According to leaked transcripts, Saudi Arabia made several veiled threats to Russia.
You heard correctly.
A few weeks ago, a meeting took place between Russian President Vladimir Putin and Saudi Arabian Prince Bandar bin Sultan in Putin’s private home on the outskirts of Moscow.
The content of this discussion is some of the most telling and riveting information you’ll ever come to read regarding international politics and the inevitable direction of the Syrian civil conflict, which is looking like it may fully blossom into wider conflict.
In the interest of full disclosure, the authenticity of this document is under debate, but the newspaper that released the documents, Al-Monitor, is a respected news organization.
The most shocking aspect of this conversation was when Prince Bandar alluded to the upcoming Winter Olympics in Sochi, Russia. Essentially, if Russia did not play ball by withdrawing support of the Assad regime, there would be drastic consequences.
From Al-Monitor:
“I can give you a guarantee to protect the Winter Olympics in the city of Sochi on the Black Sea next year. The Chechen groups that threaten the security of the games are controlled by us, and they will not move in the Syrian territory’s direction without coordinating with us. These groups do not scare us. We use them in the face of the Syrian regime but they will have no role or influence in Syria’s political future.”
When I read this, at first I had a hard time believing it. How could anyone be foolish enough to openly concede that Saudi Arabia openly controlled Chechen terrorist groups – while fully aware of Russia’s bloody and tumultuous history against Chechnya terrorism – and still expect to curry Putin’s favor?
But then again, it should come as no surprise, since Saudi Arabia is one of the largest state sponsors of terrorism in the Middle East. But because the U.S. government is in bed with the Saudis, a blind eye is turned to all of this.
And Bandar conceded that he had “spoken with the Americans before the visit,” so it is obvious that this deal was conjured up by Saudi Arabia and the West.
Things got more interesting when the subject of oil and gas came up:
“Let us examine how to put together a unified Russian-Saudi strategy on the subject of oil. The aim is to agree on the price of oil and production quantities that keep the price stable in global oil markets. … We understand Russia’s great interest in the oil and gas present in the Mediterranean Sea from Israel to Cyprus through Lebanon and Syria. And we understand the importance of the Russian gas pipeline to Europe. We are not interested in competing with that. We can cooperate in this area as well as in the areas of establishing refineries and petrochemical industries. The kingdom can provide large multi-billion-dollar investments in various fields in the Russian market. What’s important is to conclude political understandings on a number of issues, particularly Syria and Iran.”
In addition, Bandar sweetened the deal by pledging to buy $15 billion worth of Russian arms.
So what we essentially have is Saudi Arabia using threats and buy-offs to get Russia on the Saudi/American side.
But let’s play out the scenario of Putin accepting Saudi Arabia’s offer.
What would that do to world oil prices?
It would certainly give Russia’s ESPO benchmark pipeline a boost on the world stage. Major buyers of ESPO crude have been the U.S., Japan, and China. Russia’s Siberian crude benchmark is considered a competitor against WTI crude, and could very well supplant the rising stature of WTI on the world stage, and Brent itself.
There has been talk of ESPO being used as a benchmark for Asia by 2015, which would be perfect territory for Russia as Putin aims to liberalize the energy-export market to ship more gas to rising economies there.
Russia already controls a large monopoly on gas imports in parts of Europe and Asia, which is why countries like Poland and Mongolia are trying to develop domestic shale resources to steer clear of expensive imports from Russian companies like Rosneft (MM: ROSN).
A Russian/Saudi alliance would form a giant monopoly on world oil prices and would permanently set the standard for oil prices.
And we all know what happens with monopolies: high prices and little choice for consumers and traders.
Such an alliance could bring more stability to the energy market, which would keep prices steady, but this also means pre-determined prices that would be based on favorable outcomes for Russia and OPEC.
But if Russia didn’t agree to these terms, here is where Bandar made another veiled threat: “We guarantee you that Russia’s interests in Syria and on the Mediterranean coast will not be affected one bit.”
During these negotiations, Bandar promised that Russia’s monopoly hold on the European gas market would not be challenged with gas from the Gulf.
Saudi Arabia not only made an indirect physical threat against the Sochi Olympics, but also a subtle economic threat of busting Russia’s natural gas dealings.
And this threat of gas coming from the Gulf is a potentially real one.
Qatar is a tiny gas-rich nation that has supplied over $3 billion in aid to Syrian rebels. Qatar and Saudi Arabia have been the largest supporters of Syrian insurrection, but Qatar sees this more as an investment opportunity, with a possible gas pipeline through Syria that could threaten Russia’s monopoly hold.
With each of these key statements, Putin responded in a conciliatory way, but the Russian leader remained undeterred, stating that Russia would continue to support the Assad regime and Iran’s nuclear aspirations.
Bandar went on to point out the inevitably of military action and that Russia is making a mistake.
Some are disputing the validity of this discussion as being a piece of propaganda by Russian intelligence, but Putin’s later response is all too real.
On August 27th, President Putin informed the Russian armed forces to prepare for a massive military strike against Saudi Arabia if Western powers launched a strike against Syria. According to internal sources, Putin was “enraged” after his discussion with Bandar, according to EU Times.
I wrote a previous article about the Syrian conflict and the possible road to World War Three. Oil prices are going to remain high due to geopolitical scheming.
Frankly, the U.S. media is lying to you. This is not about saving the Syrian people. Syria is being used as a strategic pawn by the West that could lead to an ultimate showdown with Iran.
Iran has already vowed to strike back if the U.S. attacked Syria, and with Russia putting its army on the ready, this could have serious consequences for not only the markets, but for the entire world.
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I doubt Putin will actually attack Saudi Arabia if the U.S. strikes Syria, but he will retaliate if backed into a corner too far or if something does indeed happen at the Winter Olympics. But let’s take Putin’s threat at face value, assuming Russia will indeed attack Saudi Arabia. And let’s say Iran chose to strike the West for attacking Syria.
The U.S. would condemn the actions of Russia, which would inevitably lead to direct conflict. In Iran’s case, the U.S. would attack without hesitation. The West has been so focused on Iran’s nuclear program, if the Ayatollahs even sneezed in the direction of Syria, the Americans would reply with military force.
What we would expect is all-out war, with other nations ultimately joining the fight, that could push oil prices back to 2008 levels of $140. It could even exceed that range.
And if full-scale World War Three breaks out, we will have much more to worry about than oil prices.
These scenarios seem outlandish, but they are all too real in today’s world.
Whichever scenario plays out, oil prices are going to continue to spike amid all the uncertainty.
And when it comes to energy, the bottom line is that the U.S. has to break free of OPEC for a more sound energy and foreign policy. But as long as the U.S. continues to befriend the Saudis and help them play kingmaker in the region, OPEC’s power will remain entrenched.
There are skeptics out there, but the U.S. can indeed break free in a few decades and may even be able to engage in oil exports, competing with both Russia and Saudi Arabia. There is no harm in trying.
But many are highly skeptical of this rush to war, and there are even the some reports that the U.S. completely staged these chemical attacks for war justification. After all, the U.S. claims that Assad is behind this goes against the UN reports that the Syrian rebels have been using chemical weapons.
No matter what the media and the politicians are telling you, it is not necessary to intervene in Syria, and it is possible to break free of Saudi oil dependence.
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