The U.S. and European sanctions against Russia will become more severe and crippling in the face of drastically falling oil prices – prices which are falling drastically because of the unprecedented boom of shale gas fracking both domestically in the U.S. and abroad in Ukraine and other locales. The oil & gas giants like Chevron and Exxon Mobil have created revolutionary conditions with now direct consequences on U.S. foreign policy and global war for dominance. Via Bloomberg:
Oil’s decline is proving to be the worst since the collapse of the financial system in 2008 and threatening to have the same global impact of falling prices three decades ago that led to the Mexican debt crisis and the end of the Soviet Union.
Russia, the world’s largest producer, can no longer rely on the same oil revenues to rescue an economy suffering from European and U.S. sanctions. Iran, also reeling from similar sanctions, will need to reduce subsidies that have partly insulated its growing population. Nigeria, fighting an Islamic insurgency, and Venezuela, crippled by failing political and economic policies, also rank among the biggest losers from the decision by the Organization of Petroleum Exporting Countries last week to let the force of the market determine what some experts say will be the first free-fall in decades.
“This is a big shock in Caracas, it’s a shock in Tehran, it’s a shock in Abuja,” said Daniel Yergin…
The destabilization in Ukraine and numerous spots in the Middle East – including the ISIS-threatened Iraq and Syria – have been mere preludes to what is coming.
The OPEC countries, led by Saudi Arabia, are allowing oil prices to fall drastically, in clear coordination with its Anglo masters, and in response to the sudden rise of shale gas production obtained through fracking. These Arab states will not lose power with the falling oil prices, while many other regimes will face pressure in all sectors.
Targeted at the center of this web of intrigue is, of course, Russia. Natural gas is at the center of the Ukrainian conflict – with Russia’s Gazprom supplying some 25% of Europe’s natural gas.
U.S. operatives are working overtime to undermine that by cutting off Russian gas and supplying Europe, instead, with booming shale gas from fracking in and around Ukraine and its rich mineral holdings.
Between rising U.S. domestic production, falling OPEC oil prices and U.S.-led production and exploration in Ukraine, gas could prove a trump card against Russia, though Putin has downplayed these consequences:
“Russia in particular seems vulnerable,” said Allan von Mehren, chief analyst at Danske Banke A/S in Copenhagen. “A big decline in the oil price in 1997-98 was one factor causing pressure that eventually led to Russian default in August 1998.”
VTB Group, Russia’s second-largest bank, OAO Gazprombank, its third-largest lender, and Russian Agricultural Bank are already seeking government aid to replenish capital after sanctions cut them off from international financial markets. Now with sputtering economic growth, they also face a rise in bad loans.
Oil and gas provide 68 percent of Russia’s exports and 50 percent of its federal budget. Russia has already lost almost $90 billion of its currency reserves this year, equal to 4.5 percent of its economy, as it tried to prevent the ruble from tumbling after Western countries imposed sanctions to punish Russian meddling in Ukraine. The ruble is down 35 percent against the dollar since June.
At the same time, Russia has just given up its bid to build a South Stream pipeline to bypass Ukraine and has been accused of covertly funding anti-fracking protests in Romania, Ukraine and other areas in the hotzone of the Eastern Europe proxy war over natural gas.
An important secondary consequence of falling oil prices will come in the form of disruptions to social services in countries that have been supporting citizens with money from high oil prices – including Russia, Iran, Venezuela, Nigeria and others.
Falling oil revenue will mean less money for subsidies and handouts. For the geopolitical orchestra-tors in the Anglo-elite network, this is part of the strategy.
Coddled by years of $100 crude, governments instead spent that windfall subsidizing everything from 5 cents-per-gallon gasoline to cheap housing that kept a growing population of underemployed citizens content.
The Council on Foreign Relations heralded this fracking boom as a means of reasserting North American-based U.S. power around the world and ‘transforming the global energy landscape.’