This Coronavirus thing impacts everything. The oil market is no exception. I’ve committed to some pretty strong predictions about the future of the oil market and how it means the end of the current regime in Saudi Arabia. I still stand by all of those predictions, but it’s hard to say whether this current crisis accelerates the timeline, or slows it down. Starting March 6th, Saudi Arabia went to war against every other producer in the world.
I believe that the US oil industry will be the most prominent victim. The sustained period of low oil and gas prices we are about to experience may bring us to an inevitable future more quickly. Saudi Arabia will be the last oil producer. The crucial question remains the price at which they are able to sell that oil for. It’s now possible to envision a future where Saudi Arabia controls price again… but only briefly. Today’s video explains…
I feel like the broader arc of Trump’s Iran policy has been ignored recently. The incredibly flashy and violent gyrations of escalation have gotten a lot of coverage, but there isn’t enough emphasis on why we’re here. Sure, I suppose it’s fun to get bogged down on the question of whether or not assassinating the general of a country we are not at war with is a good idea, but we’re kind of missing the forest for the trees. No matter what you think of the Soleimani killing, we should be more focused on how we got here. And that’s what I try to do today with this video. I attempt to evaluate Trump’s “Maximum Pressure” policy against Iran, and I find it wanting.
My guess is that today’s video will get lots of comments along the lines of “You’re only realizing this now?” and “Obviously!”. For many observers of the Middle East over the past two decades it is transparently obvious that the United States has been the problem. Nobody else has been overthrowing governments and sowing chaos with the abandon that the Bush, Obama and Trump administrations have. At least a million lives have been lost, and an entire region of the world has lost out on two decades of economic development because the US wanted to cover up for the fact that their client state, Saudi Arabia, had done 9-11. So yeah, we’re the bad guys. Obviously. But that doesn’t mean it can’t get worse.
Our bad guy status is not so obvious to the US public at large. And it’s certainly not so obvious to the US media. That’s why I think it’s worthwhile to mark the trajectory here. The US isn’t just a damaging actor, it’s been getting progressively worse. Many argue that Obama was better than Bush, and his attempt at an Iran Nuclear Deal really was a serious attempt at peace, but everything else he did was a continuation of the horrors of the Bush presidency. More than that, it was an intensification of them. Obama destroyed Libya and Syria without even pretending to rebuild them. His drone program led to fewer US casualties, but its scope and brutality put us into even more morally fraught territory that its initially smaller bodycount hid from us. And Trump, with his gleeful embrace of war crimes is obviously another big step down the path to heck. Things really are getting worse. That’s worth marking, which is one of the things I attempt to do with today’s video…
My book, and today’s video aren’t just intended as “blame America First” whining. They are intended as the basis for a new, saner approach to US foreign policy. One of the central problems in Washington, DC for the past 30 years is that we haven’t had a goal. We’ve had a ton of resources, a ton of professionals geared towards the outside world, and no clear sense of what to do with them since the end of the Cold War. Instead all these people have pursued a variety of conflicting goals. Some of them have been noble, some have been horrible, but in combination they have produced an effect that is disorganized in the most self-interested and chaotic way. With this series I hope to suggest a better way.
The mission of US foreign policy should be to stave off war for as long as possible. We should use our extraordinary power and reach to try to make the world a less dangerous place for everyone. This would do the world a great service, but it would also serve the United States in the best possible way. As I’ve also emphasized, it’s the United States that has the most power to lose from a new world war. So we should stop seeking it out in the deserts of the Middle East and in the waters of the South China Sea. We should stop sending the instruments of death to every country in the world we can, in ever accelerating amounts. If we stopped doing these things, I think we’d find that there is still plenty for Washington, DC to do. Even beyond the much larger problems that the United States has made, the world has many fault lines that could benefit from our diplomatic attention. Imagine a world with DC think tanks that were focused on solving Nagorno-Karabakh, or opening the border between Morocco and Algeria, rather than fomenting wars? It may all sound a bit pie in the sky, but once you’ve absorbed the arguments of today’s video, how could you want to do anything else?
With today’s video I try something new. Most of my video scripts come to me more fully formed, in a rush of inspiration. With this “Avoiding the British Empire” series, I’m trying something more ambitious. The first 9 episodes of the video series are meant to work with each other, building the case, and helping viewers arrive at a picture of the world that grows with each installment. The series is meant to be greater than the sum of its parts. I’m not sure this has been entirely successful. I tend to focus on making discrete points and individually successful videos. My writing process is like that as well. This series is the first I can think of, where multiple videos started out as “Oh, I need to do this in this video”, rather than as a loose collection of thematically related issues. Many of the videos in the series predated the over-arching series structure. Today’s video did not. What do you think?
Two weeks later, it is beginning to look like I got fooled again, and the United States is not in fact leaving Northern Syria. But I’m not as crushingly disappointed as I was the last couple times Trump pulled this back in December of 2018, or back in March of 2018. After telling everybody we were withdrawing, we are apparently going back to Northern Syria to “take the oil”. I’m not as bothered by this, because this Syrian intervention is just too ridiculous to survive.
US intervention in Syria has always been darkly absurd and absurdly selfish. We spent billions to take down Assad, which created ISIS, which weirdly ended up with us spending billions to protect Assad from the Islamic State in the most convoluted way possible. But this new Trump initiative is too absurd to last. Trump seems to think he can just steal the oil, which is a moral and legal atrocity. The horror of it wouldn’t keep it from happening, but what will keep it from lasting is the pointlessness. Despite massive efforts from OPEC, Oil can’t get over 60 dollars a barrel, and Syria doesn’t have much oil at all. Neither Exxon nor any other US company has any serious interest in getting involved in something with such high risk and such little reward. The Pentagon isn’t actually arguing for Trump’s silly heist plan. What they want is to keep the oil from Assad, to keep the civil war going, and they are saying that they want to keep it from ISIS, which is pretty ridiculous, because as I’ve repeated again and again, it’s US involvement that keeps ISIS going.
The reason none of this really bothers me is that it can’t possibly last. When I ran a video last year claiming that Washington DC had won the war in Syria, it was the Kurds that were at the heart of that victory. The Kurds, or the Syrian Democratic Forces (SDF) were the perfect imperial tool for the United States. Because of the threat from Turkey, they were a capable militia force that desperately wanted to keep the United States in Syria for as long as possible. Thanks to Trump’s weird choices, the SDF is now protected by Assad, not the United States. And Assad happens to be the legal sovereign authority in Syria. He wants his oil back, and if anybody in the US or the world wants to preserve a pretense of international rule of law we will have to give it to him. This oil adventure could last as long as a year or two, but US power in Syria has been comprehensively broken, and that’s something that Syria, the world, and the people of the United States can continue to be grateful for. And, very weirdly, as this video shows, we owe it to Donald Trump.
I dislike reacting to events quickly, the way that this video does. But this channel obviously couldn’t let the attack on the Abqaiq refinery go uncommented on. Saudi Arabia is sort of my bread and butter, and this could very well be the biggest thing that has happened to Saudi Arabia since it’s idiotic decision to invade Yemen back in 2015. Two weeks later, I’m pretty pleased with my coverage. In the video I referred to my surprise that the oil price spike had been so small. My surprise has only grown.
As of today, the price of Brent Crude oil fell back below the 60 dollars a barrel mark. Two weeks after an attack disrupting half of Saudi Arabia’s production, oil prices are back where they were before the attack, but the oil market has changed irrevocably. In the comments, and unfortunately in the video itself, there is a lot of emphasis on how quickly or slowly Saudi production resumes. That’s important, but it’s not that important. Two weeks later, it’s still not entirely clear what the on the ground impact is. The important thing is that the market no longer seems to really care that much. Reading articles on outlets like www.oilprice.com has gotten seriously depressing. It’s become clear that high prices, not really seen since 2014, are not returning any time soon. I said it in the video, and I’ll say it again now, with two weeks of reinforcement: This is HUGE. Ten years ago, even if Saudi Arabia restored full production the within hours, prices would have spiked, and wouldn’t have come down for months. The attack itself would have sent a message of risk and worry that would jack up prices for weeks.
Now that the worst has happened, and prices haven’t gone up at all, a different message is being sent, loud and clear: Saudi Arabia just doesn’t matter that much anymore.
Man, this video just gets more and more right with time. When I uploaded this one just over two months ago, it presented three reasons why Saudi Arabia should get the heck out of Yemen as soon as possible. Today I would add at least two more. First, the war is putting the safety and security of Saudi Arabia itself in more and more jeopardy by the day. Just a few weeks ago, the Yemenis pulled off history’s most devastating attack on Saudi oil infrastructure. This attack, and the indifference of world oil markets to it, both gravely undermine the Saudis. Over this past weekend, confused reports emerged that the Saudis may be losing large battles on or distressingly close to their own territory. Whether those reports are true or not, the fact that they can be believed should be terrifying to the Saudis.
There is an out from all of this. The Houthis are aware that their complete dominance of the battle space is actually a problem for them. If they push their advantage, and make real inroads in to Saudi territory, they could prompt a US response. They have proved their independence, and remain more interested in peace than the Saudis are. The Houthis have offered to cease attacks on Saudi territory, if the Saudis will agree to do the same. This is a real opportunity. So far, the Saudis have reacted by murdering a bunch of Yemeni families from the air. They should really start pursuing peace before it’s too late.
This video has turned out to be quite prescient. Closing in on two months ago, when it became clear that the UAE was withdrawing some troops from Yemen, I proposed three possible scenarios for what it would mean. All three are still worth considering, but it’s looking like the one I flagged as most likely is the one that’s happening. It’s a sort of Vietnam 1973 scenario. The Saudis have lost, but they won’t acknowledge it yet, and there is plenty of murder and destruction to come before it becomes obvious to everyone with a 1975 style “helicopters on rooftops” moment.
I didn’t anticipate how quickly things would fall apart, however, with Saudi and UAE proxies engaging in open warfare in the only major Yemeni city that their “coalition” has managed to take. I think the Vietnam parallel stands though. Since World War II we have been lucky enough to see very little inter-state war. Much of the suffering in the world has come in the context of civil wars. This Saudi invasion of its neighbor is only one of a handful of such examples since the 1940s. Vietnam is one of those examples, and the parallels will just get more and more obvious. As sad as this is, it is a bit heartening to see that the US failure in Vietnam wasn’t some unique failure of will, it’s just really fricking hard to invade a country in the modern context. The Saudis are doing even worse than we did, much more quickly.
The US invasion of Iraq also fits into the Vietnam structure pretty well, as I documented five years ago…
Saudi Arabia is in a terrible trap. Even the things that it thinks will help threaten its demise. As I pointed out in this video’s companion video, they want a US war with Iran because it would lead to a spike in oil prices, and more damage to competitors in Kuwait and Iraq than to themselves. But even this strategy comes with risks, whether they are caught up in the war or not.
I don’t have a ton of sympathy for the Saudi royal family, obviously, but it’s a situation worth appreciating. It’s Kafkaesque. They’ve constructed a paradise that no longer works. Every ploy they employ gets them closer to the edge. This video lays out the problem of the war with Iran, and this series lays out the broader problem.
