Saudi Arabia

6 Of The Last 8 U.S. Recessions Were Preceded By Oil Price Spikes – Damage To Saudi Oil Industry Could Take “Months” To Repair

When the price of oil rises dramatically, that tends to be really bad for the U.S. economy.  Because we are so spread out and goods are transported over such vast distances, our economy is particularly vulnerable to oil price shocks, and that is one reason why the events that we just witnessed in the Middle East are so alarming.  According to an article that was published by the Federal Reserve Bank of San Francisco in 2007, five of the last seven U.S. recessions that had occurred up to that time “were preceded by considerable increases in oil prices”.  Since that article was published in 2007, the recession that began in 2008 hadn’t happened yet, and of course that recession was immediately preceded by the largest oil price spike in history.  So that means that six of the last eight U.S. recessions were preceded by oil price spikes, and now we may be facing another one.  It is being reported that it may take “months” for Saudi Arabia to fully repair the damage that was done to their oil industry, and that could fundamentally alter the balance of supply and demand in the global marketplace.

Yesterday, I discussed why high oil prices are so bad for our economy.  When the price of oil is too high, it can cause inflation and hurt economic growth simultaneously.  The article from the Federal Reserve Bank of San Francisco that I mentioned in the last paragraph tried to explain why this happens in very basic economic terms…

Oil price increases are generally thought to increase inflation and reduce economic growth. In terms of inflation, oil prices directly affect the prices of goods made with petroleum products. As mentioned above, oil prices indirectly affect costs such as transportation, manufacturing, and heating. The increase in these costs can in turn affect the prices of a variety of goods and services, as producers may pass production costs on to consumers. The extent to which oil price increases lead to consumption price increases depends on how important oil is for the production of a given type of good or service.

Oil price increases can also stifle the growth of the economy through their effect on the supply and demand for goods other than oil. Increases in oil prices can depress the supply of other goods because they increase the costs of producing them. In economics terminology, high oil prices can shift up the supply curve for the goods and services for which oil is an input.

Needless to say, the unprecedented attack on Saudi oil production facilities was going to cause the price of oil to rise substantially.  In fact, when global markets opened up on Sunday evening we witnessed quite a dramatic spike…

In an extraordinary trading day, London’s Brent crude leaped almost $12 in the seconds after the open, the most in dollar terms since their launch in 1988. Prices subsequently pulled back some of that initial gain of almost 20%, but rallied again as traders waited in vain for an Aramco statement clarifying the scale of damage.

So where is the price of oil going from here?

One analyst quoted by Oilprice.com believes that we could soon see it hit $80 a barrel, and others believe that it could move up toward $100 a barrel not too long from now.

In the days ahead, global markets will be watching Saudi Arabia very carefully.  The longer it takes them to resume normal production levels, the higher the price of oil will go.

According to Bloomberg, one analyst is already publicly admitting that “full resumption could be weeks or even months away”…

All eyes are on how fast the kingdom can recover from the devastating strike, which knocked out roughly 5% of global supply and triggered a record surge in oil prices. Initially, it was said that significant volumes of crude could begin to flow again within days. While Aramco is still assessing the state of the plant and the scope of repairs, it currently believes less than half of the plant’s capacity can be restored quickly, said people familiar with the matter, asking not to be identified because the information isn’t public.

”Damage to the Abqaiq facility is more severe than previously thought,” said Amrita Sen, chief oil analyst at Energy Aspects Ltd. “While we still believe up to 50% of the 5.7 million barrels a day of output that has been disrupted could return fairly swiftly, full resumption could be weeks or even months away.”

That is really bad news, and that is assuming that there won’t be any more attacks like we just witnessed.

If there are more attacks, Saudi oil production could be far lower than normal for an extended period of time, and that would be catastrophic for the global economy.

Most Americans don’t realize this, but a lot of Saudi oil actually gets shipped to the west coast.  The following comes from Fox Business…

Drivers in California, however, could be hit the hardest. Nearly half of what Saudi Arabia exports to the U.S. is sent to the West Coast, as reported by Reuters. In the year that ended in June, the West Coast imported an average of about 11.4 million barrels of Saudi crude every month – much of which went to California refineries.

The Golden State already has among the highest average gasoline prices in the country – at $3.63 per gallon as of Monday.

We are going to see higher gasoline prices right away, but in the short-term we should be able to handle them okay.

But if there are more attacks like the one we just saw, or if a major war breaks out in the Middle East, the price of gasoline could easily spike to levels that we have never seen in this country before.

The U.S. economy was already deeply struggling even before the attack in Saudi Arabia, and so this could definitely push us over the edge.  We should all be getting prepared for an extended economic downturn, because it looks like that is precisely what we could be facing.

Hopefully we won’t see any more attacks on oil production facilities, but the attack on Saturday clearly demonstrated how extremely vulnerable such facilities are to terror attacks.  And with Middle East tensions currently at an all-time high, USA Today is warning that our future “may well get much rockier soon”…

The new threat is tension among nations in the region, as well as the ability to attack based on new and relatively simple technology. Drones can be flown long distances carrying weapons just powerful enough to attack oil facilities. Middle East tensions are severe enough that attempts at similar attacks are not over.

Oil futures do not trade based on the present. They trade on forecasts about oil supply and demand in the future. The future looks rocky and may well get much rockier soon.

We are truly in uncharted territory, and we desperately need peace and calm to prevail in the Middle East.

Sadly, that is not likely to happen, and every new wave of violence is going to mean more economic pain for all of us.

About the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

The U.S. Is Staging Troops At A Key Saudi Military Base That It Used During All Of Our Previous Middle East Wars

The U.S. military is following many of the exact same patterns that we witnessed during our previous wars in the Middle East, and that even includes setting up shop at a key military base deep in the heart of the Arabian peninsula.  After the U.S. invasion of Iraq in 2003, the U.S. military abandoned Prince Sultan Air Base in Saudi Arabia, but now they are back.  Hundreds of U.S. troops are already there working hard to get the base operational, and as you will see below, a tremendous amount of new construction is planned.  The base covers “well over a hundred square miles”, and so it has more than enough room to serve as a central hub for a new Middle East war.  Tensions with Iran have escalated dramatically over the past few weeks, but apparently somebody anticipated that the U.S. would need to use this base even before then, because according to NBC News U.S. troops were already arriving back in June…

In June the U.S. military began moving equipment and hundreds of troops back to a military base in Saudi Arabia that the U.S. deserted more than 15 years ago, according to two U.S. officials familiar with the deployment.

Over the coming weeks the deployment to Prince Sultan Air Base, intended to counter the threat from Iran, will grow to include fighter jets and Patriot long-range missile defense systems, the officials said. The Patriots have already arrived at the base and should be operational in mid-July, while the aircraft are expected to arrive in August.

And it turns out that the U.S. military has used this base during all of our previous wars in the Middle East.

For example, according to Air Force Magazine the U.S. military first occupied Prince Sultan Air Base for a few months during Operation Desert Storm…

The US Air Force first occupied the sprawling base in two frantic months from November 1990 to January 1991, then departed. Five years later, USAF and coalition forces moved back into the base. It quickly became a massive facility, home to a state-of-the-art air operations center and serving as the hub for air activity in the region.

Then later on, the base played a key role during the U.S. invasion of Afghanistan.  The following comes from the Military Times…

Starting with the January 1991 air war against Iraq after its invasion of Kuwait the previous summer, the U.S. flew a wide range of aircraft from Prince Sultan air base, originally known as al-Kharj. Supported by an all-American array of creature comforts like fast-food restaurants and swimming pools, U.S. forces there flew and maintained Air Force fighters and other warplanes.

The base also served as a launch pad for the December 1998 bombing of Iraq, code-named Operation Desert Fox, which targeted sites believed to be associated with Iraq’s nuclear and missile programs. In 2001, the base became home to the U.S. military’s main air control organization, known as the Combined Air Operations Center, which orchestrated the air war in Afghanistan until it was relocated in 2003 to al-Udeid air base in Qatar.

But U.S. activity at the base didn’t reach a crescendo until Operation Iraqi Freedom in 2003.  Here is more from Air Force Magazine…

Other delicate negotiations came down to the wire just before the start of Operation Iraqi Freedom. “We’ve had very productive meetings regarding military cooperation with Saudi Arabia in the event of military action against Iraq,” State Department official Richard Boucher announced Feb. 26, 2003.

That day, newspapers reported that the Saudis granted formal permission for PSAB to be used in the war against Saddam Hussein’s Iraq. Operation Iraqi Freedom began March 19.

Once again, PSAB pulled its weight in the air campaign. Fuel was a metric showing just how far PSAB had come since 1996. Prince Sultan Air Base operated at maximum rates during major combat operations in Operation Iraqi Freedom from March 19 to May 1, 2003. During that time, the 363rd Fuels Management Flight issued more than one million gallons per day. Officials had previously expanded the fuel storage capacity at Prince Sultan from two million to more than 15 million gallons.

So as you can see, every time the U.S. has decided to go to war in the Middle East, Prince Sultan Air Base has played a leading role.

And now after all this time we have suddenly returned.

This time around, it appears that the U.S. is planning for a very long stay.  According to NBC News, existing roads and runways will be reinforced and expanded, and the U.S. military is even going to “build a medical facility”…

While Prince Sultan Air Base is an active facility, portions of the base will need an upgrade to accommodate the U.S. military, including reinforcing and expanding roads and runways, one U.S. official said. Base housing will also need updating, the official said, and the U.S. will build a medical facility. Many of the U.S. service members deployed there over the past few weeks are engineers preparing the base for the new mission.

Apparently whoever is in charge of making these sorts of decisions is not very optimistic about peace with Iran.

A tremendous amount of money and effort is required for a project like this, because it is basically the equivalent of putting up a small American city in the middle of nowhere.  The base covers “well over a hundred square miles”, and all the way back in 2002 Wolf Blitzer called it “a little sliver of America in the middle of the Arabian Peninsula”…

“By the time the base complex was completed in 1999, it had cost the government of Saudi Arabia more than $1 billion and covered well over a hundred square miles,” found Air Force historian Daniel L. Haulman.

Food was also a priority. Baskin-Robbins ice cream set up shop as did other popular vendors such as Pizza Inn and Burger King. In time, the exchange provided a small haven of food, shopping, and diversion. “It’s a little sliver of America in the middle of the Arabian Peninsula,” enthused CNN’s war correspondent Wolf Blitzer, who visited the base in December 2002 as forces there prepared for intensifying action against Iraq.

I suppose that the Saudis want us to be as comfortable as possible if we are going to fight a war that will greatly benefit them.

After all, the Saudis and the Iranians have been engaged in a proxy war for many years, and so the Saudis would be absolutely thrilled to see the U.S. military bomb the living daylights out of them.

And Saudi Arabia’s minister of state for foreign affairs actually sounds quite eager for the action to start…

“Any attack on the freedom of navigation is a violation of international law,” Adel Aljubeir said in a Twitter post.

“Iran must realise its acts of intercepting ships, including most recently the British ship, are completely unacceptable. The world community must take action to deter such behaviour,” he added.

But as I discussed in a previous article, if the American people truly understood what a war against Iran would be like, there would be millions of protesters in Washington D.C. right now trying to stop it from happening.  It would be a horrible, bloody, apocalyptic war that would set the entire Middle East ablaze, and it would set the stage for the sort of nightmare scenarios that I have been relentlessly warning about.

Unfortunately, so far only a very small portion of the U.S. population seems alarmed about any of this.

Meanwhile, the Pentagon is rapidly preparing for war, and Prince Sultan Air Base is now buzzing with U.S. military activity for the very first time since the invasion of Iraq.

About the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

Global Markets Continue To Fall As Bloomberg Warns “The Next Financial Crisis Is Staring Us In The Face”…

It looks like it could be another tough week for global financial markets.  As the week began, markets were down all over the world, and relations between the United States and Saudi Arabia have taken a sudden turn for the worse.  That could potentially mean much, much higher oil prices, and needless to say that would be a very bad thing for the U.S. economy.  It has really surprised many of us how dramatically events have begun to accelerate here in the month of October, and the mood on Wall Street has taken a decidedly negative turn.  Yes, U.S. stocks did bounce back a bit on Friday (as I correctly anticipated), but it was much less of a bounce than many investors were hoping for.  And this week got off to a rough start with all of the major markets in Asia down significantly…

In the Greater China region, the Hang Seng index in Hong Kong fell by around 0.9 percent in early trade. The Shanghai composite also slipped by 0.33 percent while the Shenzhen composite bucked the overall trend to edge up by 0.4 percent.

In Japan, the Nikkei 225 fell by 1.48 percent in morning trade, while the Topix index slipped by 1.17 percent, with most sectors trending lower.

But what happened in Asia was nothing compared to what we witnessed in Saudi Arabia.

At one point the stock market in Saudi Arabia had plummeted 7 percent after news broke that President Trump warned that the Saudis could face “severe punishment” for the disappearance of journalist Jamal Khashoggi.

The Saudis are denying doing anything wrong, but everyone agrees that he is missing, and everyone agrees that he was last spotted entering the Saudi Consulate in Istanbul on October 2nd.

And it is being reported that U.S. intelligence had previously intercepted communications which indicated that the Saudis planned to abduct Khashoggi.

It is believed that Khashoggi was dismembered after being abducted by the Saudis, and all of the major western powers have expressed major concern about his fate.  But the Saudis insist that they didn’t have anything to do with his disappearance, and they are threatening “greater action” if any sanctions are imposed upon them.  The following comes from USA Today…

Saudi Arabia denied any involvement in the disappearance of Washington Post contributing journalist Jamal Khashoggi and warned Sunday that any sanctions against the oil-rich kingdom would be met with “greater action” and possibly exploding oil prices.

“The kingdom affirms its total rejection of any threats and attempts to undermine it, whether by threatening to impose economic sanctions, using political pressures or repeating false accusations,” the government said  in a statement released to Saudi media. “The Kingdom also affirms that if it receives any action, it will respond with greater action.”

So what might that “greater action” look like?

Well, one Saudi official is warning that the price of oil could rise to “$100, or $200, or even double that figure”…

In a column published just after the SPA statement, Saudi-owned Al Arabiya channel’s General Manager Turki Aldakhil warned that imposing sanctions on the world’s largest oil exporter could spark global economic disaster.

“It would lead to Saudi Arabia’s failure to commit to producing 7.5 million barrels. If the price of oil reaching $80 angered President Trump, no one should rule out the price jumping to $100, or $200, or even double that figure,” he wrote.

If the price of oil did shoot up to $200 a barrel, that would be absolutely crippling for the U.S. economy.

You see, it wouldn’t just cost a whole lot more to fill up your gas tank.  Virtually everything that we buy has to be transported vast distances, and so the price of gasoline must be factored into all of those products.

The price of food is already ridiculously high, and so I don’t even want to imagine what a trip to the grocery store might look like if the Saudis follow through on their threats.

Meanwhile, warnings from the mainstream media of a new crisis on Wall Street continue to become even more dramatic.  For example, the following comes from a Bloomberg article entitled “The Next Financial Crisis Is Staring Us in the Face”…

The financial crisis ripped through Wall Street 10 years ago, pushing the global economy to the edge of the abyss. One might think those searing experiences would have created a learning opportunity — for managing risk better, understanding structural imbalances in the financial markets, even learning a bit about how our own cognitive processes malfunction.

Instead, we have little new wisdom or self-awareness to show for that traumatic event.

And this is how that Bloomberg article ended…

As memories of the crisis fade as the economy recovers, we find the seeds of the next crisis are already being planted. They are the exact same issues of debt and mismanaging risk and not understanding our own limitations. Failing to learn from our prior experiences, we seem doomed to repeat them. We only have ourselves to blame.

That sounds like it could have been ripped right out of The Economic Collapse Blog.

Of course the author of that Bloomberg article is right on the money.  We never learned the very hard lessons that we should have learned from the crisis of 2008.  Instead, we simply reinflated all of the old bubbles and made them bigger than ever before.

Now America is 68 trillion dollars in debt, and our day of reckoning is so close that even the mainstream media is sounding the alarm.

It should be another very interesting week.  Monday may set the tone for the entire week, and so hopefully U.S. markets will bounce back some more.  If they don’t, it could set off another round of panic…

About the author: Michael Snyder is a nationally syndicated writer, media personality and political activist. He is publisher of The Most Important News and the author of four books including The Beginning Of The End and Living A Life That Really Matters.

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The Mainstream Media Is Talking About A Coming Middle East War That Could Involve Saudi Arabia, Iran, The U.S. And Israel

People better start waking up and paying attention to what is happening in the Middle East, because the situation is becoming quite serious.  If things go badly, we could be facing a major regional war which would involve not only Saudi Arabia and Iran, but also potentially the United States and Israel.  Yesterday, I quoted an article in the New York Times that warned that tensions between the Saudis and the Iranians were raising “the threat of a direct military clash between the two regional heavyweights”.  And now Jake Novak of CNBC is saying that a “direct conflict between Saudi Arabia and Iran, as opposed to the proxy war they’re fighting in Yemen, looks inevitable.”

I put those last two words in bold so that there wouldn’t be any confusion.  In fact, Novak is warning that the Saudis “are marching ever closer towards a wider regional war”.  Novak understands the dynamics of the Middle East, and he realizes where things could be headed if cooler heads do not prevail.

Saudi Arabia and Iran have already been fighting proxy wars against one another in Syria and Iran for quite a while, but a direct military conflict between the two could literally be a nightmare scenario.

One of the primary characters in this ongoing drama is Saudi Arabia’s extremely hawkish crown prince Mohammed bin Salman.  He hates Iran with a passion, and he has already said that he believes that a peace dialogue with Iran is impossible.

And over the past several days, events in Saudi Arabia and Lebanon have moved talk of war to the front burner…

First, the kingdom squarely blamed Iran for a missile attack on Riyadh from Yemen that was thwarted by the U.S.-made Patriot anti-missile system. The Saudis called that attack “direct military aggression by the Iranian regime and may be considered an act of war.”

Second, the Saudis accused Lebanon of — figuratively at least — declaring “war” against it because of aggression from Hezbollah. That statement spurred even Saudi ally and Egyptian President Abdel Fattah al-Sisi to publicly urge for calm.

In an article yesterday, I discussed the “purge” that is currently taking place in Saudi Arabia.  Many believe that this purge is all about removing any potential obstacles to a war with Iran.  Mohammed bin Salman and his father have made dealing with Iran their number one strategic priority, and they have even enlisted the Israelis as allies in their cause…

As is already well-known, the Saudi and Israeli common cause against perceived Iranian influence and expansion in places like Syria, Lebanon and Iraq of late has led the historic bitter enemies down a pragmatic path of unspoken cooperation as both seem to have placed the break up of the so-called “Shia crescent” as their primary policy goal in the region. For Israel, Hezbollah has long been its greatest foe, which Israeli leaders see as an extension of Iran’s territorial presence right up against the Jewish state’s northern border.

If Saudi Arabia and Iran go to war, it is probably inevitable that Hezbollah will strike Israel at the same time, thus getting the Israelis directly involved in the conflict.

Not only that, if a major regional war does erupt in the Middle East it would almost certainly mean that the U.S. would have to get involved as well.  Here is more from Jake Novak of CNBC…

But if full blown war breaks out directly between the two countries, it’s hard to see the U.S. being able to sit it out without at least some form increased weapons support and other aid. Then it will be up to Iran’s possible allies, like Russia and China to make the next move.

If you are thinking that this sounds like the type of scenario that could cause World War III to erupt, you would be correct.

The Iranians and the Saudis both have weapons of mass destruction, and so a direct conflict between the two would seem to be unthinkable.

But rational thinking does not always prevail in the Middle East.  The conflict between Sunni Islam and Shia Islam has a long and bitter history, and the bad blood between the Saudis and the Iranians is never going to subside until one side or the other ultimately prevails.

Let us hope that a “hot war” between Saudi Arabia and Iran does not erupt any time soon, because such a war would not be good for the United States whatsoever.  Pretty much every scenario that you can imagine ends with enormous numbers of innocent people dead, and such a conflict could ultimately be the spark that sets off World War III.

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

Is Saudi Arabia Heading For War With Iran?

Is a major war in the Middle East looming on the horizon?  Most of us living in the western world simply do not realize how much Saudi Arabia and Iran truly hate one another.  Saudi Arabia is the global center for Sunni Islam, and Iran is the global center for Shia Islam, and the two major sects of Islam have a history of bad blood that literally goes back for over a thousand years.  The Saudis and the Iranians are already engaged in “proxy wars” in Syria and in Yemen, and now a missile that was fired at Riyadh’s international airport threatens to turn the conflict between the two regional powers into a hot war.

If you are tempted to think that I am exaggerating one bit, just consider what the New York Times is saying about this…

Saudi Arabia charged Monday that Iran had committed “a blatant act of military aggression” by providing its Yemeni allies with a missile fired at the Saudi capital over the weekend, raising the threat of a direct military clash between the two regional heavyweights.

The accusations represent a new peak in tensions between Saudi Arabia and Iran at a time when they are already fighting proxy wars in Yemen and Syria, as well as battles for political power in Iraq and Lebanon.

And Yahoo is reporting that the Saudis are saying that this missile attack “may amount to an act of war”…

On Monday, a Saudi-led military coalition battling Tehran-backed rebels in Yemen said it reserved the “right to respond” to the missile attack on Riyadh at the weekend, calling it a “blatant military aggression by the Iranian regime which may amount to an act of war”.

Saudi Foreign Minister Adel al-Jubeir also warned Tehran.

“Iranian interventions in the region are detrimental to the security of neighbouring countries and affect international peace and security. We will not allow any infringement on our national security,” Jubeir tweeted.

For those that have not grasped the implications of what I am saying yet, let me break this down very simply for you.

If Saudi Arabia and Iran go to war, the United States will be involved in that war on the side of the Saudis.

It would be a war unlike anything we have ever seen in the history of the Middle East, and it is almost a certainty that weapons of mass destruction would be used in such a war.

Essentially, what we are talking about is the potential for World War III to erupt in the Middle East.

And all of this comes at a time when the biggest “purge” in the modern history of Saudi Arabia is taking place…

A campaign of mass arrests of Saudi Arabian royals, ministers and businessmen expanded on Monday after a top entrepreneur was reportedly detained in the biggest anti-corruption purge of the kingdom’s affluent elite in its modern history.

The reported arrest of Nasser bin Aqeel al-Tayyar followed the detention of dozens of top Saudis including billionaire investor Prince Alwaleed bin Talal in a crackdown that the attorney general described as “phase one”.

The purge is the latest in a series of dramatic steps by Crown Prince Mohammed bin Salman to assert Saudi influence internationally and amass more power for himself at home.

Some would say that the Saudis are “cracking down on corruption”, while others would say that Crown Prince Mohammed bin Salman is “consolidating power” prior to going to war.

In any event, this situation deserves our full attention, because it could ultimately result in a major regional war in which the United States is directly involved.

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

Venezuela Has Officially Abandoned The Petrodollar – Does This Make War With Venezuela More Likely?

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…

So why is the petrodollar so important?

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?

The guys over at Zero Hedge seem to think so…

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.

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

Super Soft On Islamic Terror: Obama Says That ISIS ‘Is Not An Existential Threat To Us’

Obama Makes A StatementIn 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.

This should be the biggest Obama scandal of them all, and yet nobody is talking about it.  Sometimes I think that I must be going crazy because what Obama did was so obviously wrong and yet nobody wants to touch this.  For much more on all of this, please see my previous article entitled “The Biggest Obama Scandal? He Knows That Turkey Is Buying Oil From ISIS And He Is Doing Nothing To Stop It“.

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?

No.

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”…

ISIS Statement

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.

WW3: Fighters From Turkey Are Pouring Into Syria And Attacking Targets Despite The Ceasefire

Middle East MapThe 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.

The Saudis continue to reiterate their position that either Assad must go peacefully or he will be removed by force…

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.

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