If you subtract Ebola and ISIS from the news, what are the three most significant recent developments in world affairs? Here are my nominations: Saudi Arabia announces it will raise production and drop oil prices, Turkey loses its bid to serve on the UN Security Council, a meeting between Putin and Merkel gets cancelled because he’s late (though they meet later). You may be surprised to know that all three events do interconnect in unexpected ways. They also tell us a lot about real-time shifts in geostrategic power balances, how they happen and how to read them.
Let us begin with the first. Why would Saudi Arabia seemingly cut off its nose to spite its face, as it were, by gratuitously reducing its own national revenue? Recent reports have it that the Saudis are willing to see oil prices go down to $80 a barrel and even, according to this report, down to $60 or $50 for preferred customers in the West and Asia. http://www.aa.com.tr/en/economy/402343–saudi-arabia-to-pressure-russia-iran-with-price-of-oil. The article identifies the real purpose: to punish Iran, Russia and its client Assad, of Syria. Top Russian oil official Mikhail Leontyev from Rosneft was quoted in Russian media as saying, “Saudi Arabia has begun making big discounts on oil. This is political manipulation and Saudi Arabia is being manipulated politically which could end badly”. Translated into blunt English, Leontyev is actually threatening the Saudis while not accusing them directly. In other words, the Russians know it’s the Saudis making a strategic move against them. According to most statisticians Moscow needs to sell oil at $100 to pay for its budget commitments. http://www.businessinsider.com/russia-saudi-arabia-and-oil-prices-2014-10. [Read more]
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