By Dr. Derek Ellerman
If it wasn’t bad enough that the recent failure of the Silicon Valley Bank has likely led the Federal Reserve to give up it’s fight against inflation (my prediction), the American people can expect yet another assault against their wallets.
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China’s newest ally Saudi Arabia and the OPEC oil cartel agreed to even more cuts to oil production, which has caused the price per barrel to jump.
According to several outlets like MarketWatch, OPEC is going to cut well over a million barrels of daily oil production by next month.
It’s yet another body blow for the already-battered working American.
Shocking OPEC+ Oil Cut
Helima Croft, head of commodity strategy at RBC , said Saudi Arabia was staking out an economic strategy independent of the US, after a deterioration in relations between Riyadh and Washington during the Biden administration.“It’s a Saudi-first policy" pic.twitter.com/ld6TS7XA4A
— Charles V Payne (@cvpayne) April 3, 2023
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RELATED: The ‘Energy Transition’ to Green Is a Fantasy
Major Oil Production Cuts
Oil prices had been declining for the first half of last month, reaching about $67 per barrel, only to skyrocket right back up again to nearly $80 at the time of this writing.
The move is particularly interesting given that Saudi Arabia just recently announced well over $10 billion in investments in Chinese energy production, something I believe to be an epoch-making shift in global power. The plan involves nearly 700,000 barrels a day to China.
According to Reuters, OPEC was expected to keep their current oil production, and markets were “surprised.”
I’m not so sure professional market watchers should have been surprised, given the earlier China deal.
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We’re looking at a total shift in the world’s centers of power. The unexpected should be expected – especially if it’s something to the detriment of the current hegemon – the U.S. – and benefits the rising power – China.
UBS bank analyst Giovanni Staunovo told Reuters:
“The Sunday production cut was on no ones radar… With U.S. oil producers focused on capital discipline, OPEC+ remains in control of the oil market.”
It seems like he just perfectly explained why it should have been on everyone’s radar!
Exactly when the Saudis distance themselves from the West and get closer to Iran and China human rights become very important in Saudi Arabia. pic.twitter.com/Q5RI7fZdXw
— Hassan Mafi (@thatdayin1992) March 18, 2023
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RELATED: Massive Saudi Investments in China Signal Epoch-Making Shift in Global Power
American Oil Production
The whims of petro dictators would be far less consequential to a nation that is energy independent.
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While America currently uses about 20 million barrels of oil daily, we currently only produce less than 12 million barrels daily.
To make up for that 8 million barrel shortfall, we import the bulk from Canada, but rely on Mexico, Saudi Arabia, and others.
The truth is, if America was a serious country, we’d boost production ourselves.
Alas, we “lack the refining capacity.”
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I did a quick search to see how roughly how much it costs to build a modern oil refinery. Apparently, Mexico just built one last year, at a cost of $18 billion.
That is an incredible capital investment. And yet, just by cutting our welfare to the corrupt kleptocracy in Ukraine, we could have built five new refineries.
The point is, the world as we see it is defined by choices people make.
More accurately, the choices crooked politicians make, and the choices the American people make when they keep sending these same people to Washington.
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One thing seems to be pretty clear, though. Barring any earth-shattering changes in direction, oil is only going to get more expensive.
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i hope someone can explain this to Clueless Joe Biden, so he can find some reason NOT to blame his own stupid foreign policies
The US (Biden) insults the Saudi Prince, calls him a murderer and threatens to retaliate against the country financially, thereby attacking an Arab’s most precious asset, his honour. When Saudi cuts production in October to hold oil prices high then Biden threatens “Consequences”.
Saudi (and the whole of the Middle East) is done with the US and the West. It is joining BRICS, it has already invested heavily in BRICS nations and intends to do more. It sees the future and the West is finished as far as they can see.
Good luck with the dollar when all the non-aligned countries trade in Yuan or their own currencies.
If you have not emigrated yet then you are too late.
Never forget, over 81,000,000 people voted for ol’ Joe. Still, the “mean tweets” are mostly gone now. As is our economy. Global standing/respect. The dollar as a global monetary unit. Futures of our grandchildren and their grandchildren. Et cetera, et cetera, et cetera.
And again Biden will cry ” It’s their fault ” but easily forgets he cut Oil production in the US By over 1.4 million barrels a day on his first day in office. ( which if oil production had been allowed to continue as it was the US would be Producing Millions of more barrels a day than Pre-Pandemic levels ) . But Joes going to blame the Saudis, then release even more of our Oil reserves , which are at Dangerous levels now,to the point if the US gets into a sustained war, we could not defend ourselves ( Along with the fact he’s depleted our Military supply’s already also.) Our enemies already know this, which is why they are threatening war.