Tag Archives: Oil crash

Saudi Arabia Did This To Itself | Abqaiq Attack | Yemen 19

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.

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Islamic Terrorism Is Over | Notes From The Golden Age 18

It’s not really the focus of today’s video, which I wanted to keep light, but it really is fucking outrageous what the Defense Department is trying to pull off with its new National Defense Strategy. The Pentagon continues to use terrorism as a blank check for assassinations, kidnappings, and hyper-militarization in dozens of countries all over the world. The Pentagon has used it to scare the US public for decades now. They want to keep doing all of these things. But now that terrorism is fading, they want to perform a magic trick, keep all their money and toys, and continue with business as usual.

And they’re getting away with it. Washington, DC is super absorbed with talking about how much it hates Donald Trump, but is acting with surprising unity. Trump has started a trade war with China. The Department of Justice is pursuing cases against Chinese businesses with unprecedented and shocking vigor. The recently vacating “adults in the room” at the Defense Department were obsessed with China too. Every media group lightly poo poos Trump’s treatment of China… and then jumps on the bandwagon to talk about how scary and sinister China is. It’s outrageous really. Sigh.

Well at least we’re attempting to hold them accountable. Spill your glass for the War on Terror. It was a terribly wasteful and pointless way to spend a couple trillion dollars and a couple million lives.

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Saudi Arabia Is Finished | Everybody’s Lying About Islam 1

People are good at ignoring the obvious. Saudi Arabia is finished. The 2014 crash in the price of oil has left the ruling family in an impossible position. Since 2014 the country has been burning through around $100 Billion of dollar reserves a year. At that pace, the current regime has got about 4 years left before they can’t meet their obligations. The almost 100 billion in debt (up by a factor of 4 since 2014) that the country is now carrying will accelerate this issue. This problem has been noted of course, but most financial publications have been quick to swallow the Saudi line on the issue.

The problem has been identified, and Saudi Arabia is supposedly taking bold steps to address it. What few are talking about is how inadequate these steps are. This video covers the farcical “Vision 2030” idea that is supposedly going to turn Saudi Arabia into a new Dubai.

What I didn’t get into, because the video was already too long, was the illusion of a Saudi Aramco IPO. Saudi Aramco, the state oil company, is supposedly a multi-trillion dollar company. Selling off the proposed 5-10% of the company would give the Saudi royal family a few more years of runway. It’s not going to work. It may very well go forward, but they are not going to get the money they want. Also, the investment is something that everybody will be excited to look into, but dramatically fewer will want to actually buy.

Aramco is a state-run black box at the moment. Getting money from outside investors would require a high degree of disclosure and re-organization that they are unlikely to be interested in doing. The country is also faced with a couple of Catch-22s. First, driving up the valuation of the company requires driving up the cost of oil. To do this Saudi Arabia has to restrict its supply, which means it would lose market share, and have less funds to deal with its many issues. Second, if they don’t get Aramco up to Western corporate standards, they’ll have to rely on local investors. Those investors have plenty of money, but as the country gets shakier, they will become less interested in investing in Aramco. A great indication of the shakiness of Saudi Arabia would be the country’s needing to rely on local investors to fund the Aramco IPO.

These issues leave me convinced that by 2030 Saudi Arabia will be a completely different country. Unfortunately US policy seems to be that the Saudi money spinner will go on forever. The new administration has been doubling down on the brutal Saudi adventure in Yemen, and seems to want to escalate with Iran. This is crazy.

My “Everybody’s Lying About Islam” video series and essay deal with these issues in detail…

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