The commodity world has been jolted in the last few weeks. While most market watchers, mavens, and supposed experts comment upon the weather, the real story behind the oil price is the cheating on OPEC output quotas. Furthermore, Saudi Arabia seems engaged in a coordinated plan with its US brethren to destroy Iran using economic weapons, like oil price. The Saudis have discounted by $1.75 its oil price on topline sweet crude sales to its US customers. If Iran cannot be given the shock & awe treatment like Iraq, since Russia is tied like a direct strong umbilical cord in defense, then Saudis will deliver serious financial blows to Iran instead by aiding and abetting the oil price down. They offer lip service to production cuts and other associated FedSpeak tactics. They are flooding the market with oil, even as Russia does the same, while almost all OPEC players are cheating. THOSE ARE THE REAL STORIES, NOT SILLY WEATHER. Heck, blame it on the weather, and the majority of shleps will believe that, especially when short sleeved shirts grace the landscape in New York City. There are three topics of conversation identified as "small talk" pursuits among people who struggle to engage each other at a base level without depth: weather, sports, and politics. One can be sure that Goldman Sachs, the USGovt, and the Saudis are enjoying the embraced diversionary topic of weather, as backroom deals are struck, tactics are shared, extreme profits flow, and effects are pronounced. Just like the GS Commodity Index weights on gasoline were tinkered with last August, some mammoth output and pricing forces are at work now. My Gosh! Weather is responsible for perhaps $3 to $4 in the oil price, no more!
Russia is even adding fuel to the fire, as it angers OPEC by selling more oil when output cuts are debated openly and sometimes with hostility. The Russian oil production runs now at 9.75 million barrels per day. Russia angers US officials also, since its Urals crude is being sold in Rotterdam in euro terms. Anyone familiar with history realizes that the Saudis were as crucial as the bankers in destroying the Soviet Union. The Saudi royals were coordinated with US policy as they permitted the crude oil price to go under $10, and bankers called in huge loans. Call it a Soviet loan default, but please ignore the underlying force. History rhymes here with respect to Saudis versus Iran. An aside… now we have Russia selling oil in rubles, and also several nations selling oil in euro transactions like Norway, Venezuela, and Iran.
