
Saudi Arabia threatens to ditch dollar oil trades to stop 'NOPEC' - jonbaer
https://www.reuters.com/article/us-saudi-usa-oil-exclusive/exclusive-saudi-arabia-threatens-to-ditch-dollar-oil-trades-to-stop-nopec-sources-idUSKCN1RH008
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fmajid
MBS would find himself on the receiving end of a cruise missile. It's not as
if he would be missed by the rest of the al-Saud family he sidelined.

The US also has long-standing contingency plans to support Shia secessionism
in the oil-rich Eastern provinces should the al-Saud stop doing as they are
told. No invasion needed.

~~~
zaphirplane
Of course that’s absolutely what would happen, like Cuba, Iran, Iraq, Syria,
Venezuela, Nicaragua, Panama. On reflection regime change hasn’t been
successful without significant troops on the ground

~~~
adventured
Regime change often isn't necessary for the US to accomplish its goals. In
this thread premise, Syria would be regarded as a success, because there's
nothing left of the country. They no longer pose a threat to Israel and
they're a small fraction of the military power they used to be (a net drag on
Russia rather than a benefit). It'll take them decades to rebuild.

The average income in Cuba is $20 per month. Without regime change they were
heavily neutralized as an influence in Latin America. Cuba's military could
hardly be less of a concern. Once Raul Castro is gone, that's the formal end.

Venezuela is a failed state. The Bolivarian Revolution is over there. There
won't be another Chavez any time soon. And if there is, there are no resources
to be used to fund such a regime's agenda. The US didn't have to do anything
in that case, Venezuela destroyed itself through typical Statist
mismanagement. Ironically Chavez will have ended up helping to benefit the US
considerably, by destroying what should have been one of the world's largest
oil producers. It removed vast potential supply from the global oil market for
decades, helping to an extent to make way for the US boom, keeping prices high
enough to spur on the Permian shale build-out. If Venezuela were producing
like it should be, that'd be ~4m more barrels per day the US producers would
have to contend with on the global market, dragging on prices. Instead the US
has a solid runway from here to 16m barrels per day of production in the
coming decade.

The US is now a big oil competitor with Iran. So keeping them boxed in - no
regime change needed - is a large win economically. The US can pretend it's
for all sorts of reasons, while actually serving the purpose of furthering US
oil production and exports. The US is 'convincing' South Korea to abandon
Iranian oil right now, in favor of US oil. All the US has to do is keep Iran
boxed in for two decades until oil demand begins to contract, then it's over
(two decades merely being the time from here to 9/11). Iran's theocratic
system will collapse in on itself as oil demand fades, they don't have enough
of an alternative economy.

~~~
petre
That's why I'm happy about the US being an oil producer: less arab/persian oil
money to sponsor terrorism. Syria is also screwed. Too bad they scewed
Gaddafi, a hopeless romantic who wasn't sponsoring terrorism when the US made
everybody think he was, but it was in fact Hafez al-Assad who did.

~~~
zaphirplane
No idea where you’d get that from. I am sure when the US and UK are building a
coalition to invade and remove Assad a lot of things will turn up, nuclear
programs, chemical weapons, training camps, cocaine, ivory trade. Lots and
lots of stories will be made up. No need to get the ball rolling

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ainar-g
This might be simply Russian state propaganda working, but wouldn't the
diversification of the world's currencies be a good thing? Remember how
everyone were afraid of the collapse of the US Dollar back in 2008, and then
the similar predictions about the Euro? (And we're hearing a lot about the
Great Britain's Pound these days.)

~~~
Theodores
> wouldn't the diversification of the world's currencies be a good thing?

It is not that simple. If an economy has a surplus, e.g. China, where does
that surplus go? This is why we have a default world currency whether that be
silver, gold or petro dollars.

When you work through it a bit more the more you realise a basket of
currencies won't work, unless every currency is essentially the same. Capital
is like water, it flows.

I would like to see discussion on how we can move on from the currencies we
have to a measure of energy. Everything can be measured in energy terms, why
not cut out the abstractions?

~~~
ainar-g
I used to play with an idea of a science fiction novel, where the united
Earth's currency is essentially kcal/kJ. The problem is that if you have a
flammable and radioactive material, do you count the energy you get from it by
burning it, or the energy from throwing it into a nuclear fission reactor, or
the energy of throwing it into a black hole in a particular angle[1]?

[1]: [https://www.youtube.com/watch?v=ulCdoCfw-
bY](https://www.youtube.com/watch?v=ulCdoCfw-bY)

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ilaksh
It sounds like this NOPEC thing must look like kind of a nuclear option to
Saudi Arabia, otherwise why would they threaten something so drastic?

Given that, is the NOPEC thing serious, and if so, why would people propose it
knowing how critical the Saudi relationship is?

~~~
nl
The US-Saudi relationship is much less critical to the US now than it was 15
years ago.

Since the US shale oil revolution, the US is essentially energy independent.

Basically all that is left is that Iran is more poisonous in US politics than
Saudi Arabia for reasons that relate to the Iranian revolution and the -
moderately reasonable - fears that Israel has of Iran.

~~~
ilaksh
According to CNN the US imports 7.9 million barrels a day from Saudi Arabia.
According to Wikipedia the US uses 19.8 million barrels per day. That means
approximately 40% of the oil comes from Saudi Arabia.

[https://edition.cnn.com/2018/10/15/investing/saudi-arabia-
oi...](https://edition.cnn.com/2018/10/15/investing/saudi-arabia-oil-imports-
united-states/index.html)

[https://en.wikipedia.org/wiki/List_of_countries_by_oil_consu...](https://en.wikipedia.org/wiki/List_of_countries_by_oil_consumption)

~~~
jandrewrogers
You are misunderstanding the oil market -- the US is one of the leading
exporters of both crude oil and refined oil products. A large percentage of US
production and importation is not for the US market but for foreign markets.

The US exports 3.6 million barrels of crude oil per day for other countries to
blend with lower grade crude, making it easier to refine. The US happens to
have some of the best crude oil for this purpose.

The US is also the world's largest refiner of petroleum, and the world's
largest exporter of refined petroleum products. Many countries do not have the
capacity necessary to refine crude oil. The US buys foreign crude oil, refines
it, and then exports the refined products back to those and other countries.

You can't just look at crude oil imports in isolation to determine if the US
is a net importer or not. In fact, the US has been a net exporter of total
petroleum products for several years now due to both its increased production
and critical role in global crude oil refining.

~~~
dfrage
We're particularly good at refining heavier, sour crude, but the sharp
declines in Mexican and Venezuelan oil production and exports, and pipeline
capacity from Canada maxing out has left us with overcapacity for those grades
of crude. I wasn't able to confirm this with a few minutes of searching, but
as I recall heavier Saudi crude has become attractive for this reason, plus
Saudi Aramco fully owns Port Arthur, our big refinery, as of 2017.

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sudoaza
Both the NOPEC passing and the Sauds ditching the dollar would be great, but
as the article says "The chances of the U.S. bill known as NOPEC coming into
force are slim and Saudi Arabia would be unlikely to follow through(...)"

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anthony_doan
I'm okay with this.

Maybe we can go off the oil addiction. Plus Saudi Arabis is very unsavory
especially what they did to Jamal Khashoggi.

~~~
ilaksh
People keep making comments like that. I really wish someone would explain to
me how that attitude makes any sense at all, given that the US imports 40% of
its oil from Saudi Arabia (see my comment with links below), and has core
military operations based in that country.

~~~
geezerjay
> I really wish someone would explain to me how that attitude makes any sense
> at all,

The regime resorts to political assassinations on foreign soil even in petty
issues that are insignificant at state-level. Do you have a problem
understanding how that affects international relations?

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tgraham
Last time I checked a lot of that Saudi wealth sits in dollar denominated
assets. Good luck with the devaution!

~~~
devoply
Not only that the US are big fans of "freedom" and regime change for the sake
of "freedom" when people want to ditch the dollar.

~~~
thefounder
You kill two birds with one stone but I soubt they will invade SA anytime
soon. It would be huge mistake...and for what?

~~~
devoply
Yes or you dress up genocide and usurping people's resources and pretend as if
that's the case.

~~~
thefounder
Let's face it: who likes dictatorships? To overthrone a regime there is a
price to be paid and nobody will pay that price unless there is something to
gain(i.e economically or geo-political). I'm ok with that as long as it's done
right(which was not case with Iraq) but let's not pretend that it's moral to
let these pesky dictators die by natural causes.

~~~
jacobush
Sometimes we have not developed the methods yet to remove the cancer without
seriously hurting the patient. (The country.)

That's just life. There should be a Hippocratic oath for geopolitical
intervention.

~~~
close04
In a country's case "the cancer" always has to be replaced with something. The
US definitely has no working recipe for that, as several decades have shown.

~~~
geezerjay
Venezuela and Cuba demonstrate thay letting the cancer fester is not a good
solution either.

~~~
close04
Let's not kid ourselves, the US doesn't pour hundreds of billions of dollars
_every year_ into the war effort because they want to fix "the cancer" and the
locals' problems. They do it for political and economical reasons
(power/influence/money).

Which is why all such regime changes bring no measurable increase in the
quality of life of the local people. So then, from the perspective of the
local Venezuelan or Cuban, what exactly is the difference between a festering
cancer and a replacement cancer beyond looking at other countries getting
richer / more powerful by extending their influence into yet another country?

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BubRoss
Two others who wanted to stop selling oil for dollars were Sadam Hussein and
Momar Gadahfi. In power for decades, then they announce they will sell oil for
euros or a gold backed currency. Only a few years later from their
announcement each one was dead.

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caprese
about to be a net exporter of glass

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jessaustin
Innocent children in Yemen who wouldn't burn to death from USA munitions might
appreciate such a development...

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wrong_variable
OPEC is a cartel we can get behind, simply because without them price of oil
would be 3 USD / barrel.

We would be at 500 ppm if not for the irrational boycott of the West by King
Faisal.

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JumpCrisscross
> _Saudi Arabia is threatening to sell its oil in currencies other than the
> dollar_

Dumb threat. Streisand effect, too—this bill just went, for me, from something
I didn't know about to something that's on my radar.

Go ahead, sell in other currencies. Your buyers will bake in the swap costs to
hard currency. It isn’t like Mexican oil isn’t sold for pesos or North Sea oil
for pounds sterling or kroner. The petrodollar hypothesis is a myth. The
United States, now [EDIT: nearly] a net oil exporter, does not depend on Saudi
oil.

~~~
fxj
Why shouldn't europe then buy oil directly in euros? How does it make sense to
first buy dollars and then buy oil if it is not mandatory? The saudis would
happily take hard euros I suppose.

~~~
JumpCrisscross
> _Why shouldn 't europe then buy oil directly in euros?_

Until recently, the Euro electronic transmission system was far slower, and
less immutable, than the Fedwire system. This has recently changed. Otherwise,
the superior investment environment in the U.S. ( _i.e._ higher yields) and
broader international acceptance of dollars would be marginal issues. At this
point, Saudi Arabia selling all its oil in dollars is a bit of an anachronism.

