Saudi Arabia cuts May oil prices to Asia, raises US rate after Opec+ deal

[Gerry Maddoux + 3,627]

Soooooo . . . .

The dust has settled a bit. The Saudis have chuckled over the deal. Then they dropped their price to China and raised it to the US. 

President Trump has suggested that they all might want to cut 20M barrels. May 1. Texas RRC may mandate 20% cuts. 

Meanwhile, WTI is languishing between $21-22, where everyone involved is . . . . losing money hand over fist. It won't wait until May 1. 

At this pace, with a one-third overall demand destruction that will be slow to recover, US shale is going to lay down rigs like crazy and shut in the wells they can, KSA sovereign wealth fund is beginning to bleed, Russia is headed toward losing its toehold on imaginary superpower status, Canadian producers are headed for complete ruin, Iran is growing ever more desperate, and mighty Exxon just borrowed $10B to get through the storm. Great result from the big G20. Pleasure all around. Break out the champaign.

Even if there is a 30M barrel cut, it would take quite a few months to work off this tremendous glut, unless "something big happens." The price of WTI cannot be allowed to remain here: hundreds of thousands of workers will lose jobs in an economy already decimated by the coronavirus. As I've said like a broken record, the US oil and gas workforce is the only segment of the economy that Mr. Trump can raise from the dead. If the US loses an (even fragile) semblance of energy-independence, we are at the tender mercies of a world gone upside down, lost and floundering, totally rudderless--to mix all available metaphors. 

So, what? Well, the only tool in something that gives everyone heartburn, makes capitalists shudder, but it's the one thing the president can employ by presidential authority, the stamp of disapproval that he has demonstrated a zeal for using: tariffs. 

And why would he not tariff Saudi oil? They have ostensibly been our steadfast ally since WWII. We have allowed them every conceivable bully tactic: the '70's embargo, hostage prices at times, their ongoing existence as a terrorist-producing state, the attempted freeze-out in 2014, and now, at the first headstone of the burial grounds of a pandemic stirred up in some vile culture medium in China, a pump and dump scheme transparently designed to take down American oil. 

Then to add insult to terrible injury, they drop the price of oil to the communists who have fired off one bio-terrorist weapon after another. Wittingly or no, China has infected the world, over and over and over. This time they took existential aim, tossed us a pernicious viral hand-grenade. Then, when they realized just what a Satan their evil spirits had conjured up, they lied about the damn thing in every conceivable way: their body count in Wuhan, the mysterious origins of the virus, their inexplicable mercury and hydrogen sulfide stew from the incinerators, the not-only-obvious person-to-person transmission but its ridiculously malignant contagion. 

So, we're going to tolerate KSA discounting the price of oil to such bio-terrorists? This is one of the most mocking infringements on oil diplomacy, not to mention appearances, that could ever be invoked, even by an enemy. This is despicable by its very content but unbelievably vile and spiteful given the context. 

No matter how bad the word sounds to a capitalistic system, the only way to fight such action is with a 25% tariff on Saudi oil. Then they can produce however much they desire, sell it all to China, hang their fortunes on being suppliers to the virus bio-terrorists infecting the world. We should withdraw every last troop from Saudi Arabia, leave them to their own devices, let the chaos theory mess with them. They seem to like chaos.

Edited April 14, 2020 by Gerry Maddoux

[Rob Plant + 2,616]

21 minutes ago, Gerry Maddoux said:

We should withdraw every last troop from Saudi Arabia, leave them to their own devices, let the chaos theory mess with them. They seem to like chaos.

Gerry I pretty much agree with a lot of what you post, however you are clearly very angry with what has happened (and rightly so) and as such you aren't thinking this one through.

If the US withdraws their troops and leaves Saudi to the chaos that would ensue then the US loses. The US loses to Iran, China and Russia for the whole region's political direction for decades. There is a bigger picture than the current price of oil here.

You can take the attitude of screw the lot of them we'll go it alone, but is that wise in the long term as it only makes the enemies of the US stronger, again you hand your enemies victory.

I would fear for Israel if the US pulled out of Saudi, and I would predict war would soon follow, potentially even of the nuclear kind.

The world is a pretty fu**ed up place right now the very last thing we need is even more instability and uncertainty.

 

[Gerry Maddoux + 3,627]

4 minutes ago, Rob Plant said:

I would fear for Israel if the US pulled out of Saudi

I think Israel can take care of itself, but if they need help we're always available. 

I doubt the three or four thousand US troops in KSA are capable of making much of a statement, much less an impact. And the Saudis wouldn't know which side of the THAD defense system should point toward Iran if we didn't show them. 

But we're going to allow them to get by with all this damage? I don't think so. Somehow I just don't think so.

I could actually stomach their machinations--I've seen them all before. But discounting oil to the very regime that spawned a viral atomic bomb against the world? Well, the hell with them!

[Rob Plant + 2,616]

9 minutes ago, Gerry Maddoux said:

I think Israel can take care of itself, but if they need help we're always available.

Agreed especially with the backing of the US.

My concern is if Iran attacks Israel which I believe is firmly on their agenda then the US clearly would step in. If Russia/China then back Iran in order to maintain control of the region we could have a full blown WW3 on our hands. 

https://www.timesofisrael.com/khamenei-israel-a-cancerous-tumor-that-must-be-eradicated/

https://www.bangkokpost.com/world/1761949/top-iran-general-says-destroying-israel-achievable-goal

I guess you'd get your oil price up, every cloud I suppose!

[Nihad Mitnjek + 2]

8 minutes ago, Rob Plant said:

Gerry Je suis à peu près d'accord avec beaucoup de ce que vous publiez, mais vous êtes clairement très en colère contre ce qui s'est passé (et à juste titre) et en tant que tel, vous ne réfléchissez pas à celui-ci.

Si les États-Unis retirent leurs troupes et laissent l'Arabie saoudite au chaos qui s'ensuivrait, les États-Unis perdent. Les États-Unis perdent contre l'Iran, la Chine et la Russie pour l'orientation politique de toute la région depuis des décennies. Il y a une image plus grande que le prix actuel du pétrole ici.

Vous pouvez prendre l'attitude de viser le nombre d'entre eux, nous allons faire cavalier seul, mais c'est sage à long terme car cela ne fait que renforcer les ennemis des États-Unis, encore une fois, vous remettez la victoire à vos ennemis.

Je craindrais pour Israël si les États-Unis se retiraient de l'Arabie saoudite, et je prédis que la guerre suivrait bientôt, potentiellement même de type nucléaire.

Le monde est un endroit assez fou en ce moment, la dernière chose dont nous avons besoin est encore plus d'instabilité et d'incertitude.

 

I reassure you, the United States can physically depart from Saudi Arabia and there will be no chaos inside this country and that will not change anything for Israel. The American army has largely organized and designed its defense strategy in the region outside of Saudi Arabia (Qatar for the command center with 13,000 men, Kuwait, Jordan, Iraq, Bahrain and UAE, North Eastern Syria). The recent presence (end of 2019) of 3000 Americans plus some specialized weapons in Saudi Arabia is to strengthen security but not to maintain order and again to fully protect (it would take a lot more soldiers to do this in a country the size of Saudi Arabia) which is insured by the Saudis themselves.

[Rob Plant + 2,616]

13 minutes ago, Nihad Mitnjek said:

I reassure you, the United States can physically depart from Saudi Arabia and there will be no chaos inside this country and that will not change anything for Israel. The American army has largely organized and designed its defense strategy in the region outside of Saudi Arabia (Qatar for the command center with 13,000 men, Kuwait, Jordan, Iraq, Bahrain and UAE, North Eastern Syria). The recent presence (end of 2019) of 3000 Americans plus some specialized weapons in Saudi Arabia is to strengthen security but not to maintain order and again to fully protect (it would take a lot more soldiers to do this in a country the size of Saudi Arabia) which is insured by the Saudis themselves.

Yes maybe you are correct on this.

My point to Gerry initially was not to make a knee jerk emotional decision on Saudi based on their recent discounting of oil to China, and not to destabilise the region further.

Its a time for cool heads, and to formulate the best response.

As unpalatable as it may be for the US I am sure they have many ways of punishing MBS financially and politically that could dethrone him if they wished, and that may come to pass.

Edited April 14, 2020 by Rob Plant

[RSD + 41]

Playing Devil's advocate here - if Trump puts a 25% tariff on Saudi oil imports (which amount to 600,000 bpd for Motiva + a bit more elsewhere - less than 10% of U.S. oil consumption), then the Saudis will say screw this and toss the new OPEC++ agreement in the bin and start smashing out 13.5 million bpd at really cheap prices - did that 25% tariff really help U.S. oil producers?

[Nihad Mitnjek + 2]

14 minutes ago, Rob Plant said:

Oui, vous avez peut-être raison.

Mon point de vue à Gerry au départ n'était pas de prendre une décision émotionnelle de genou sur l'Arabie saoudite sur la base de leur récente remise de pétrole à la Chine, et de ne pas déstabiliser davantage la région.

Aussi désagréable que cela puisse être pour les États-Unis, je suis sûr qu'ils ont de nombreuses façons de punir MBS financièrement et politiquement qui pourraient le détrôner s'ils le souhaitaient, et cela pourrait arriver.

It's a vain attempt. MBS and his father are almost the Saudi state. It's not the US or anyone else who determines who is the leader of Saudi Arabia. The CIA favorite was MBN (recently arrested) and MBS overpowered them all. In Muslim powers of the monarchical type, there is a competition in the royal family, the strongest prevail for lack of established inheritance rules. It's a kind of natural selection more or less assumed. MBS has concentrated and centralized power. His grandfather is the great founder of the third Saudi state. He conquered the peninsula and manipulated the great powers. His father, after having long been the governor of Riyadh, frequented all his predecessors and traveled all over Saudi Arabia, became. They know all the secrets of power. 

If you don't believe me, then ask the US military to go and capture him.

[Gerry Maddoux + 3,627]

46 minutes ago, Rob Plant said:

I guess you'd get your oil price up

With all regards, this is not "my" price that needs to come up. You're British, right? The US came to your defense when your backs were up against the wall. 

Well, our backs are up against the wall. With 22,000 deaths and counting--and with full realization that your country has suffered as much, per capita--and with 20 million people suddenly out of jobs, we are on the cusp of falling into the abyss. Only the astute handling of this crisis by the president, his advisers and the Federal Reserve were we able to partially mitigate this economic disaster. 

The Saudis launched this ill-conceived scheme of theirs just before it became apparent that we'd be facing the butcher from Wuhan. Any decent people--much less an ally--would have pulled back at that point, said gee we didn't foresee this, and we really want to help our "ally." But no, they pushed on gleefully, reconfirming their stance over and over. Kick 'em when they're down. What dirty bastards!

We are talking about a couple of million American jobs at stake, an entire industry, and you have the audacity to say "I guess you'd get your oil price up . . ." I'd rethink that one if I were you. If the US fails, what do you really think it going to happen to the UK, to Europe, to Israel, and to the world. The European Union is headed for a financial calamity. I fear the UK is too. I hope not. 

As in the past, it's easy to let everyone pile on the American back, and I fully understand that many people think shale had it coming to them, but for God's sake, where is a sense of unity? I've had my long run in my chosen profession, but I'd sure like to see it prosper for the men and women coming behind me. I can survive this economic onslaught, even if "your oil price" languishes at this level forever, but I sure would hate to see a couple of million hard-working people whose jobs can ALL be salvaged fall into the maws of a psychopath like MbS. 

Take any shot at me you like, but try to get it right. And please, take a moment and determine if you really want to be preaching to me. You know absolutely nothing about me, my morality, my patriotism, and certainly not my heritage. The comment, "I guess you'd get your oil price up" was a slur to me and everything I stand for. And I won't stand for it, not for a moment. 

[Gregory Purcell + 94]

5 minutes ago, Nihad Mitnjek said:

MBS and his father are almost the Saudi state. It's not the US or anyone else who determines who is the leader of Saudi Arabia. The CIA favorite was MBN (recently arrested) and MBS overpowered them all. In Muslim powers of the monarchical type, there is a competition in the royal family, the strongest prevail for lack of established inheritance rules.

But can he hold onto power,  the recently arrested Saudi Royalties  were plotting a coup d'etat, I am sure many more attempts will follow, the war in Yemen is going horribly wrong for MSB, and how can Saudi Arabia maintain it's welfare state with oil under $30 a barrel?   Saudi Arabia is bleeding money,   it looks like a house of cards to me.   

[Nihad Mitnjek + 2]

31 minutes ago, Gregory Purcell said:

But can he hold onto power,  the recently arrested Saudi Royalties  were plotting a coup d'etat, I am sure many more attempts will follow, the war in Yemen is going horribly wrong for MSB, and how can Saudi Arabia maintain it's welfare state with oil under $30 a barrel?   Saudi Arabia is bleeding money,   it looks like a house of cards to me.   

I am sure that in 2032, you will still be glossing over the hypothetical house of card like the many prophets who announce the fall of the monarchy every year.

With all due respect, you don't seem to know how this country works. You are not alone, the KSA remains one of the most poorly known countries in all its dimensions. If I can suggest some advice to you, put aside your beliefs. They are certainly the fruit of a Western bias when they are not simply the result of a complete ignorance of this country.

[0R0 + 6,251]

7 hours ago, Nihad Mitnjek said:

Les talibans ont gagné la guerre (pas la paix). Les pays occidentaux l'ont compris et organisent leur départ. 

Vous voulez essayer en Arabie Saoudite et avec des hommes sur le terrain. Bonne chance !

Ksa appreciates its commercial relations with the United States. He gets the best products and he gratifies his old partner with money and jobs. These are win-win relationships. The European, Russian and Chinese military industries would like to be able to count on such a client.

KSA has no desire to join Russia or the Chinese (although they have good relations with these two states) but it will work more with these countries if they can no longer count on the USA. Symbolically, economically, militarily, it's a great catch for states that have dreams of superpower.

The KSA has contractual and extra-contractual levers. We could see it with the oil market.

Russia and China are aligned with Iran and would use any opportunity to have Iran take over the oil fields of the gulf. While Saudi can delude itself that it can be a Chinese or Russian client and survive, there is no reality to that option. Without US support, China and Russia will not support Saudi as an intact nation, but take the oil fields and separate them from all of the local populations. The Saudis seeking Chinese or Russian protection is suicidal. Russia would only take Saudi as intact with minimal oil output, or dismantle the country and produce the oil without Saudi people being involved. 

China seeks only a vassal relationship for Saudi and its neighbors. Locking in dedicated supply into China. Otherwise, they can not afford to expend the incremental cost of projecting military power into the Gulf, something the US has done easily for decades.  They can only land soldiers on the ground in size. Not provide air cover and protection to oil shipments.  

Russia is a strategic competitor with Saudi. They would like nothing more than disrupt Saudi oil competing with their oil. In the alternate, they would gladly take the oil for themselves - all of the gulf oil. Again, they can't project power into the gulf, they, like China, can only fly in troops to hold ground. They don't have the naval power to protect oil shipments. 

Europe is not militarily ready to provide any sort of support to Saudi. Only Britain can, but not yet. They would set up Saudi to be a protectorate in the Imperial model. Saudi would only retain partial sovereignty.

US interest in Saudi and the gulf is insubstantial. It is a legacy from before shale. Its main role is to prevent Russia and China from taking control of the gulf if they put boots on the ground. Expect China to decline as an oil consumer from this point if they can't make peace with the world after this fiasco of CV19. If they do, then they have 5 more years before their oil consumption starts on an inevitable sharp decline trend as its demographics implode. 

[Nihad Mitnjek + 2]

1 hour ago, 0R0 said:

Russia and China are aligned with Iran and would use any opportunity to have Iran take over the oil fields of the gulf. While Saudi can delude itself that it can be a Chinese or Russian client and survive, there is no reality to that option. Without US support, China and Russia will not support Saudi as an intact nation, but take the oil fields and separate them from all of the local populations. The Saudis seeking Chinese or Russian protection is suicidal. Russia would only take Saudi as intact with minimal oil output, or dismantle the country and produce the oil without Saudi people being involved. 

China seeks only a vassal relationship for Saudi and its neighbors. Locking in dedicated supply into China. Otherwise, they can not afford to expend the incremental cost of projecting military power into the Gulf, something the US has done easily for decades.  They can only land soldiers on the ground in size. Not provide air cover and protection to oil shipments.  

Russia is a strategic competitor with Saudi. They would like nothing more than disrupt Saudi oil competing with their oil. In the alternate, they would gladly take the oil for themselves - all of the gulf oil. Again, they can't project power into the gulf, they, like China, can only fly in troops to hold ground. They don't have the naval power to protect oil shipments. 

Europe is not militarily ready to provide any sort of support to Saudi. Only Britain can, but not yet. They would set up Saudi to be a protectorate in the Imperial model. Saudi would only retain partial sovereignty.

US interest in Saudi and the gulf is insubstantial. It is a legacy from before shale. Its main role is to prevent Russia and China from taking control of the gulf if they put boots on the ground. Expect China to decline as an oil consumer from this point if they can't make peace with the world after this fiasco of CV19. If they do, then they have 5 more years before their oil consumption starts on an inevitable sharp decline trend as its demographics implode. 

1- You can always dream. Russia and Iran are already unable to share the meager Syrian cake. Like many others, they have common and divergent interests. We still wonder where China and Russia are to support Iran economically since Trump pulled out of the JCOAP and imposed sanctions. They are the same people who believe that a US - Iran war will start the third world war because China and Russia will get involved beyond words.

2- If you read me correctly, I never talked about protection of Saudi Arabia by China, Russia or Europe, but trade relations. If you believe that Saudi Arabia is chasing the protection of a country, you are mistaken. Simply send your army to occupy this country and we will see how it is doing. The Iraqi and Afghan experience are however edifying.

3- If this interest in the Gulf is insignificant, why do you cry when the KSA plays on the oil market? Personally, I do not find that the presence of the US in this region is a good thing for the Americans and for the region. The intervention in Iraq in 2003 was catastrophic. He'd better withdraw from the area even if he lost a lot of influence.

[Gregory Purcell + 94]

13 minutes ago, Nihad Mitnjek said:

Russia and Iran are already unable to share the meager Syrian cake

Russia and Iran are invited guest in Syria they are not trying to take it over,  they are saving from Al Qaeda Wahhabi terrorists.   And the American oilmen don't need to take Saudi's oil fields, they need to take it off the market to save our own oil fields,  Washington can put sanctions on your oil just like they put on Iranian oil, or Venezuelan oil. 

[0R0 + 6,251]

10 minutes ago, Nihad Mitnjek said:

2- If you read me correctly, I never talked about protection of Saudi Arabia by China, Russia or Europe, but trade relations. If you believe that Saudi Arabia is chasing the protection of a country, you are mistaken. Simply send your army to occupy this country and we will see how it is doing. The Iraqi and Afghan experience are however edifying.

 

Saudi or the destination countries, in the absence of US naval support, would have to provide cover for the oil shipments. Otherwise, entire countries would move to "trade" oil via piracy. It is doubtful that the attrition of oil shipments from Saudi on the way to China would leave them with any supply at all. 

The US would definitely not want to take on that kind of occupation because of precisely that experience you refer to and it has no willingness to take on the kind of actions that would permanently secure control of the gulf oil resources. China's idea of occupation is genocide. They would not face a problem in taking over the entire geography if they were invited in. Russia has a proxy system whereby the control would not be by their direct boots on the ground, but support to the aggressor (Iran), with little care as to whether any oil leaves the gulf. . 

I see that Saudi has the delusion that they have a general value to the US. They don't. The US is now only interested in maintaining oil supply to its allies and "frenemies". It has little need for Saudi oil proper. If Britain Japan Korea and some portion of Europe, France or Germany or Turkey  were to take over the protection of the oil fields and trade routes, then the US would gladly take a secondary role as part of a coalition, if not leave it to them altogether. Under those circumstances, trade with China would not be primary, but only of leftovers that the Western empires didn't take for themselves. The island chains of the S China sea would be acting at will to suck whatever portion of the oil and other commodities making their way to China they can get away with. 

The US actions are what keeps the oil trade viable. Without it, the oil has to be protected by imperial navies on its way to end markets. That would not be done at the cost of the "new empires", it would be done at Saudi's cost. 

We can easily see an oil cost premium of $20-30 for oil inside the S. China sea, vs. oil making its way to Europe via British naval protection, or to Japan and Korea under protection of the ample Japanese deep sea navy. India is still a big question. It does not have sufficient naval resources nor the economic power to build them. Yet they have not aligned with the US to obtain its selective protection, as the US demands lopsided mercantile advantages. 

Saudi appears to be married to an old global order that is slipping away due to US disinterest. 

[Gerry Maddoux + 3,627]

26 minutes ago, 0R0 said:

I see that Saudi has the delusion that they have a general value to the US. They don't. The US is now only interested in maintaining oil supply to its allies and "frenemies". It has little need for Saudi oil proper.

 

27 minutes ago, 0R0 said:

Saudi appears to be married to an old global order that is slipping away due to US disinterest. 

BINGO!

[0R0 + 6,251]

1 hour ago, Nihad Mitnjek said:

3- If this interest in the Gulf is insignificant, why do you cry when the KSA plays on the oil market? Personally, I do not find that the presence of the US in this region is a good thing for the Americans and for the region. The intervention in Iraq in 2003 was catastrophic. He'd better withdraw from the area even if he lost a lot of influence.

The US presence was necessary. So long as the trade routes are functional due to implied US protection, there will still be a competitive Saudi position in oil supply. Once the US can hand over to whomever of its allies are willing to take on that task for their own purposes, Saudi will not have a competitive position in the oil markets. Only countries with a navy to run convoys to their home markets would be their clients.  Saudi would have to pay for it in having those as its exclusive markets where their low cost production is marked up in British or Japanese trade. Possibly French German or Turkish as well. But definitely not anyone else within the decade. China's navy would not be able to run interference with the likes of the Somali pirates on its own. Add Philippine and Indonesian pirates, possibly India and Sri Lanka as well, and ask yourself whether Saudi and the Gulf has a competitive position when the US leaves behind the global order it established and conducted for nearly a century. 

The major countries of the trade system were all offered a chance to join in a continuing US protection if they are willing to pay for it with mercantile advantages to the US, or outright cash. UK, Japan, Korea and to a degree Australia took it up. India is on the fence. The middle east is not reacting at all, as if all that is off their table. The Philippines are unwilling to pay for this protection - at least not yet. Other ASEAN countries are yet to react. Their time may be running out.

China keeps acting as if their navy means something despite it being light ships with minimal survivability and no range outside the S China sea. They have entirely missed the boat in their strategic planning, focusing on hitting US military bases around the pacific with missile barrages. That was entirely misguided as the US never had an intention to hit China with an invasion nor a blockade. China has been mirroring their own position in interpreting US positions and deployment. They were supposing that there is some sort of US interest in recreating the capture of China ports and industrial cities by Western powers as was the case before WWII. Nobody wants to be burdened by hundreds of millions of Chinese. There is no intention by anyone to do any such thing, nor has there been since the 1950s.  China had not realized that they were valuable trading partners and the bases were there to keep their trade with the US viable. The  US makes 3 times more in processing and marking up Chinese products than China does. It is only now, that China has been attempting to exercise hard ball politics with its imaginary industrial might of key global monopolies, that the circumstances have changed, Now the West needs to exorcise China from the global trade system and regionalize  supply chains to duplicate its monopoly industrial capacity. 

Japan has started with a subsidy program to all that move production out of China. It is only the first, and the only one to do so publicly. The rest of the world will follow quietly without making big loud proclamations. The US will do the same either quietly or loudly depending on whether Trump is reelected, in any case, congress will take to exorcising China out of US supply chains regardless of who has the presidency. Even Chinese asset Biden will have no say in the matter. 

 

[Gregory Purcell + 94]

23 minutes ago, 0R0 said:

China keeps acting as if their navy means something despite it being light ships with minimal survivability and no range outside the S China sea. They have entirely missed the boat in their strategic planning, focusing on hitting US military bases around the pacific with missile barrages.

You are vastly underestimating the second largest Navy in the world, and also underestimating the affect taking out US forward naval bases, what it would do to our ability to project power into those shipping lanes.

[Christian Oppenländer + 15]

7 hours ago, Gerry Maddoux said:

So, what? Well, the only tool in something that gives everyone heartburn, makes capitalists shudder, but it's the one thing the president can employ by presidential authority, the stamp of disapproval that he has demonstrated a zeal for using: tariffs. 

If you allow me a newbie question here. How would the business for Exxon and also comparies like Shell or BP be affected by such tariffs and therefore a "floor" price for oil in the US alone? Why does Exxon oppose the idea, is it because they hope to buy some bankrupt assets for the long term? Or would their business immediately suffer from it? Thanks 

[0R0 + 6,251]

4 minutes ago, Gregory Purcell said:

You are vastly underestimating the second largest Navy in the world, and also underestimating the affect taking out US forward naval bases, what it would do to our ability to project power into those shipping lanes.

You don't get the point. The US is protecting Chinese trade. 

US bases being bombed only removes US protection of Chinese trade and makes China an outright big time enemy that would be actually blockaded and their navy would be eradicated. Japan and UK navies would take part. After which nothing will ever come to or leave a Chinese port. The US can project into the S China sea with no substantial bases. The bases only make it cheaper. 

Besides which. I believe that the US is on the way to being deployed with tactical nuclear anti-barrage weapons in addition to current anti- missile technology. So China is likely to achieve far less than it expects if they were to take that route. US and Australian hypersonic drones that I have no idea how they would be used, are there as well. 

The Chinese navy is all about attack and nothing about survival. It is designed for a first strike only. It is the characteristic Chinese military attitude. Their own forces are expendable, only doing damage to the enemy matters. That makes it a useless navy if its goal is to steadily protect China's commerce outside the S China sea - within it there is no challenge unless they themselves initiate a deliberate attack. 

The question for China is to what purpose would they do such things, plan for it so extensively and expend so much of their military budget on it. From the US perspective it all looks like internal machinations with no particular purpose. Some sort of internal power posing by the PLA for the benefit of malign hardliners. 

If the Chinese actually look like taking Taiwan is on their agenda any time soon, then Taiwan would be a nuclear power within one day. 

This all reeks of a very expensive internal campaign for China to appear important and threatening. Unfortunately for them, this is all paranoia against the US, which is organized around the S China sea because it wants trade there. You may have noticed that the US left Vietnam over 40 years ago when the realized it might have only been a communist effort because that was the only support the national unification and self determination of the country could obtain. So the bottom line was that this proxy war was just not worth it. Other than that, there has not been an occupation of anyone in the S China sea. Only navy and other bases that that are not used to suppress the sovereign countries where they are located, but to keep trade - particularly Chinese trade - running smoothly. 

China has a paranoid memory of its century of humiliation that has nothing to do with the actual US post WWII system. It simply protects shipping and the oil that drives trade. No more, no less. At least not since the Soviets collapsed. What is China worried about other than its own expansionary goals?

[Gregory Purcell + 94]

45 minutes ago, 0R0 said:

The question for China is to what purpose would they do such things, plan for it so extensively and expend so much of their military budget on it.

Because the USA routinely  cuts nations off from trade if they don't do what we tell them to do.  And they want to be able to protect their key trading routs from us for rather obvious reasons, they need Middle East oil to keep their factories humming,  we have spent decades bulling China, Russia and Iran simultaneously, and we have driven them into an undeclared alliance.  

And you sure are not the first American to suggest if we can't beat them with conventional warfare lets nuke them till they glow, even though they can do the same to us.

Luckily Putin recently suggested a three way summit between USA Russia and China in September and Trump accepted. A Russian intelligence analyst I follow about the situation

" In practical terms there is no real alternative to superpowers setting new set of rules. Well, there is--a complete chaos and slide towards global military confrontation in which the United States doesn't have resources to win and, being inherently nuclear-biased, especially after losing conventional arms race, the nuclear option stops being for the US something unthinkable. It all is reminiscent of living next to rowdy, drunk neighbor, who is full o shit but you still cannot make him move or kill him without sustaining life-threatening injuries yourself. What's left? Talk, with gun drawn, obviously, and talk firmly, but still talk. Well, killing one of his dogs is also not forbidden, but not the neighbor and his property. "       http://smoothiex12.blogspot.com/2020/04/noblesse-oblige-20.html#disqus_thread

 

[Gerry Maddoux + 3,627]

1 hour ago, Christian Oppenländer said:

If you allow me a newbie question here. How would the business for Exxon and also comparies like Shell or BP be affected by such tariffs and therefore a "floor" price for oil in the US alone? Why does Exxon oppose the idea, is it because they hope to buy some bankrupt assets for the long term? Or would their business immediately suffer from it? Thanks 

For Exxon, the answer is both. Exxon has been in business with Saudi Arabia for almost a century. After helping the Saudis with their oilfields, they were instrumental in the Saudi Aramco build-out, then did a 50-50 JV with the Aramco subsidiary SABIC in building and operating KEMYA, the big petrochemical plant in Al-Jubail, Saudi Arabia. Additionally, they are JV with Saudis in SAMREF, the largest refinery in the Middle East. I'm sure there are many more projects. The Saudis trust Exxon and Exxon has become what it is today because of their association with the Saudis. 

Exxon, like any good company, is always on the look-out for pennies on the dollar property, which some of the shale properties in the Permian and elsewhere will become if prices don't nudge up soon. Exxon is fully aware that world perception of KSA is growing more negative. I am sure they probably feel a pang of patriotism when the Saudis pull a stunt like their recent one trying to destroy American oil, but Exxon's balance sheet is nothing like it used to be and they have one eye on their association with the Saudis and another on the shale basins. 

There is a third variable, of course, and that is the big Stabroek Block off the coast of Guyana. Exxon (with Hess) has made almost twenty very large finds down there. Judging by the size of the gas-handling facilities they have being built, this is also an exceptionally gassy project that is going to cost a huge amount of money. It will take a few years and lots of billions to get this project up to speed. But at that point it should spew out money--both in NG which will go toward LNG, and oil. 

 

[NessyOil + 5]

1970's   Saudis are bad they are causing our gasoline prices to spike

 

2020    Saudis are bad they are causing our gasoline prices to drop

 

Americans just cant make up their mind I guess 

[0R0 + 6,251]

29 minutes ago, Gregory Purcell said:

protect their key trading routs from us

That is not what the US is doing. It is not what it has done, Even Iran is only threatened with economic sanctions applied through the payments system. In reality, they settle payments through the UAE central bank and Russia settles through other central banks, most often of Belgium. 

US has done little in recent memory to blockade anyone.  That is simply not what the ships are there for. 

The bullying was entirely appropriate for Russia and Iran. Russia is the military successor of the Soviet Union and has been militarily expansionary. Iran has 40 years of active military operations against the US and regional allies. Definitely deserving of a direct blockade. Which they still have not seen as the US is there to keep trade going. Not to blockade anyone. 

I don't really see China having been "bullied" on its malicious expansionary intents into Taiwan or HK. Contrary to Chinese thinking. These are independent countries. Perhaps when China actually brings itself into imposing self isolation in order to preserve the CCP, which has been its trend for the latter half of the past decade, then perhaps Shenzhen will be unified with HK as an independent state. 

The tactical nukes are intended for hitting a barrage of missiles. Not China. Perhaps China claims to have territorial sovereignty over air space its missiles are traveling through? The point is that small tactical nukes over the S. China sea are not a component of nuclear war. They have just enough power to destroy a missile barrage with a couple of missiles, while the "conventional" Patriot and and newer anti missile defenses take out the singles. 

Again, it is an upside down reading.

The Russians are paranoid because they had been run through by Poles, French, then Germans, and then again. But taking parts of another country to recreate military presence in the Black sea is not something that warrants anything less than sanctions. Note that the Bosphorus remain just as open as they had been, NATO member Turkey didn't do a thing. Neither did anyone else. Russians are not being bullied for no reason. They are being actively expansionary and are being very lightly counteracted, minimally so.

The intelligence source you are quoting seems incapable of seeing the Russian actions as the outrageous acts that they are. Their idea of fair relationships is entirely warped. Nobody owes them any more respect than is due to Burkina Faso. Nor does China deserve any more than that. They were invited in to the global order. They acted within it to their enormous benefit while complaining and undermining the US that made it run, all the time. Iran Russia and China do not remain viable without this order. The narrow militarily focused saberring actions of these countries, endlessly belligerent, do not get at all that in the absence of US willingness to engage any further, the short range navy of China boats and Russian navy will be competing with British and Japanese naval power and eventually some combination of European imperial forces, united or disparate, and with Turkey as well. If India could afford to then it would be in there with their own navy. But it doesn't look like it. 

So far, Trump has offered a mutually beneficial relationship based on paying the US in mercantile favors or cash for continued operation. The US threat is not to attack Iran, Russia or China. It is to leave them to protect their shipping and interests on their own when everyone else has as good a chance as they do to blow it all up. 

 

[Gerry Maddoux + 3,627]

10 hours ago, Rob Plant said:

Its a time for cool heads, and to formulate the best response.

That would not be me. 😀

Though I've gotten better throughout the day.