geopolitical goals. The following is an excerpt from a recent article by Andrew Topf…
We don’t have to look too far back in history to see Saudi Arabia, the world’s largest oil exporter and producer, using the oil price to achieve its foreign policy objectives. In 1973, Egyptian President Anwar Sadat convinced Saudi King Faisal to cut production and raise prices, then to go as far as embargoing oil exports, all with the goal of punishing the United States for supporting Israel against the Arab states. It worked. The “oil price shock” quadrupled prices.
It happened again in 1986, when Saudi Arabia-led OPEC allowed prices to drop precipitously, and then in 1990, when the Saudis sent prices plummeting as a way of taking out Russia, which was seen as a threat to their oil supremacy. In 1998, they succeeded. When the oil price was halved from $25 to $12, Russia defaulted on its debt.
The Saudis and other OPEC members have, of course, used the oil price for the obverse effect, that is, suppressing production to keep prices artificially high and member states swimming in “petrodollars”. In 2008, oil peaked at $147 a barrel.
Turning to the current price drop, the Saudis and OPEC have a vested interest in taking out higher-cost competitors, such as US shale oil producers, who will certainly be hurt by the lower price. Even before the price drop, the Saudis were selling their oil to China at a discount. OPEC’s refusal on Nov. 27 to cut production seemed like the baldest evidence yet that the oil price drop was really an oil price war between Saudi Arabia and the US.
If the Saudis wanted to stabilize the price of oil, they could do that immediately by announcing a production cutback.
The fact that they have chosen not to do this says volumes.
In addition to wanting to harm U.S. shale producers, some believe that the Saudis are determined to crush Iran. This next excerpt comes from a recent Daily Mail article…
Above all, Saudi Arabia and its Gulf allies see Iran — a bitter religious and political opponent — as their main regional adversary.
They know that Iran, dominated by the Shia Muslim sect, supports a resentful underclass of more than a million under-privileged and angry Shia people living in the gulf peninsula — a potential uprising waiting to happen against the Saudi regime.
The Saudis, who are overwhelmingly Sunni Muslims, also loathe the way Iran supports President Assad’s regime in Syria — with which the Iranians have a religious affiliation. They also know that Iran, its economy plagued by corruption and crippled by Western sanctions, desperately needs the oil price to rise. And they have no intention of helping out.
The fact is that the Saudis remain in a strong position because oil is cheap to produce there, and the country has such vast reserves. It can withstand a year — or three — of low oil prices.
There are others out there that are fully convinced that the Saudis and the U.S. are actually colluding to drive down the price of oil, and that their real goal is to destroy Russia.
“Did you know there’s an oil war? And the war has an objective: to destroy Russia,” he said in a speech to state businessmen carried live on state TV.
“It’s a strategically planned war … also aimed at Venezuela, to try and destroy our revolution and cause an economic collapse,” he added, accusing the United States of trying to flood the market with shale oil.
Venezuela and Russia, which both have fractious ties with Washington, are widely considered the nations hardest hit by the global oil price fall.
And as I discussed just the other day, Russian President Vladimir Putin seems to agree with this theory…
“We all see the lowering of oil prices. There’s lots of talk about what’s causing it. Could it be an agreement between the U.S. and Saudi Arabia to punish Iran and affect the economies of Russia and Venezuela? It could.”
Without a doubt, Obama wants to “punish” Russia for what has been going on in Ukraine. Going after oil is one of the best ways to do that. And if the U.S. shale industry gets hurt in the process, that is a bonus for the radical environmentalists in Obama’s administration.
There are yet others that see this oil war as being even more complicated.
Marin Katusa believes that this is actually a three-way war between OPEC, Russia and the United States…
“It’s a three-way oil war between OPEC, Russia and North American shale,” says Marin Katusa, author of “The Colder War,” and chief energy investment strategist at Casey Research.
Katusa doesn’t see production slowing in 2015: “We know that OPEC will not be cutting back production. They’re going to increase it. Russia has increased production to all-time highs.” With Russia and OPEC refusing to give up market share how will the shale industry compete?
Katusa thinks the longevity and staying power of the shale industry will keep it viable and profitable. “The versatility and the survivability of a lot of these shale producers will surprise people. I don’t see that the shale sector is going to collapse over night,” he says. Shale sweet spots like North Dakota’s Bakken region and Texas’ Eagle Ford area will help keep production levels up and output steady.
Whatever the true motivation for this oil war is, it does not appear that it is going to end any time soon.
And so that means that the price of oil is going to go lower.
How much lower?
One analyst recently told CNN that we could see the price of oil dip into the $30s next year…
Few saw the energy meltdown coming. Now that it’s here, industry analysts warn another move lower is possible as the momentum remains firmly to the downside.
“If this doesn’t hold, we could go back to price levels in late 2008 and early 2009 — down in the $30s. There’s no reason why it couldn’t happen,” said Darin Newsom, senior analyst at Telvent DTN.
Others are even more pessimistic. For instance, Jeremy Warner of the Sydney Morning Herald, who correctly predicted that the price of oil would fall below $80 this year, is now forecasting that the price of oil could fall all the way down to $20 next year…
Revisiting the past year’s predictions is, for most columnists a frequently humbling experience. The howlers tend to far outweigh the successes. Yet, for a change, I can genuinely claim to have got my main call for markets – that oil would sink to $US80 a barrel or less – spot on, and for the right reasons, too.
Just in case you think I’m making it up, this is what I said 12 months ago: “My big prediction is for $US80 oil, from which much of the rest of my outlook for the coming year flows. It’s hard to overstate the significance of a much lower oil price – Brent at, say, $US80 a barrel, or perhaps lower still – yet this is a surprisingly likely prospect, the implications of which have been largely missed by mainstream economic forecasters.”
If on to a good thing, you might as well stick with it; so for the coming year, I’m doubling up on this forecast. Far from bouncing back to the post crisis “normal” of something over $US100 a barrel, as many oil traders seem to expect, my view is that the oil price will remain low for a long time, sinking to perhaps as little as $US20 a barrel over the coming year before recovering a little.
But even Warner’s chilling prediction is not the most bearish.
A technical analyst named Abigail Doolittle recently told CNBC that under a worst case scenario the price of oil could fall as low as $14 a barrel…
No one really saw 2014’s dramatic plunge in oil price coming, so it’s probably fair to say that any predictions about where it’s going from here fall somewhere between educated guesses and picking a number out of a hat.
In that light, it’s less than shocking to see one analyst making a case—albeit in a pure outlier sense—for a drop all the way below $14 a barrel.
Abigail Doolittle, who does business under the name Peak Theories Research, posits that current chart trends point to the possibility that crude has three downside target areas where it could find support—$44, $35 and the nightmare scenario of, yes, $13.65.
But the truth is that none of those scenarios need to happen in order for this oil war to absolutely devastate the U.S. economy and the U.S. financial system.
There is a very strong correlation between the price of oil and the performance of energy stocks and energy bonds. But over the past couple of weeks this correlation has been broken. The following chart comes from Zero Hedge…
It is inevitable that at some point we will see energy stocks and energy bonds come back into line with the price of crude oil.
And it isn’t just energy stocks and bonds that we need to be concerned about. There is only one other time in all of history when the price of oil has crashed by more than 50 dollars in less than a year. That was in 2008 – just before the great financial crisis that erupted in the fall of that year. For much, much more on this, please see my previous article entitled “Guess What Happened The Last Time The Price Of Oil Crashed Like This?…”
Whether the price of oil crashed or not, we were already on the verge of massive financial troubles.
But the fact that the price of oil has collapsed makes all of our potential problems much, much worse.
As we enter 2015, keep an eye on energy stocks, energy bonds and listen for any mention of problems with derivatives. The next great financial crisis is right around the corner, but most people will never see it coming until they are blindsided by it.