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No, Putin Has Not Declared War on the US Oil Industry
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The media has decided that the reason oil prices are plunging, is not because the impulsive Saudis want to bully Russia into output cuts that aren’t in Russia’s best interests, but because sinister Mastermind, Vladimir Putin, wants to obliterate America’s domestic oil industry so he can rule the world. For brainwashed Americans, who believe that evil Putin is the source of all of Washington’s problems, it is a persuasive storyline. Whether it’s true or not is another matter altogether.

There’s no doubt that falling prices will help Russia gain market share over US shale producers that lose money whenever oil falls below \$50 per barrel. But there’s also no doubt that falling prices hurt Russia too. Lower prices shrink revenues forcing governments to make drastic cuts to critical state programs that have widespread public support. If prices fall too far, then Putin won’t be able to raise real incomes, provide more fiscal support to young families and the elderly or implement other parts of his domestic agenda. Even so, his critics continue to believe that –driven by his visceral hatred of the United States– Putin is deliberately pushing down prices to send markets into turmoil, crash the US economy and bring Washington to its knees. It could be true, but its highly unlikely. Check out this clip from an article at Marketwatch:

“The rapid growth of the U.S. shale industry is at the heart of a Russia-versus-Saudi Arabia crude-oil price war that threatens to upend a global economy already under threat from the spread of the coronavirus, experts said Monday.

“Russia has made no secret of the fact that it is concerned about the growth of the U.S. shale industry and of its view that repeated output cuts by OPEC were effectively handing market share to U.S. producers,” said Caroline Bain, chief commodities economist at Capital Economics, in a Monday note.

Russia’s rejection last week of a Saudi push for additional production cuts prompted Saudi Arabia over the weekend to slash prices on crude exports in a move analysts said was aimed at taking market share from Russia. But it was Russia’s longstanding frustration with rapidly growing U.S. shale industry that prompted Moscow to resist the push for additional production curbs.” (“Why Russia wants to crush U.S. shale oil producers in price war”, Marketwatch)

This is pure speculation, and it’s contradictory too. On the one hand the author admits that the Saudis “slashed prices” in order to hold a gun to Russia’s head and blackmail them into reducing output, and then on the other, he blames Russia for the outcome. WTF? So it’s Russia’s fault for not caving in to Saudi blackmail, is that what he’s saying?

Give me a break!

It’s the Saudis that are breaking their production-stabilization agreement with Russia not the opposite. Despite price fluctuations, Putin wants to maintain current output because output stabilization encourages investment. In other words, his business decision is not entirely based on today’s fluctuating prices. Is that so hard to understand? No, it’s not, unless you happen to be a Saudi oil sheik who hits the panic button at the first sign of trouble.

So now, instead of negotiating a better deal, the petulant princes have decided to step up production, flood the market with more oil, further weaken global demand, send prices plunging, increase the pain for everyone, and then blame Putin for everything. It’s ridiculous.

What if I told you that, unlike the United States, Russia doesn’t use its oil as a weapon to achieve geopolitical objectives? What if I told you that Russia never interrupted the flow of gas or oil to Europe during the entire Cold War period despite hostile relations between the parties? Would that surprise you?

Putin does not want to destroy the United States. That’s nonsense. He wants to normalize relations with Washington so they can deal with the problems confronting both countries in a constructive way. He’s even said so a million times. That’s why Russian officials never resort to belligerent name-calling but always refer to their US colleagues as their “partners”. Putin wants to avoid recriminations so Moscow and Washington can find common ground on the tough issues, like nuclear proliferation, energy policy and global security. That’s why Putin has remained steadfast and respectful while Washington continues to wage its misguided scorched-earth disinformation war on Russia.

Did you know that the US is presently conducting massive military drills on Russia’s border that simulate an invasion by NATO forces? The operation is called Defender 2020 and the obvious intention is to intensify the fear that the United States is actually planning an invasion of Russia sometime in the near future. Check it out in this article from Counterpunch:

“At this very moment thousands of US soldiers are disembarking from troop transports in six European countries and rushing toward prepositioned munitions around Europe, to deploy weapons as swiftly as possible.

This excitement marks the beginning of “Defender Europe 2020”, the largest military exercises to be staged in Europe in over 25 years. Strategists will record how swiftly our forces can reach the Russian border, and test our NATO allies. There has already been a massive US build-up in the countries bordering Russia…

Most diabolical and chilling of all: the exercises will come to a climax in June, which is the 75th anniversary of Operation Barbarossa, Germany’s invasion of the Soviet Union in 1941, which killed 27 million people. Russians born in 1930 turn 90 this year. They remember. The heart and soul of Russia remembers as well.

Russian Chief General Gerasimov is convinced the US is preparing for war. All it would take for an attack is one false-flag operation.” (“Defender of Europe 2020: a Dangerous Provocation on Russia’s Border”, Counterpunch)

Here’s more on the same operation from the World Socialist Web Site:

“The largest deployment of troops across the Atlantic in 25 years entered its main phase last weekend within the framework of the Defender Europe 2020 exercise. The scale of NATO’s provocative military exercise underscores how far advanced the preparations for war are 75 years after the end of World War II.

The United States and 18 other countries are deploying large contingents of troops from America and Western Europe to the Russian border within a short period of time. In total, around 37,000 soldiers are participating in the exercise, which is to continue until June …Alongside around 33,000 vehicles and containers, some 450 tanks will deploy to the Russian border. …The manoeuvre is designed to send a message of deterrence, according to the German and US militaries. Lt. Gen. Martin Schelleis commented on this, “The reality is that Russia, with its illegal annexation of Crimea in 2014, provoked this development. …..

Russia, which was given the assurance 30 years ago when Germany was reunified that NATO would not expand into eastern Europe and certainly not onto former Soviet territory, has responded with alarm to the latest provocation. Foreign Minister Sergei Lavrov remarked, “Of course we will respond. We can’t ignore developments that cause us concern. But we will respond in a way that does not create any unnecessary risk.”
(“Defender 2020: Largest mobilisation of NATO troops against Russia in 25 years”, World Socialist Web Site)

Naturally, the story was ignored by the mainstream media that realized that Washington’s incitement would not reflect well on US foreign policy. The only coverage of the Defender 2020 operation appeared in alternative media where the number of readers is smaller.

Defender 2020 is not the first provocation directed at Russia either, it’s just the latest in a long list that includes unilateral economic sanctions, attacks on Russia’s markets and currency, the selling of lethal weaponry to Russia’s fanatical enemies in Ukraine, efforts to prevent Russia from selling its natural gas to Europe via Nordstream or Turkstream, the toppling Ukraine’s government in a CIA-backed coup that greatly undermined Russia’s regional power, nuclear weapons treaties (INS) that were unilaterally jettisoned (putting all Europe in grave danger), the arming and training Sunni jihadists now fighting in Syria, the seizing and occupying the land east of the Euphrates to prevent Russia from achieving its mission of preserving the territorial integrity of Syria, and the launching of an evidence-free 4 year-long propaganda campaign aimed at discrediting Putin in the western media. Washington has made it quite clear that its highest priority is to inflict as much damage on Russia as possible by whatever means necessary.

So, yes, Putin certainly has every reason to target America’s heavily-indebted shale oil sector by keeping production high, forcing the closure of upwards of 50% of all shale producing companies in the US, delivering a withering blow to the banks and private equity companies that carry their debt, and triggering a wave of defaults that will require vast government assistance to prevent sizable damage to the teetering US financial system. But that’s not what Putin’s doing. He still wants dialog with the US not conflict. He wants to strengthen ties with Washington not destroy them. He wants to work together in a venue where both countries can articulate their national interests and negotiate a way forward that eschews acrimony, subversion and confrontation.

“Russia does not seek conflict with anyone”, President Vladimir Putin has said in his annual Kremlin speech to parliament and the nation in 2016. “Unlike some foreign colleagues who see Russia as the enemy, we do not seek – and never sought – enemies. We need friends, but we will not permit harm to our interests”, he added.

Putin: “It is quite clear to everyone that bilateral relations between the United States and Russia are going through a complicated stage, and yet those impediments, are not based on anything solid. The Cold War is a thing of the past, the era of acute ideological confrontation between the two countries is just vestige of the past. Today’s situation in the world is dramatically different. Today Russia and the US face a whole new set of challenges. Those include a dangerous malajustment of the mechanisms for maintaining international security and stability, regional crises, the creeping threat of terrorism and transnational crime. The snowballing risks to the economy and the environment. We can only meet these challenges if we join the ranks and work together. Hopefully, we will achieve this understanding with our American partners…..Along with President Trump, we want to improve our bilateral relationship by taking the first steps to restore an acceptable level of trust and return to the previous level of interaction on all the issues of mutual interest.” (“Trump meets Putin in Helsinki”, July 2016, CNBC)

Putin is ready to bury the hatchet and work together for a better future. Shouldn’t we do the same?

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  1. Well,who.’s telling the truth?
    The ramifications are endless.
    Destruction of humanity,life on earth?
    At last count,I’ve heard the nuclear arsenal can destroy us
    8000 times .Will we have enough sticks and stones
    for world war four?We must put an end to this,before it biblically
    ends us.I don”t think Putin is bluffing.Have we been listening?

  2. LondonBob says:

    Maxim Suchkov says it is very much aimed at the US, straight from his Kremlin sources.

    • Replies: @Felix Keverich
    , @Herald
  3. Is that how you view Putin?

  4. ‘Putin does not want to destroy the United States. That’s nonsense. He wants to normalize relations with Washington so they can deal with the problems confronting both countries in a constructive way. He’s even said so a million times. That’s why Russian officials never resort to belligerent name-calling but always refer to their US colleagues as their “partners”’

    A very important truth.

    But there are an awful lot of Americans, it seems, who don’t understand it. Or they pretend not to understand it.

    And I’m very glad for the sake of global sanity and stability that it seems likely Putin will run again for reelection. The Russian legislature is making this possible.

    Putin has shown himself to be the most skilful statesman of his day – far-sighted, calm, practical, undogmatic, excellent at selecting key staff, working hard to keep good relations in the world, and possessing a deep genuine regard for the welfare of his country.

    I do think the world has been very fortunate in having both Putin and Xi, another gifted and far-sighted man, at a challenging time, and I think it is likely to become even more challenging.

    The US is being run by truly dangerous people, and I don’t mean only Trump.

    • Replies: @JVC
  5. Let’s say, Trump believes that Putin is flooding the market to hurt the US shale industry. Okay?

    Then why doesn’t just pick up the phone, call Putin and work out a deal? Isn’t that what Mr Wheeler-dealer said he was going to do during his campaign? Whatever happened to “The Art of the Deal”??

    Instead, he wold rather watch 50% of the US shale producers go bankrupt taking down a few banks with them. It makes no sense.

    Just pick up the phone, and make a deal, dammit!

    Maybe Putin says something like this: “Okay, I’ll cut production, but what about the sanctions, eh? And what about Nordstream and those US troops stealing oil in east syria. Remove them now, and maybe we can cut a deal.”

    Does that sound reasonable?

    Of course it is. You scratch my back, I’ll scratch yours. That’s the way business is done.

    Trump said he was a great horse trader. Time to put up or shut up!

  6. Delta G says:
    @Mike Whitney

    I don’t think its The Donald’s call to make the call. Besides, what is really the problem of letting the US Shale Industry flush down the Shitter where it belonged before it was born. It is an abomination and should have been an abortion. Vlad is doing us a favor, just like he is trying to save The Sultan from himself. Not working to good their either but maybe the Corona Virus will make people regain common sense.

    • Replies: @Twodees Partain
  7. Delta G says:

    With Regard to Defender Europe 2020

    While some troops have already been sent the majority have not.

    US Army Europe deputy commander Maj. Gen. Andrew Rohling told reporters earlier this month that the Army was “war-gaming” coronavirus contingency plans for Defender Europe 20.

    Additional guidance is expected in the near future. “We’re actively monitoring that,” an Army spokesman told Insider Wednesday. “There are a number of courses of action we are looking at.”

    But lets hope the Military Intelligence does what it does best and send the rest ASAP.

  8. Putin is a leader who moves cautiously, to his credit. But in the final conclusion for Russia: “…we will not permit harm to our interests”. That is where the danger lies: that is why, as Mike Whitney says, the world must “work together for a better future”.

  9. Hi Whitney, I didn’t read the rest of your column for a reason, and the reason is that you don’t acknowledge the elephant in the room.
    You should name and shame the jews for whom this is being done and whose agenda is being carried out or hold your tongue and hunker down in Chile.
    For those that don’t know, both wall street and the federal reserve are controlled by the zionist jews.

  10. JVC says:
    @John Chuckman

    (But there are an awful lot of Americans, it seems, who don’t understand it. Or they pretend not to understand it.)

    Current America is populated with people who are taught from the earliest of primary education WHAT to THINK, rather than HOW to THINK.

    The MIC+ needs an enemy, and as one gets stale, another is brought forth. Ever since Putin said nyet to America moving in and taking complete control of Russian resources, it’s been Russia’s turn in the barrel.

    That’s what the public is told to think..

  11. @Mike Whitney

    I agree with the general spirit of what you are saying, but your implicit claim to know what Putin is thinking, feeling, and doing seems a bit excessive.

    Perhaps Putin is sick and tired of gratuitous US sanctions and has decided an opportunity to strike back (and, yes, perhaps acquire some leverage for a deal) has arrived. The absurd US gambit to block Nordstream 2 could well have been the final straw.

    And what are we saying the Saudi goal in all this is? It’s strange that Saudi initiated an overproduction scheme to drive out US shale in 2014 when Russia was in a bind with all the sanctions that were being targeted at her. Now, the claim is that it’s Russia doing the same thing while Saudi is opposed and actually wants to cut output and drive up prices. Or something. Maybe the whole Russia-vs-Saudi story is simply theater (and cover for the Saudis) with both of them actually cooperating against US shale.

    Frankly, I’ve always wondered whether shale was in large part a clandestine cooperative venture with strategic goals in mind between the USG, big finance and the drillers/refiners. Is it possible that the USG could coordinate a sustained stream of financing from Wall Street in a near-ZIRP environment for an otherwise non-viable energy production scheme to drive down global oil prices over a period of years in order to punish/destabilize/reduce revenues to Russia, Iran and Venezuela (in the belief that “friendly” producers could survive it OK)? One could theorize that US shale oil generated a window of opportunity for geopolitical and geostrategic scheming against various rivals of the US. If that’s the case, it seems to have failed, as it appears that window is near to closing.

    What if I told you that, unlike the United States, Russia doesn’t use its oil as a weapon to achieve geopolitical objectives?

    Well, in general, I wouldn’t believe you. States don’t just take bargaining chips (i.e., “weapons”) off the table whatever they may claim. It may not serve Russian aims to use oil for obviously extortionate purposes right now, but I certainly don’t believe it’s some principle that Russia unfailingly upholds. It’s difficult to sort out Russian threats to end energy subsidies to various countries (which admittedly it does not owe them) from its pursuit of strategic goals such as, for example, a “union” with Belarus.

    I agree that Russia, at this point, is more sinned against than sinning, but that has certainly not always been the case, and there is no reason to assume it will always be that way.

  12. Sam_spade says:

    It’s the “Putin nyet“. The US government has imposed sanctions unreasonably on Russia for years. The opportunity finally arose to return the favor. It is not the only reason, but there is a delightful irony.

  13. Putin does not want to destroy the United States.

    No, but taking them down a peg or two as the indirect result of a spat with the KSA seems like a great Two Birds with One Stone move. Given Nordstream 2, its hard to not believe the US has finally been considered a legitimate target for turnabout.

    • Replies: @animalogic
  14. @LondonBob

    Maxim Suchkov

    This man is a closet liberal, and his “sources” are Western newspapers.

    I happen to agree with the author here. Russia finds it extremely difficult to cut production due to the way its oil industry is structured: competitive and privately owned. Previous cuts were more like slowdowns on growth.

  15. Putin = statesman. Trump and most U.S. senior politicians = confrontational bullies.

  16. @Mike Whitney

    It’s likely that Trump has the same degree of power as a manager of a McDonald’s “restaurant”, he has no input on product, price or marketing strategy but he can yell at staff, hire and fire but otherwise does as he’s told to do.

  17. Franz says:

    For brainwashed Americans

    Mike, you’re good. But how many of them can be left?

    Trump promised one thing, delivered the opposite. How many will vote next time? Just like the Reagan 80s when the A-hole Ron promised to “get the country moving again” and then just booted up the drug war and prison industries?

    How many fools can believe this any more now, when it’s not just the same, it’s worse?

    Brainwashed assumes a brain to begin with. I don’t see that.

  18. @The Alarmist

    “Given Nordstream 2, its hard to not believe the US has finally been considered a legitimate target for turnabout.”
    Agreed. Its also ironic that the KSA is doing a good part of the heavy lifting (not that they’re blamed).
    Agree with another commenter: shale is a filthy & dangerous business (ie destruction of aquifers etc). So good riddance. Hope well more than 50% goes under.

  19. @Delta G

    I agree. Shale oil requires the maintenance of very high crude prices just for the producers to keep treading water by losing investments slowly. No matter what anyone does, the shale oil producers are all bound for bankruptcy.

    Why anyone should fail to see that shell game for what it is remains a mystery to me.

    • Replies: @SteveK9
  20. SteveK9 says:
    @Mike Whitney

    Yes. US needs to join OPEC+ (although there may be too much oil out there for this to work for very long). But, the most important political sector in the US is the War Party, and they are making a fortune demonizing Russia. Trump has not been very effective with that part of the ‘swamp’.

  21. SteveK9 says:
    @Twodees Partain

    And, when it explodes the debt will be repaid by … you, and me. That is why it is probably best if the industry is destroyed sooner, rather than later … at least for the 99%.

  22. Herald says:

    You are being sarcastic, I hope.

    Almost every policy decision made in Washington over the past decade or so has been aimed at hurting and weakening Russia in some way. Could anyone seriously blame Putin for not wanting to subsidise the environmental disaster and financial money pit, euphemistically called the US shale oil industry.

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