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Andrew Topf By

Andrew Topf

With over a decade of journalistic experience working in newspapers, trade publications and as a mining reporter, Andrew Topf is a seasoned business writer. Andrew also…

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Did The Saudis And The US Collude In Dropping Oil Prices?

Did The Saudis And The US Collude In Dropping Oil Prices?

The oil price drop that has dominated the headlines in recent weeks has been framed almost exclusively in terms of oil market economics, with most media outlets blaming Saudi Arabia, through its OPEC Trojan horse, for driving down the price, thus causing serious damage to the world's major oil exporters – most notably Russia.

While the market explanation is partially true, it is simplistic, and fails to address key geopolitical pressure points in the Middle East.

Oilprice.com looked beyond the headlines for the reason behind the oil price drop, and found that the explanation, while difficult to prove, may revolve around control of oil and gas in the Middle East and the weakening of Russia, Iran and Syria by flooding the market with cheap oil.

The oil weapon

We don't have to look too far back in history to see Saudi Arabia, the world's largest oil exporter and producer, using the oil price to achieve its foreign policy objectives. In 1973, Egyptian President Anwar Sadat convinced Saudi King Faisal to cut production and raise prices, then to go as far as embargoing oil exports, all with the goal of punishing the United States for supporting Israel against the Arab states. It worked. The “oil price shock” quadrupled prices.

It happened again in 1986, when Saudi Arabia-led OPEC allowed prices to drop precipitously, and then in 1990, when the Saudis sent prices plummeting as a way of taking out Russia, which was seen as a threat to their oil supremacy. In 1998, they succeeded. When the oil price was halved from $25 to $12, Russia defaulted on its debt.

The Saudis and other OPEC members have, of course, used the oil price for the obverse effect, that is, suppressing production to keep prices artificially high and member states swimming in “petrodollars”. In 2008, oil peaked at $147 a barrel.

Related: OPEC Ministers Decry Price War Conspiracy Theories

Turning to the current price drop, the Saudis and OPEC have a vested interest in taking out higher-cost competitors, such as US shale oil producers, who will certainly be hurt by the lower price. Even before the price drop, the Saudis were selling their oil to China at a discount. OPEC's refusal on Nov. 27 to cut production seemed like the baldest evidence yet that the oil price drop was really an oil price war between Saudi Arabia and the US.

However, analysis shows the reasoning is complex, and may go beyond simply taking down the price to gain back lost marketshare.

“What is the reason for the United States and some U.S. allies wanting to drive down the price of oil?” Venezuelan President Nicolas Maduro asked rhetorically in October. “To harm Russia.”

Many believe the oil price plunge is the result of deliberate and well-planned collusion on the part of the United States and Saudi Arabia to punish Russia and Iran for supporting the murderous Assad regime in Syria.

Punishing Assad and friends

Proponents of this theory point to a Sept. 11 meeting between US Secretary of State John Kerry and Saudi King Abdullah at his palace on the Red Sea. According to an article in the Wall Street Journal, it was during that meeting that a deal was hammered out between Kerry and Abdullah. In it, the Saudis would support Syrian airstrikes against Islamic State (ISIS), in exchange for Washington backing the Saudis in toppling Assad.

If in fact a deal was struck, it would make sense, considering the long-simmering rivalry between Saudi Arabia and its chief rival in the region: Iran. By opposing Syria, Abdullah grabs the opportunity to strike a blow against Iran, which he sees as a powerful regional rival due to its nuclear ambitions, its support for militant groups Hamas and Hezbollah, and its alliance with Syria, which it provides with weapons and funding. The two nations are also divided by religion, with the majority of Saudis following the Sunni version of Islam, and most Iranians considering themselves Shi’ites.

“The conflict is now a full-blown proxy war between Iran and Saudi Arabia, which is playing out across the region,” Reuters reported on Dec. 15. “Both sides increasingly see their rivalry as a winner-take-all conflict: if the Shi’ite Hezbollah gains an upper hand in Lebanon, then the Sunnis of Lebanon—and by extension, their Saudi patrons—lose a round to Iran. If a Shi’ite-led government solidifies its control of Iraq, then Iran will have won another round.”

The Saudis know the Iranians are vulnerable on the oil price. Experts say the country needs $140 a barrel oil to balance its budget; at sub-$60 prices, the Saudis succeed in pressuring Iran's supreme leader, Ayatollah Ali Khamanei, possibly containing its nuclear ambitions and making the country more pliable to the West, which has the power to reduce or lift sanctions if Iran cooperates.

Adding credence to this theory, Iranian President Hassan Rouhani told a Cabinet meeting earlier this month that the fall in oil prices was “politically motivated” and a “conspiracy against the interests of the region, the Muslim people and the Muslim world.”

Pipeline conspiracy

Some commentators have offered a more conspiratorial theory for the Saudis wanting to get rid of Assad. They point to a 2011 agreement between Syria, Iran and Iraq that would see a pipeline running from the Iranian Port Assalouyeh to Damascus via Iraq. The $10-billion project would take three years to complete and would be fed gas from the South Pars gas field, which Iran shares with Qatar. Iranian officials have said they plan to extend the pipeline to the Mediterranean to supply gas to Europe – in competition with Qatar, the world's largest LNG exporter.

“The Iran-Iraq-Syria pipeline – if it’s ever built – would solidify a predominantly Shi’ite axis through an economic, steel umbilical cord,” wrote Asia Times correspondent Pepe Escobar.

Global Research, a Canada-based think tank, goes further to suggest that Assad's refusal in 2009 to allow Qatar to construct a gas pipeline from its North Field through Syria and on to Turkey and the EU, combined with the 2011 pipeline deal, “ignited the full-scale Saudi and Qatari assault on Assad’s power.”

“Today the US-backed wars in Ukraine and in Syria are but two fronts in the same strategic war to cripple Russia and China and to rupture any Eurasian counter-pole to a US-controlled New World Order. In each, control of energy pipelines, this time primarily of natural gas pipelines—from Russia to the EU via Ukraine and from Iran and Syria to the EU via Syria—is the strategic goal,” Global Research wrote in an Oct. 26 post.

Poking the Russian bear

How does Russia play into the oil price drop? As a key ally of Syria, supplying Assad with billions in weaponry, President Vladimir Putin has, along with Iran, found himself targeted by the House of Saud. Putin's territorial ambitions in the Ukraine have also put him at odds with US President Barack Obama and leaders of the EU, which in May of this year imposed a set of sanctions on Russia.

As has been noted, Saudi Arabia's manipulation of the oil price has twice targeted Russia. This time, the effects of a low price have hit Moscow especially hard due to sanctions already in place combined with the low ruble. Last week, in an effort to defend its currency, the Bank of Russia raised interest rates to 17 percent. The measure failed, with the ruble dropping another 20 percent, leading to speculation the country could impose capital controls. Meanwhile, Putin took the opportunity in his annual televised address to announce that while the economy is likely to suffer for the next two years and that Russians should brace for a recession, “Our economy will get diversified and oil prices will go back up.”

He may be right, but what will the effect be on Russia of a sustained period of low oil prices? Eric Reguly, writing in The Globe and Mail last Saturday, points out that with foreign exchange reserves at around $400 billion, the Russian state is “in no danger of collapse” even in the event of a deep recession. Reguly predicts the greater threat is to the Russian private sector, which has a debt overhang of some $700 billion.

“This month alone, $30-billion of that amount must be repaid, with another $100-billion coming due next year. The problem is made worse by the economic sanctions, which have made it all but impossible for Russian companies to finance themselves in Western markets,” he writes.

Will it work?

Whether one is a conspiracy theorist or a market theorist, in explaining the oil price drop, it really matters little, for the effect is surely more important than the cause. Putin has already shown himself to be a master player in the chess game of energy politics, so the suggestion that sub-$60 oil will crush the Russian leader has to be met with a healthy degree of skepticism.

Related: OPEC Calls For Widespread Production Cuts

Moscow's decision on Dec. 1 to drop the $45-billion South Stream natural gas pipeline project in favor of a new pipeline deal with Turkey shows Putin's willingness to circumvent European partners to continue deliveries of natural gas to European countries that depend heavily on Russia for its energy requirements. The deal also puts Turkey squarely in the Russian energy camp at a time when Russia has been alienated by the West.

Of course, the Russian dalliance with China is a key part of Putin's great Eastern pivot that will keep stoking demand for Russian gas even as the Saudis and OPEC, perhaps with US collusion, keep pumping to hold down the price. The November agreement, that would see Gazprom supply Chinese state oil company CNPC with 30 billion cubic meters of gas per year, builds on an earlier deal to sell China 38 bcm annually in an agreement valued at $400 billion.

As Oilprice.com commented on Sunday, “ongoing projects are soldiering on and Russian oil output is projected to remain unchanged into 2015.”

“Russia will go down with the ship before ceding market share – especially in Asia, where Putin reaffirmed the pivot is real. Saudi Arabia and North America will have to keep pumping as Putin plans to uphold his end in this game of brinksmanship.”

By Andrew Topf of Oilprice.com

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  • Robert on December 24 2014 said:
    Did The Saudis And The US Collude In Dropping Oil Prices? NO.
  • Jake Ashworth on December 24 2014 said:
    If the U.S and Saudi Arabia are manipulating the price of oil down, good on them. The actions of Russia and Iran in Ukraine and Syria have caused thousands of lives to be lost and they should pay the price. What I find more compelling is that if the price can be lower it can also be maniplulated higher, and the consumer through no fault of their own is enriching places like Iran (so they can fund their nuclear program) and Russia (so they can meddle in the affairs of a foreign sovereign nation)....and that's what the real tragedy is.
  • Bob on December 24 2014 said:
    "Blame" or credit? This is a very good thing .. and gasoline should never be more than a dollar a gallon.
  • Maria on December 24 2014 said:
    Anything that is bad for the likes of Russia, Norway and Iran is good for the rest of the world.
  • Barney on December 24 2014 said:
    That was my first thought when I finally recognized the continued slide. Although I'm not so sure collusion is the right word and would tend to believe the Saudi's have much greater control over the US than anyone really wants to admit.
  • Reality on December 24 2014 said:
    The Fed ended QE. The banksters were channeling the "easing" into oil and other comms. Glass Steagal was long gone, but Bernanake decided to enrich the banks under outdated theory they would "loan" the money. Dems and Repubs. all got their cuts.
  • Ron Gosling on December 24 2014 said:
    Great conspiracy theory article but I don't believe anyone inside the Obama Administration is intelligent or trustworthy enough to concoct a plan of this magnitude and make it work and keep it quiet. Can you imagine John Kerry keeping a secret while Iran is screwing the US?
  • David Vallaire on December 24 2014 said:
    Ukraine is on the Russian border not the U.S. border. The U.S. backed a coup to overthrow a democratically elected government in Ukraine. NAto is being used as a mercenary force to impose the economic will of the U.S.
    and the EU.
    Plan was to take over Ukraine via proxies, kick Russia out of Crimea, use to port to bring in LNG and use the Ukrainian pipelines to sell it to Europe. U.S. companies bought 49% of the U.S. energy transit lines in Ukraine and Joe Biden's son was made the director of a Ukrainian energy company. Does Biden's kid even speak Ukrainian?
    The U.S. is the aggressor in Ukraine.
  • bluesky on December 24 2014 said:
    Saudi Arabia does what Britain tells them to. Of course it's
    a setup. If they would just tell us where oil is made we
    wouldn't have this problem.
  • bob j on December 24 2014 said:
    The oil price drop is payment from the Saudis to the United States for the war in Iraq.
    We sent in our military to stop Hussein in return the Saudis promised us the price drop. Now that the war is over, payment is being made.
    Think big picture.
  • Mark on December 24 2014 said:
    Robert, don't be so sure. While I am no fan of the administration or Kerry whatsoever, I LONG suspected a co-op to force the price down. It only hurts exactly those oil revenue dependent countries on the naughty list. Saudi is dependent but they haven't been stupid with their money. So yea,. It appears there indeed was a plan and it's not to run Fracking out of business.
  • mike_matthews on December 24 2014 said:
    In addition, As a result of the sudden, but temporary, low price of oil, Obama vetoes the XL pipeline with little resistance. US\Canadian shale oil producers go out of business. When its all over, Saudi Arabia and OPEC cut production running the price to $150 plus giving Obama his much desired $5 per gallon gasoline and reviving his dead green energy plans, cap and trade, and increased regulation nation.

    Or not. Just a thought.
  • Ibrahim on December 24 2014 said:
    Unfortunately there are more theories than facts mentioned in this article. First of all, those "experts" calling out numbers about how much an oil producing country needs for break-even or balanced budget have all proven to be wrong. Despite this low prices, US-producers keep on.
    But the point I wonder most is, that there is no single reference to the fact, that since shale-boom, US-oil-imports from Saudi Arabia shrank every year. And this fact is the most likely reason for Saudi Arabia trying to push down prices, so the "inefficient" producers leave the marketplace, as the Saudi Oil Minister says. They want market share BACK. Another fact is OPEC's actions pushed prices lower since Nov. 27, but we should not ignore the fact that prices have already fallen since July '14.

    So what could be the reason for people to believe in such theories while ignoring the obvious facts? The reason must be hope, that prices, once the "bad guys" lose, will rise again. But that would be again ignoring facts like oversupply plus supply rising in a higher rate than demand.
  • Andylit on December 24 2014 said:
    The problem here is two-fold.

    1. The least complex, most logical explanation is almost always correct. The theory above is a grossly complex conspiracy that has the risk of severely imploding in the faces of the players. Further, the goal of the current US administration is HIGHER energy prices, not lower.

    2. The price drop is a direct result of American private sector activities that run contrary to public policy. If the administration could find a way to shut down shale production, it would do so in a heartbeat.

    Beyond these ideas, the simple fact is that the current administration is essentially incapable of formulating or carrying out any foreign policy beyond photo op hand shakes.
  • Dan on December 24 2014 said:
    Unfortunately I think there absolutely is collusion between the Saudis and this administration to make the price of oil plummet. It is a win-win for the Obama administration because it serves several of their goals at once. They do not like the success that fracking has had on private land in the US. They are anti-oil and this will cause many of those in the fracking industry to go belly up due to the debt they have created and cannot repay with oil at $40 a barrel. It also creates a problem with those wanting to build the Keystone XL or deepwater rigs in the gulf......all things they hate. It also punishes Russia and Iran. The advantages to the Saudis are obvious as well. This will destroy energy production not only in the US, but Canada, Venezuela, Russia and Mexico just to name a few. We will be back to the unstable Middle East supplying most of the oil with it's inexpensive production.
    What people do not realize is that most of the private job growth in this country has been in energy. If the oil price stays suppressed we are going to lose many of those companies and the jobs they have created. You make think it is great to have $2 a gallon gas for now, but the rebound effect and going back into recession are going to hurt the seriously impact the country for a long time.
    This is NOT good.
  • geoff on December 24 2014 said:
    And..lets add the latest wrinkle to the conspiracy. Warmer US/Cuba relations. Venezuela can no longer subsidize Raul, nor can Vladimir. So in steps the US, after 50 some yrs, to further poke a finger in Putin's eye. He has been getting a touch arrogant in the world, and needs to be "slapped upside the head" to remind him goodwill has it's limits. I may be way off, but I don't think so.
  • Thomas Murphy on December 24 2014 said:
    Did they collude? DUH!
  • scf on December 24 2014 said:
    Maybe the US and many other countries like to pay less for oil? Maybe people like to pay less for everything, which is how to increase your standard of living.
  • Snigglewhip on December 24 2014 said:
    On the demand side, are Millennials even taking up the car-driving habit? A lot of them are still living with their parents, can't find decent-paying jobs and can't afford a car. On top of that, auto insurance has become prohibitively expensive in places. You can't get rid of a glut if you lose your most enthusiastic customers.
  • JH on December 24 2014 said:
    So, what cash is Putin going to use to continue drilling in order to maintain production?

    I guess we are not hearing any more about Russian threts to freeze out Europe this winter? Vlad needs the cash.
  • Jack Everett on December 24 2014 said:
    I don't believe the Saudis are colluding with Obama. It would have been possible with Bush and we all know how close and friendly Bush was with Terrorist Saudi Arabia.
  • Dennis Wingo on December 24 2014 said:
    The only problem with this theory is that John F. Kerry (who served in Vietnam) is not smart enough to figure out how to do something like this.

    Both the Russians and Saudi's have stated multiple times that the biggest threat to them is fracking. Watch protests against fracking ramp up and if the producers start going bankrupt watch for the Saudi's to swoop in and buy the assets.
  • Jon on December 24 2014 said:
    Funny how the author never mentions the fact that the brick countries that are being pressured, are the ones that are trading out of the petrodollar system. I do not doubt that there are other factors involved, but you can't tell me this isn't a major influence.
  • Chris on December 24 2014 said:
    Ha funny oil price was my captcha answer, oh your all so smart. As far as I am concerted, us 200 million Americans who are not doing very well in this multicultural suicide pumping millions and millions of job pirates across our border being plotted on American workers who are also forced to pay for the invasion. We can use all the help we can get even though we know none of those people who made this happen care about the 'cheaper' part of the equation. Just one of those rare times when the side effects are good for the little guy struggling right now.
  • Kortney Dunkle on December 24 2014 said:
    no one saw this coming except the oil bugs and not even this this sudden
    Nose dive. Obama working with the Saudis on THIS conspiracy ??? ha ha ha

    This admin. Doesn't have a foreign policy. They detest oil and hate cheap gas as
    It creates individual mobility and kills green initiatives.

    It's supply and demand and yes, U.S. Fracking was the trigger for the oversupply.

    It will end at 40 per barrel.
  • john70 on December 24 2014 said:
    And another thing: The Obama regime really wants to shut down the shale oil phenomenon.
  • Derek on December 24 2014 said:
    Great article. Very speculative, but aroused the conspiracy nut inside me... Long live cheap oil!
  • Brad Arnold on December 25 2014 said:
    Instead of focusing on oil producers as the reason why current oil prices are declining, I suggest looking to new competing energy technologies:

    http://www.opednews.com/articles/Low-Energy-Nuclear-Reactio-by-Christopher-Calder-Andrea-Rossi_Energy-Policy_Industrial-Heat-Llc_Lenr-141013-530.html

    "There are many companies now racing to bring Low Energy Nuclear Reaction products to the marketplace. One notable company is Solar Hydrogen Trends, which claims to have accidentally discovered a way to use LENR to produce hydrogen gas from water at the energy equivalent of producing pollution free oil for about $5.00 a barrel. Their hydrogen gas producing reactor has been independently tested by two well known companies, AirKinetics, Inc. and TRC Solutions. Both companies found that the reactor works as promised, and the TRC Solutions PDF report is quite shocking."
  • Jay on December 25 2014 said:
    Interesting to note that the countries that are being affected by this are pushing to get away from a petro-dollar exchange and are pushing other ways to pay. This offers a better explaination than an ISIS for Assad quid pro quo. Saving the U.S. economy for Assad and Iran is more likely the reason. Just a thought given Syria's desire to bypass the petrodollar as well.
  • Daniel Staggers on December 25 2014 said:
    Even though it seems like collusion, it isn't. There are no secrets today, (just ask the NSA) and this one would be a doozy; impossible to keep it a secret.

    Second, Obama has make it very clear he wants 5 dollar gas, NOT 2.70. Cheap oil makes his green vision much to expensive to stomach.

    Also, as a result of this, it's prudent to remember that our oil glut, is despite our Government, NOT BECAUSE OF IT!
  • Atonium on December 25 2014 said:
    Japan was pushed to attack usa 73 years ago, when roselvelt placed an oil embargo for Japan's war against China... How far Ruskies can be pushed ?
  • Fred on December 25 2014 said:
    "Anything that is bad for the likes of Russia, Norway and Iran is good for the rest of the world."

    Remember when a bunch of Russians, Norwegians, and Iranians hijacked airliners and flew them into buildings?

    Yea, me neither.
  • observer on December 25 2014 said:
    As soon as oil prices rise over(or likely do not fall below) $45 a barrel the frackers, horizontal drillers, and oil operators using co2 in an emerging technology known as EOR (that is and will continue to drive rising American, Canadian, and Mexican oil output) will be back in business.
    Add to the above the realities the fact that in much of the Marcellus & Niobara Shale Fields production costs are well under $40 a barrel. An additional bonus for the US is that the EOR technology has created a reality that long exhausted fields such as Spindle Top, Kern & Ventura Counties, numerous "dry" fields in Pennsylvania and dozens of others throughout the US, Mexico & Canada can be brought back to life because previously used technologies recovered only 1/3 of those fields' oil.
    Heap on top of the three aforementioned technologies
    the exploding natural gas output in North America and for the next 40-50 years the world will be awash with non Opec non-Russian energy sources. Best of all the EOR technology can & will be used to rehabilitate coal as a clean dirt cheap source of electricity (if voters send liberal democrats, Shrillary, and Fauxcohontas to the depths of political Hades.
    EOR technology needs billions of ton of co2 that can be captured from the smokestacks of coal burning thermal power plants.
    Cry for yourselves and your Luddite Marxist follies eco freaks, gorebull warmenists, and red inside greenies. Petroleum engineers, oil entrepreneurs and non-government non-grant seeking scientists have reburied your beloved delusions of Gaia deep in the bowels of the earth below the fracking zones.
    The wicked witch OPEC 5oo has in fact been slain (a Saudis know it by Texas birthed oil technologies created and daily being enhanced by the liberals much reviled oilmen.
  • JJ on December 25 2014 said:
    From everything Im hearing from my friends in the oil industry, U.S. oil can sustain down to $40 or $35 a barrel. A few rigs in some places may go idle for a while, but that would be just a tactical decision. U.S. producers have no intention of stopping drilling or pumping gas. If the Saudis are trying to pressure U.S. shale and gas, they are misunderstanding the political ramifications of more efficient U.S. production now. They are able to pump profitably and technology is only getting better. There are vast oil and gas deposits still untouched. There is an absolutely vast natural gas area recently found to go from NY to PA. It's huge. There is enough natural gas in the ground we could run them all into the ground.
  • Catmantwo on December 25 2014 said:
    Call it what you will. Considering the Obama administration lack of responsible negotiations in the past, I see the perceive deal with the Saudis to curtail Russian aggression and iran's nuclear program only half the deal. The other half is to crush US oil exploration and production, something this admin has always wanted. Just like the coal industry
  • alan on December 25 2014 said:
    The story was entertaining,up until the "US backed war in Ukraine"bit,then i realized i was reading a tin foil hat,medical marijuana smoking,OWS,POS piece of fiction.
  • Sam on December 25 2014 said:
    I know that the bigger conspiracy cannot be true because it involves Kerry. He is too stupid to pull off anything more complicated than adding 1+1.
  • Art on December 25 2014 said:
    Your premise that the Saudis are bankrupting themselves in some obama designed master plan to thwart Russian aggressions is hilarious.
    far more entertaining than SNL. Keep em coming.
  • Art on December 25 2014 said:
    The Saudis are bankrupting themselves in an effort to stop Russian aggressions?
    Not one word about Fracking gutting the price of oil.
  • th on December 25 2014 said:
    Supposedly the saudi's proposed last august they would cut production a half/mmbbls/day if others would also participate, no one did and they decided to force the issue, that would indicate they were not interested in a price war and if you look at inventories now, they are high but not much higher than they were a year ago, the price of oil has probably been overpriced for several years now and it needs to reflect the overproduction of all oil producers.
  • Sonya on December 25 2014 said:
    This is only the result of private sector shale oil and gas drilling. The last thing Obama wants is for consumers and other industries such as petrochemical, transportation, airlines, etc. to be saving billions of dollars in fuel cost. Shale production would have been shut down already if this weren't taking place on private land.
  • Sonya on December 25 2014 said:
    This is only the result of private sector shale oil and gas drilling. The last thing Obama wants is for consumers and other industries such as petrochemical, transportation, airlines, etc. to be saving billions of dollars in fuel cost. Shale production would have been shut down already if this weren't taking place on private land.
  • Doug on December 25 2014 said:
    Hey Bob, explain the economics of that $1/gallon gasoline.

    You ever see an oil well being drilled, or a cat cracker turnaround? Gas is cheaper than CocaCola and takes a shitload more investment to make.
  • Dave Cearley on December 25 2014 said:
    The wild care is whether Putin will allow all those private debts to default, hurting the west almost as much as Russia.
  • Cindi O'Connell on December 25 2014 said:
    The Obama-ites aren't quite smart enough to collude with anyone on oil prices. Besides, the drop in the price of fossil fuels is the exact opposite of what the Obama administration wants. They've been on record for 6 years claiming that the U. S. 'needs' high gasoline prices to justify the billions the Obama-ites have given to 'green energy' fiascos. The free market is responsible for the troubles in Russia and Venezuela which proves once again that socialist economies always wind up on the scrap heap of history.
  • Willi Brix on December 25 2014 said:
    Collusion between US and Saudis? Nonsense!

    The Saudis could not care less about Venezuela either way.
    The reasons that the Saudis are pumping and dumping oil like there is no tomorrow are:
    a) to put US shale fracking out of business
    b) to hurt ISIS next door, which finances itself largely by selling oil plundered from Syrian and Kurdish oil fileds. (Of course they financed ISIS previously, but now the Caliphate is getting a bit too powerful for the House of Saud)

    It really not necessary to invent complex conspiracy theories beyond that.
  • Al Bundy on December 25 2014 said:
    There is one big lacuna in the story. The author does not mention a number of recommendations made by more or less powerful people in the US of the Brzezinski kind in the wake of the Ukrainian crisis, to make oil prices fall to "punish" Russia. They also insisted that this was the way Reagan destroyed the USSR. Well, after does not necessarily mean because, but it happened, and if there may be a coincidence of such a global scale then they are nothing but bluffers
  • Christian on December 25 2014 said:
    Please no more speculation or lies to try and manipulate people to invest. This is typical example of american capitalists thinking one thing at a time only what theyre looking at in the moment never looking at the big picture because they cant. Ste by step make oil next step sell it. How if youre customers are already getting it from somewhere else. Undercut the price. Next step, continue to undercut the price. Ok the price is less than it costs to prpduce it, next step....duuuuuhhhh. Never able to look at the big picture
  • Mike0oSS on December 25 2014 said:
    Driving the fracking out of the states is the main reason for the drop in prices. The Sauds don't like competition and the U.S. is now the world leader in production...it worked before, knowing U.S. markets, it will probably work again..
  • Bob on December 25 2014 said:
    Obama wants to drive down the price to hurt oil companies in areas where he can't use his power to halt drilling and fracking.
  • Donald Taylor on December 25 2014 said:
    Of course, the rise in the value of the US dollar is another factor. Whatever the cause, Mr. Putin likely believes the fall in oil is a result of collusion; there are dangers in that Mr. Putin is likely to react -- quietly, and in a clandestine manner -- to counter the perceived threat. For example, consider the oil embargo against Japan that precipitated attacks on US interests in the Pacific. Is there any connection between rising civil unrest in the USA, largely instigated by factions in the US that would have been called "Marxist-Leninist-Maoist" in previous decades. Enough said.
  • Gary Farris on December 25 2014 said:
    The West must really hate Putin to make nice with Cuba. There are only a few nations left on this planet not under the boot of the globalists. Russia, Syria, Iran, Venezuela, and North Korea to name a few. It will be a sad day for mankind when the globalists vanquish there last nemesis and we are left at their mercy.
  • Dammitt on December 25 2014 said:
    If Putin is a "master player", what's he doing? Rope-a-dope?
  • art on December 25 2014 said:
    Wrong. The US is not going to gamble with our domestic oil boom and that industry's $500 billion of borrowing during the boom.
    So, the US wants to take out some big, domestic banks, too?
  • Lavita on December 25 2014 said:
    Ooohhh, many here and many writers of articles like this have little idea of what's going on here. In my prior life I worked as a consultant to a large oil firm [name removed for obvious reasons] and worked hand in hand with many foreign leaders involved with OPEC decision making at very crucial times of geopolitical brinksmanship in the 1980s. Just from personal experience in how this stuff works, what you think you might know is going on is only scratching the surface.

    I'd venture about $15 or of the decline was due to margined out long positions getting liquidated. That was part of the bigger plan, I'm sure. But you don't see the price of a commodity of such importance as oil, the thing every civilized country lives on, decline like it has in the face of population growth without major manipulation. I've seen it planned and put to action first hand years ago.

    T. Boone Pickens said it best the other day when he said that the Saudi's are making enemies by the hour and that in fact the price will be back around $100 again within a year or so. You see, guys like him know the Saudis have limits. They also are the most paranoid family on the planet. All those Arab springs leading to the ouster of all those entrenched leaders is what they fear more than anything. Obama is playing checkers here in probably one of the most advanced chess games ever seen with the prayer that these tricks they're playing using the markets to solve an end result.

    The people getting hurt the most by this don't like the play checkers. They are ruthless and have big weapons, too. Obama is known to be a coward and can't step up militarily because of the base he belongs to will hang him. I have a feeling the story of the 2015 will be the checkmate Putin ends up delivering.

    Gonna be a fun ride the next year.
  • Gene Frenkle on December 25 2014 said:
    The current situation in Russia should really drive home the reason for the Iraq invasion--OIL! Saddam was the worst of the worst and the oil situation in the 2000s would have made him stronger. So Bush felt he needed to invade Iraq at the time because Saddam would only grow more powerful as the price of oil increased just like Putin. Obviously every major politician supported deposing Saddam and we had been engaging him militarily for over 10 years.

    In hindsight the invasion only prolonged the time it took to develop fracking because oil producers kept thinking the world was going to get flooded with cheap Iraq oil.
  • SoCalMike on December 25 2014 said:
    I'm pleased as pie over the lower prices.
    This is what competitors have to do to sell but first you need real competition.

    For more than 40 years the large multinationals in bed with government and regulatory bureaucracy and since the 90s the environmental movement have been conspiring if you will to keep the prices of oil and natural gas higher than they would by at least 40-50% by waging regulatory environmental war on smaller domestic producers.
    Technological advancement is turning things around in favor of the consumer but multinational producers aren't the only ones seething over this.
    The activists and enviro freaks are angry too because they not only hate hte idea of cheap energy, they have been waging regulatory and legislative war on it for decades.
  • Ed on December 25 2014 said:
    I have a tough time believing the Oblama admin being this shrewd and manipulative on the int'l stage.

    But wanting to drive the ascendant US oil energy business onto the rocks to kill cheap oil and make everyone move to $$$ green alternatives that will profit Gore and his buddies? I absolutely can see them going along with this.

    Between Republicans and the US oil industry, I'm not sure which group Oblama hates more.
  • GozieBoy on December 25 2014 said:
    Obama would never pursue a plan which would knowingly bankrupt hundreds of US oil companies and put tens of thousands of middle class Americans out of work? Oh, wait a sec ...!
  • Damon F on December 25 2014 said:
    Where's the Putin loving Romney neo-cons gloating about Putin getting the better of Obama now?
  • ttaerum on December 25 2014 said:
    It's a mystery how this Administration which destroyed their Dem allies in the House in 2010 and their Dem allies in the Senate in 2014, would somehow manage to take out both ISIS and Assad. Yet that is what Topf's conspiracy theory depends on.
  • James Johnson on December 25 2014 said:
    Fat chance that obama would have the foresight to do this. There's not a snowball's chance he'd do that. Nor would any of his "advisers"
  • Santa on December 26 2014 said:
    The problem with this theory is that Obama is sympathetic to both Iran and Venezuela, and does not consider them enemies.
  • Bruce on December 26 2014 said:
    I think if we've learned nothing else over the years, it's that we aren't going to get the Saudis to do anything they don't want to do. What I am seeing is just a long-overdue response to decades of OPEC openly violating its own policies and production requirements by member states who always put their own needs above those of the group, and almost always at the expense of the Saudis.

    As the largest producer in OPEC, the Saudis were always being asked to take one on the chin by constantly reducing their production numbers and revenues so that other countries could up their numbers and revenues while keeping oil prices high. And to add insult to injury, these same countries were always over producing above their quotas.

    I think the Saudis finally reached a point where they were tired of being the only member of OPEC to really feel any pain, and decided enough was enough. Rather than continue loosing revenues to protect other members who were constantly cheating them, the Saudis changed their game to look out for their own needs first and if other member states can't compete, then they have no one to blame but themselves.
  • schm0e on December 26 2014 said:
    Putin's disinformation machine working wonders.
  • cigarskunk on December 26 2014 said:
    No, America didn't collude with the Saudis for one simple reason - Obama has fought tooth and nail to oppose US oil production increasing.

    Obama has issued almost no permits for drilling oil in the US over the past six years. All of the oil production has been fracking (which he opposes) shale on private, not federal, lands.

    As such, the drop in oil prices was happening no matter what Obama wanted.

    As for the Saudis, whether or not they're taking advantage of US shale production to hurt their enemies or if they're just simply desperately trying to hold onto their market share, that is up for debate.
  • Amar kayani on December 26 2014 said:
    I personally think that saudis are the doing this on there own will. They are not concluding with the Obama regime
  • Ben on December 29 2014 said:
    Not only did the US ask the Saudis to help put pressure on Russia Iran and Venezuela but they taught the Saudi how the new math works ie 10 million barrels a day @ 60$ a barrel is better than 9 million a day @ 100$ a barrel.
  • Angela on December 30 2014 said:
    The author provided an excellent historical overview and outline of current events surrounding oil prices. Although most Americans are likely pleased with the lower prices at the pump, make no mistake about it - this was carefully planned with motives that run much deeper than the giving Americans a break during tough economic times. The US and Saudi Arabia "go way back" in colluding to the benefit of the US petrodollar in exchange for protection of Saudi interests in the Middle East. There is no doubt in my mind that the US and Saudi intention is to harm the Russian economy with oil prices. The US is squeezing hard, but Putin is not easily shaken. For more on Russia, the Middle East and the Petrodollar, I recommend "The Colder War" by Marin Katusa.
  • DBM on December 31 2014 said:
    People forget Reagan did this also and it bankrupted the Soviets
  • Joe on January 10 2015 said:
    LOL! No the US didn't collude to fix oil prices. Why would the US collude to drop oil prices, which results in damaging American oil producers? Did you even think for writing this article. OPEC is engaging in a price war to protect their market share and damage shale production in the US.
  • dave on January 13 2015 said:
    bounced after testing $45 today .the bottom in?
  • D. on January 18 2015 said:
    Follow the money. Why is no one asking if those responsible for flooding the market with oil took short positions in the stock markets in months prior to the ramp up in pumping in order to cash on the falling stock prices of those companies and industries that would be most directly affected. Does anyone think that these oilmen or governments of oil producing countries would purposely take a hit to their income and revenue streams without having a plan to offset those losses? I suspect that those directly in control of the oil, the relatives, friends and business associates of them or proxies for them have benefitted greatly from short positions against oil and gas producers, rigging companies, oil equipment companies etc.
  • ellen bates on February 10 2015 said:
    I never knew cannabis oil was indeed wonderful and very effective in the treatment of cancer "if not by the government and so called rules to regulate cannabis dad would still have been alive. Thanks to the new policy of legalizing cannabis in my state and have even lost my wife's kidney cancer, and it was really shocked and surprised when I see a lot of documentary on how the cannabis oil had helped many people to whom His family thought they never could do next undergoing several "Chemo" from the department of my heart, and I have to say a word of appreciation to Dr. Brown Nelson for timely intervention in the lives of my wife suffering from kidney cancer. As I write this testimony in this blog my wife is so strong and healthy even though you have not completed the total dosage "for cannabis and medical consultation opportunity and get in touch with him if youare a cancer patient through their email: (brownnelson07@aol.com) so you can lit more details
  • Afiq on September 17 2015 said:
    There are one more thing that most people don't notice. At a time when the European Union is making sanctions against the Russian, which they have a huge well connected pipeline in Europe, of course oil prices in Europe will increase. This means they have to look for new markets as a source of oil. Of course the middle east would be the first to pope up to their mind. This would mean, higher additional costs, due to export distances. Well, what the heck just lower the oil prices. With that, euro can finally stabilize back their economy, despite the lost of oil from Russia.
  • Thoughts on November 06 2015 said:
    This is a war for water, oil is a means to the end. Canada is about to be raped and robbed of the largest natural resource of fresh water in the world?
  • Amanda on February 09 2016 said:
    For those of you who can't see the real enemy here, it's the U.S and Saudi Arabia along with the rest of their allies in the middle east.

    The sole reason to drop oil prices was to harm Russia, because Russia has now taken control of the middle east by simply bombing ISIS all to hell despite the U.S funding them. Yes, ISIS is funded by the U.S and they are attempting to have ISIS overthrow Syria so the Saudi's can then build their stupid pipeline straight through to Europe.

    U.S spent 6 trillion of your tax dollars to destabilize Iraq to the point they can build them back up and get them on the U.S's side. The U.S then told Iraq quite bluntly, do NOT allow Russia into your territory to attack ISIS, Iraq said "fine"..

    But now Iraq is letting Russia have their way with ISIS in the area, and they are being decimated. Oil tankers are being destroyed, weapons and ammunition are being destroyed. Now ISIS commanders are threatening to leave the area unless they get more ammunition, so, the U.S sends 50 tons of ammunition to "rebel" groups which happen to be ISIS in the area as commanders have found.

    The U.S is spending your tax dollars to fund ISIS which in turn is causing many civilians and your own military personnel to be killed. Russia thankfully has put a halt to it, there is nothing the U.S can do. Russia, Iran, Iraq, Jordan, and China are all conspiring to share information to destroy ISIS.

    Now the Saudi's will be bankrupt in 5 years because of their foolish attempt to lower oil prices. There will be no pipeline, Israel will lose their power in their region, U.S will be driven out, then the U.S will go bankrupt because they've spent so much on the war that can no longer be paid back because of the oil prices and all those junk bonds.

    The U.S shot themselves in the foot.

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