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Saudi Arabia threatens to ditch dollar oil trades to stop 'NOPEC'
- ilaksh 8y agoIt sounds like this NOPEC thing must look like kind of a nuclear option to Saudi Arabia, otherwise why would they threaten something so drastic? Given that, is the NOPEC thing serious, and if so, why would people propose it knowing how critical the Saudi relationship is?
- devoply 8y ago> how critical the Saudi relationship is Yes I am sure many a tear would be shed in the ranks of American elites many of whom are Muslim, Arab businessmen if the US decided tomorrow that they did not like the Saudis anymore and no longer wanted them to exist.
- close04 8y agoperhaps you are missing the point? It's enough to do business with the Saudis to make you shed a tear when it's lost. Money talks. And going beyond just money, remember that the Saudis went after one of the richest businessmen in the US (Amazon's Bezos), you can expect they also went after other businessmen and politicians, many of whom are a lot less tech savvy and protected. That's a lot of things potentially held over important people's heads.
- devoply 8y agoAmerica could initially freeze and then seize most of their assets in the US and even take control of most of them in Saudi Arabia as they did in Iraq. In fact it could probably claim a portion of those assets by accusing Saudis of causing 9/11 and sponsoring terrorism for which there is plenty of justification. It could further accuse them of violating human rights by killing people like Kashoghi. If America decides it no longer wants to support the Saudis, it will take a New York minute to covert them into enemy #1.
- ilaksh 8y agoEverything I have read says that Saudi Arabia is a major ally of the United States. There is at least one major US military base in Saudi Arabia, and I believe they have quite a lot of US or British military weapons. In that context what you are saying makes no sense.
- emiliobumachar 8y agoCuba also has a big US military base, the US simply refused to leave once their relationship went sour.
- greedo 8y agoThere are no major US military bases in Saudi Arabia. The US withdrew from all of them after 2003. The only current military installation is a Saudi owned one at Eskan Village that's used to assist the Kingdom with equipment purchased from the US.
- close04 8y ago> as they did in Iraq That turned out well don't you think? Iraq was a historical enemy whereas Saudi Arabia is a key ally of the United States. This alone should give you the feeling that there's something happening behind the curtains to justify such an alliance with a... controversial country.
- rswail 8y ago"Iraq was a historical enemy..." um, no, it wasn't, it was an ally of the US in the 80s when it was fighting Iran. Before that, in the 70s it was a Baathist secular dictatorship that was an oil exporter and thus reliant on the US dollar, while Iran was a Kingdom with a US puppet as Shah.
- close04 8y agoSorry I wasn't clear enough. What I meant is that when the regime was finally changed the US wasn't at the first round of wars in the region. In the 10+ years leading to the Iraq War and the regime change they had the first Iraq War (now known as Gulf War) and several "Desert %" operations (bombing campaigns). Going from ally straight to enemy and war is probably a big step even for the US.
- nl 8y agoThe US-Saudi relationship is much less critical to the US now than it was 15 years ago. Since the US shale oil revolution, the US is essentially energy independent. Basically all that is left is that Iran is more poisonous in US politics than Saudi Arabia for reasons that relate to the Iranian revolution and the - moderately reasonable - fears that Israel has of Iran.
- zaphirplane 8y agoThe us and any-x relationship hasn’t been important since the fall of the ussr. With some exceptions in countries with proximity to Russia or China
- ilaksh 8y agoAccording to CNN the US imports 7.9 million barrels a day from Saudi Arabia. According to Wikipedia the US uses 19.8 million barrels per day. That means approximately 40% of the oil comes from Saudi Arabia. https://edition.cnn.com/2018/10/15/investing/saudi-arabia-oil-imports-united-states/index.html https://edition.cnn.com/2018/10/15/investing/saudi-arabia-oi... https://en.wikipedia.org/wiki/List_of_countries_by_oil_consumption https://en.wikipedia.org/wiki/List_of_countries_by_oil_consu...
- jandrewrogers 8y agoYou are misunderstanding the oil market -- the US is one of the leading exporters of both crude oil and refined oil products. A large percentage of US production and importation is not for the US market but for foreign markets. The US exports 3.6 million barrels of crude oil per day for other countries to blend with lower grade crude, making it easier to refine. The US happens to have some of the best crude oil for this purpose. The US is also the world's largest refiner of petroleum, and the world's largest exporter of refined petroleum products. Many countries do not have the capacity necessary to refine crude oil. The US buys foreign crude oil, refines it, and then exports the refined products back to those and other countries. You can't just look at crude oil imports in isolation to determine if the US is a net importer or not. In fact, the US has been a net exporter of total petroleum products for several years now due to both its increased production and critical role in global crude oil refining.
- ainar-g 8y agoThis might be simply Russian state propaganda working, but wouldn't the diversification of the world's currencies be a good thing? Remember how everyone were afraid of the collapse of the US Dollar back in 2008, and then the similar predictions about the Euro? (And we're hearing a lot about the Great Britain's Pound these days.)
- thefounder 8y agoIt would not be good for the US but may be that good for other countries. U.S would loose some of its financial control(i.e sanctions, monitoring individuals etc). Anyway NOPEC will not happen as long as oil maintains is importance to the world economy. I doubt US is going to invade SA anytime soon.
- deleted 8y ago[deleted]
- Theodores 8y ago> wouldn't the diversification of the world's currencies be a good thing? It is not that simple. If an economy has a surplus, e.g. China, where does that surplus go? This is why we have a default world currency whether that be silver, gold or petro dollars. When you work through it a bit more the more you realise a basket of currencies won't work, unless every currency is essentially the same. Capital is like water, it flows. I would like to see discussion on how we can move on from the currencies we have to a measure of energy. Everything can be measured in energy terms, why not cut out the abstractions?
- ainar-g 8y agoI used to play with an idea of a science fiction novel, where the united Earth's currency is essentially kcal/kJ. The problem is that if you have a flammable and radioactive material, do you count the energy you get from it by burning it, or the energy from throwing it into a nuclear fission reactor, or the energy of throwing it into a black hole in a particular angle[1]? [1]: https://www.youtube.com/watch?v=ulCdoCfw-bY https://www.youtube.com/watch?v=ulCdoCfw-bY
- wrong_variable 8y agoOPEC is a cartel we can get behind, simply because without them price of oil would be 3 USD / barrel. We would be at 500 ppm if not for the irrational boycott of the West by King Faisal.
- tgraham 8y agoLast time I checked a lot of that Saudi wealth sits in dollar denominated assets. Good luck with the devaution!
- devoply 8y agoNot only that the US are big fans of "freedom" and regime change for the sake of "freedom" when people want to ditch the dollar.
- thefounder 8y agoYou kill two birds with one stone but I soubt they will invade SA anytime soon. It would be huge mistake...and for what?
- devoply 8y agoYes or you dress up genocide and usurping people's resources and pretend as if that's the case.
- thefounder 8y agoLet's face it: who likes dictatorships? To overthrone a regime there is a price to be paid and nobody will pay that price unless there is something to gain(i.e economically or geo-political). I'm ok with that as long as it's done right(which was not case with Iraq) but let's not pretend that it's moral to let these pesky dictators die by natural causes.
- jacobush 8y agoSometimes we have not developed the methods yet to remove the cancer without seriously hurting the patient. (The country.) That's just life. There should be a Hippocratic oath for geopolitical intervention.
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- JumpCrisscross 8y ago> Saudi Arabia is threatening to sell its oil in currencies other than the dollar Dumb threat. Streisand effect, too—this bill just went, for me, from something I didn't know about to something that's on my radar. Go ahead, sell in other currencies. Your buyers will bake in the swap costs to hard currency. It isn’t like Mexican oil isn’t sold for pesos or North Sea oil for pounds sterling or kroner. The petrodollar hypothesis is a myth. The United States, now [EDIT: nearly] a net oil exporter, does not depend on Saudi oil.
- fxj 8y agoWhy shouldn't europe then buy oil directly in euros? How does it make sense to first buy dollars and then buy oil if it is not mandatory? The saudis would happily take hard euros I suppose.
- JumpCrisscross 8y ago> Why shouldn't europe then buy oil directly in euros? Until recently, the Euro electronic transmission system was far slower, and less immutable, than the Fedwire system. This has recently changed. Otherwise, the superior investment environment in the U.S. (i.e. higher yields) and broader international acceptance of dollars would be marginal issues. At this point, Saudi Arabia selling all its oil in dollars is a bit of an anachronism.
- deleted 8y ago[deleted]
- anonymou2 8y agoLast time the US was a net oil exporter was in the 70s, in fact it became an importer when the oil crisis. It has never regained that status since then.
- anonymou2 8y agoActually even earlier than that: http://mazamascience.com/OilExport/output_en/Exports_BP_2017_oil_bbl_US_MZM_NONE_auto_M.pdf http://mazamascience.com/OilExport/output_en/Exports_BP_2017...
- sudoaza 8y agoBoth the NOPEC passing and the Sauds ditching the dollar would be great, but as the article says "The chances of the U.S. bill known as NOPEC coming into force are slim and Saudi Arabia would be unlikely to follow through(...)"
- fmajid 8y agoMBS would find himself on the receiving end of a cruise missile. It's not as if he would be missed by the rest of the al-Saud family he sidelined. The US also has long-standing contingency plans to support Shia secessionism in the oil-rich Eastern provinces should the al-Saud stop doing as they are told. No invasion needed.
- zaphirplane 8y agoOf course that’s absolutely what would happen, like Cuba, Iran, Iraq, Syria, Venezuela, Nicaragua, Panama. On reflection regime change hasn’t been successful without significant troops on the ground
- theandrewbailey 8y agoDepends on what significant means. Recently, regime change hasn't been successful even with 100,000 troops on the ground.
- adventured 8y agoRegime change often isn't necessary for the US to accomplish its goals. In this thread premise, Syria would be regarded as a success, because there's nothing left of the country. They no longer pose a threat to Israel and they're a small fraction of the military power they used to be (a net drag on Russia rather than a benefit). It'll take them decades to rebuild. The average income in Cuba is $20 per month. Without regime change they were heavily neutralized as an influence in Latin America. Cuba's military could hardly be less of a concern. Once Raul Castro is gone, that's the formal end. Venezuela is a failed state. The Bolivarian Revolution is over there. There won't be another Chavez any time soon. And if there is, there are no resources to be used to fund such a regime's agenda. The US didn't have to do anything in that case, Venezuela destroyed itself through typical Statist mismanagement. Ironically Chavez will have ended up helping to benefit the US considerably, by destroying what should have been one of the world's largest oil producers. It removed vast potential supply from the global oil market for decades, helping to an extent to make way for the US boom, keeping prices high enough to spur on the Permian shale build-out. If Venezuela were producing like it should be, that'd be ~4m more barrels per day the US producers would have to contend with on the global market, dragging on prices. Instead the US has a solid runway from here to 16m barrels per day of production in the coming decade. The US is now a big oil competitor with Iran. So keeping them boxed in - no regime change needed - is a large win economically. The US can pretend it's for all sorts of reasons, while actually serving the purpose of furthering US oil production and exports. The US is 'convincing' South Korea to abandon Iranian oil right now, in favor of US oil. All the US has to do is keep Iran boxed in for two decades until oil demand begins to contract, then it's over (two decades merely being the time from here to 9/11). Iran's theocratic system will collapse in on itself as oil demand fades, they don't have enough of an alternative economy.
- jessaustin 8y agoInnocent children in Yemen who wouldn't burn to death from USA munitions might appreciate such a development...
- anthony_doan 8y agoI'm okay with this. Maybe we can go off the oil addiction. Plus Saudi Arabis is very unsavory especially what they did to Jamal Khashoggi.
- ilaksh 8y agoPeople keep making comments like that. I really wish someone would explain to me how that attitude makes any sense at all, given that the US imports 40% of its oil from Saudi Arabia (see my comment with links below), and has core military operations based in that country.
- geezerjay 8y ago> I really wish someone would explain to me how that attitude makes any sense at all, The regime resorts to political assassinations on foreign soil even in petty issues that are insignificant at state-level. Do you have a problem understanding how that affects international relations?
- mrpopo 8y agoI'm sure the transition will be hard but I'm okay with this too.
- caprese 8y agoabout to be a net exporter of glass
- BubRoss 8y agoTwo others who wanted to stop selling oil for dollars were Sadam Hussein and Momar Gadahfi. In power for decades, then they announce they will sell oil for euros or a gold backed currency. Only a few years later from their announcement each one was dead.