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US and OPEC Depression of the Oil Price Cannot Last

But it's high time Russia adopted an economic policy as independent as its foreign one

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This post first appeared on Russia Insider

This article is based on an appearance of the prominent Russian intellectual and politician on a recent Sunday Evening with Vladimir Soloviev, the popular current affairs talk show on Rossyia-1 TV channel. It originally appeared on his blog and was translated by Svetlana Kyrzhaly and Rhod Mackenzie

The current decline in oil prices is a systematic manipulation of the hydrocarbons market by the USA with the help of the Gulf monarchies, which have large reserves. OPEC, created as a mega-regulator of the oil market, can do nothing with a nearly fourfold drop in the price of a barrel of oil.

Why is this so? Because OPEC is controlled by the United States via Saudi Arabia,  Qatar and Bahrain. Any attempts by the remaining oil-producing states to agree to reduce production are automatically torpedoed. The Saudis extract more and more oil selling it at an ever lower price and flooding the market.

On the other hand, about 85% of oil transactions are futures. That is, contracts for the supply of oil in the future. However, there is a small detail: no one is going to supply this oil, it’s just on-going speculation or resale of “securities". But as the number of futures greatly exceeds the amount of contracts for a real supply to a consumer, those who have a huge amount of money can raise or decrease the price of a barrel of oil by buying futures.

Here are the two components with which the United States manipulates the oil market. Can we call it a conspiracy? Of course not. Russia, which challenged US hegemony in the international arena, is one of the main oil-producing countries. Our dependency on oil is significantly lower than Saudi Arabia’s, Norway’s or that of Azerbaijan. But it exists.

Hence the strategy of our Anglo-Saxon "friends":
•  impose sanctions against Russia,

• negative effect of sanctions + decrease in the price of oil" on the Russian economy;
• provoke social unrest in Russia and attempt to affect the political sphere;
 • regime change in Russia, which would no longer prevent the United States from doing whatever it pleases.

How long will the United States be able to stifle Russia, keeping oil prices so low?

My opinion is, not indefinitely. Why? Because lower oil prices lead to the release of the huge money supply previously associated with oil futures, making the oil trade and speculation less profitable. The money released will be used elsewhere – that’s why the Federal Reserve System increased interest rates, fueling its huge pyramid of debt, which now stands at almost $19 trillion.

However, such actions carry a greater threat to the world financial-system. It becomes less profitable and even dangerous to begin new projects. Not only the ruble was devalued against the dollar, but also the Canadian dollar (about 40%), the Norwegian krone and many other currencies.  (The fact that the ruble was the most heavily devalued currency against the US dollar was due to a lack of professionalism and a sluggish Central Bank.)

It has become less profitable to initiate projects all over the world than to buy dollars and sit on them, or invest in US treasury notes that provide a reliable income.

Business has stopped on a global scale. By strangling Russia and organizing the inflow of new finance to the base of its debt pyramid, the United States is suffocating the entire global economy.

It won’t be able to exist in this "strangled" state for long.- The result will be an economic crisis greater than the Great Depression that will leave the Russian economy largely unscathed.

What should Russia do?

As soon as possible, it should make its economic policy as sovereign as our foreign policy.


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