American Resistance To Empire

Russia/Saudis Work the Oil Price Psychological Warfare With Talk of A fake freeze

Leonid Bershidsky, (c) 2016, Bloomberg View(c) 2016, Bloomberg View

In less than a week, major oil-producing nations will meet in Qatar to discuss capping their output. Yet even if they decide to do that, the purpose of the meeting probably has little to do with balancing global supplies. Crude market fundamentals are set for many months to come; the oil producers are more interested in finding a way to manage financial markets’ expectations, which have a greater effect on prices.

A freeze “at recent production levels would not accelerate the rebalancing of the oil market,” Goldman Sachs analysts wrote in a report that argued the meeting would be more likely to lead to a price drop than a hike. And indeed, output levels are close to all-time records for the Organization of Petroleum Exporting Countries (above 33 million barrels a day) and near the historic high for Russia, a participant in the Doha meeting (above 11.2 million barrels a day).

Besides, some OPEC members are increasing output ahead of the meeting. Iraq, for example, hit its production record — 4.55 million barrels a day — in March.

U.S. producers are heading in the opposite direction. Their output is down to late 2014 levels. Following the production decline, bloated U.S. oil inventories appear to be starting to slide, too. Though they’re still near all-time records, on April 6 the U.S. government reported an almost 5 million barrel drop.

The surprising resilience of U.S. oil production is by now a market meme. Yet there is nothing miraculous about the oil industry. Producers can rely on crutches like price hedges or technological advances, but at the end of the day, it’s all about how much smelly dark liquid they can extract from the ground at the right cost. U.S. frackers may have been better than anyone else at using these crutches, but now their impact is exhausted or receding. In the relatively free U.S. market, profit potential drives investment and output. And on both these fronts U.S. producers are feeling the strain.

On the other hand, Persian Gulf states and Russia need to pump oil at any price because that’s how they fund their budgets, so when the price is low, they need to pump more. This is how it’s going to be at least for the next few years: The traditional producers are going to win back some lost market share. The biggest problem they face has nothing to do with the physical demand-supply balance of oil. They need to keep prices as high as possible, but low enough to prevent U.S. investment and output from rising again.

The only way to do that is to manage expectations. Domenico Favoino and Georg Zachmann of the Brussels think tank, Bruegel, recently estimated that 73 percent of the oil price decrease in the last three years could be attributed to expectations about the physical demand-supply balance, not the balance itself. According to the researchers, the role expectations play in price setting has increased dramatically since 2008.

This is a world in which you have to convince traders that the balance is going to move this way or that, not to actually change it. That explains, at least in part, the mini-rally since the largely meaningless February agreement between two of the world’s biggest producers, Russia and Saudi Arabia, as well as Qatar and Venezuela, to freeze production at January levels. The price of Brent crude is up about $10 per barrel.

Everyone, including traders, understands that such deals are iffy, that the parties won’t necessarily stick to them, and that freezing production at record levels may just signify an inability to pump much more oil in the near future. Yet it’s still something to trade on. If the talks in Doha on April 17 end in an agreement, even a symbolic one, that will send the market a signal to drive up the price.

That signal, however, will not be credible or lasting enough to spur an increase in U.S. oil investment. Investors and creditors are more cautious than traders. The former are scared off by high volatility; the latter are energized by it. In February, the implied volatility of the Brent crude price was the highest since 2009, at 70 percent; now it’s down to about 50 percent — still a scary level for people looking at energy industry business plans.

The Saudis and the Russians, however, don’t care about the volatility all that much: They’re still going to keep production as high as they can, because their populations’ standards of living and their regimes’ stability depend on it. So if they can send prices higher without signaling a real change of trend, that’s the best they can do until they solidify their market share gains. Holding a meeting where production caps and cuts are discussed is one way of achieving that. News of the meeting can combine with shrinking U.S. output to produce temporary price rises.

It’s important to produce such news regularly. It’s less important to be bound by any output-limiting agreements, as OPEC has proven time and again by not sticking to its output targets.

_ Leonid Bershidsky, a Bloomberg View contributor, is a Berlin-based writer.

For more columns from Bloomberg View, visit

Copyright © 2016, Chicago Tribune




Pak-India Corridor Competion—Victory Goes To Side Which Overcomes Terrorist Roadblocks

[SEE:  India-Pakistani Competition Translates Into Competing Economic/Transit Corridors]

cpec BALOCHISTANRAW targeting CPEC, trying to destablise Pakistan: COAS

the nation pakistan

GWADAR: Chief of Army Staff (COAS) General Raheel Sharif has reaffirmed Pakistan Army’s resolve to provide security for $46bn China Pakistan Economic Corridor (CPEC) projects and said that completion of the project will not only bring a true economic transformation to Balochistan but country and region as well.

Addressing a seminar on CPEC in Gwadar on Tuesday, Army Chief General Raheel Sharif said that in the place of today’s rugged mountains and lifeless barren deserts, we look forward to the emergence of modern infrastructure, special economic zones, health facilities and universities which will bring enduring benefits for our people.

“CPEC is a lifetime opportunity for Pakistan to improve the socio-economic equation of its [less privileged] areas and populace. I assure the people of Balochistan that it is [them] who will benefit the most from the fruits of this project,” the COAS added.

The army chief explained that the corridor ranged from Western China to the plains and coasts of Pakistan and promised that it will also benefit the country’s “remotest” areas of Gilgit-Baltistan.

General Raheel termed the CPEC as a “grand manifestation” of deep-rooted ties between China and Pakistan. “CPEC is indeed a corridor of peace and prosperity, not only for the people of Pakistan and China but also for the region and beyond,” he said.

The COAS termed transparency and good management as extremely important factors for the sustainability of the project.

“Socio-economic justice resulting from the balanced development will also increase people’s stakes in national unity and cohesion. For our enduring progress and prosperity, this sense of coherence will be our greatest asset,” the army general said.

General Raheel said that the project was being appreciated by world powers who consider it to be a “catalyst of economic transformation of the entire region”.

The COAS, while briefing the seminar about the positives of the project, also discussed the gravity of the prevailing challenges faced by the country with respect to CPEC.

“I must highlight that India, our immediate neighbor, has openly challenged this development initiative. We all know that hostile intelligence agencies are averse to this grand project.

“I would like to make a special reference to Indian Intelligence Agency, RAW, that is blatantly involved in destabilizing Pakistan. Let me make it clear that we will not allow anyone to create impediments and turbulence in any part of Pakistan,” said General Raheel.

The army chief assured the attendees that the security of CPEC was Pakistan Army’s “national undertaking” and that they will not leave “any stone unturned”. “We will continue to keep a close watch at its every step,” he added.

General Raheel said that a force comprising fifteen thousand men was responsible to secure the project under the ambit of Special Security Division.

“CPEC, besides being at the core of our national resolve, is a reflection of Pakistan-China friendship. It will be truly realized, whatever it takes.”

Both Afghan Forces and ISIS Wannabes Are Defecting To Taliban

[SEE: Resurgence of the Taliban]


ISIS Fighters in Afghanistan Defect Over Violence: Taliban


PESHAWAR, Pakistan — Six senior Afghan ISIS commanders and a group of fighters have abandoned the extremist group amid reports it was too violent, two top Taliban officials told NBC News.

The former ISIS commanders, judges and fighters pledged allegiance to the Taliban’s leader, Mullah Akhtar Mohammad Mansour, on Monday, according to Taliban spokesman Zabihullah Mujahid (READ HERE)

Afghan soldiers desert as Taliban threaten key Helmand capital


Taliban announces ‘summer offensive’ targeting US, NATO troops

Afghan Forces Kill 10,000 Taliban In 2015, Without the US, Or Its Air Force

[Afghan National Security Forces (ANSF) in 2014— 3,720 killed  -vs-  5,500 killed in 2015, an increase of 1780 Afghan troops in 2015  -vs-  10,628 Taliban killed in 2015, compared to 603 killed in 2014, an increase of more than 10,000 Taliban killed in 2015.  That is a 1000% improvement in efficiency over US/NATO forces in their last year of combat before the official US withdrawal in 2014!  They did that without US air support, depending solely upon their paltry helicopter assets and trainer planes.  Just imagine what they could do with full air support.]


The Islamist group seeks legitimacy and political space in Afghanistan

Last week, US Secretary of State, John Kerry, was on a secret visit to Afghanistan to save the national unity government, NUG (Kerry’s Pushiness Threatens To Unify Afghans Against His Schemes ). He said that the 2014 deal setting up President Ashraf Ghani’s NUG would allow it to serve a full five-year term. For Afghanistan, 2015 was the worst year, the year of setbacks. Afghan National Security Forces (ANSF) suffered the heaviest casualties for any one year. Nearly 5500 killed and 14,000 wounded. Civilian casualties were also very high. According to South Asia Terrorism Portal, 10628 militants, mainly Talibans, were killed in 2015 compared to 603 killed in 2014. The Taliban occupy more territory in Afghanistan than at any time since the war began in 2001. Twenty-seven of the country’s 34 provinces face high Taliban threat and in Nangarhar province the challenge is from the ISIS. Till last month 38 out of 400 districts were under Taliban control and 40 were being contested. For example, the Independent Afghan Analyst Network reported that Taliban was in control of most of the districts of Southern Helmand province except the district headquarters. Two years ago Helmand was under full government control.

Lt Gen John Campbell (now replaced by Lt Gen John Nicholson), top US Commander in Afghanistan, admitted that the decision to keep 5500 Nato troops till 2017 was based on some assumptions that did not turn out to be true. President Obama observed that ‘Afghan forces are not as strong as they need to be’. This rather bleak security situation is the result of the withdrawal of foreign forces according to a political time-line, unrelated to the adverse ground reality and capacity of ANSF to deter Taliban. It is likely that American commanders have fudged their assessment of the ANSF morale and calibre which turned out to be below par. The new President of the US will have to review the situation next year unless there is a Black Swan event earlier.

Washington has realised that the transition was premature. It was based on the flawed assumptions that ANSF would enable NUG to initiate an Afghan-led and Afghan-owned reconciliation process with Taliban and that Pakistan would deliver the Taliban for peace talks. Washington is frustrated with the squabbling within the NUG. A BBC Gallup poll conducted from October 22 to November 18, 2015 (that had 2500 respondents across 34 provinces) reveals that 81 per cent of Afghans are very dissatisfied with NUG and 69 per cent fear things will get worse.

A US survey reflected that the level of dissatisfaction with NUG was 60 per cent. The disapproval ratings for President Ghani too were pegged at 60 per cent while 86 per cent of the respondents went against CEO Abdullah Abdullah. Crowning this disunity, the UNAMA chief in Kabul stated he would be surprised if the NUG survives through 2016. Declaring the controversial presidential election results — Ghani 55 per cent and Abdullah 45 per cent — 16 months later was like tossing the NUG from the frying pan into the fire. Nearly 500,000 jobs have been lost due to the withdrawal of foreign forces further disabling an aid-driven economy. Washington and Brussels are becoming increasingly tired of Afghanistan and the mounting refugee influx from Syria and Iraq to Europe has shifted attention from Afghanistan to the threat posed to Europe by ISIS. Kabul could soon become a forgotten war zone precariously held together by western funding for ANSF and NUG.

President Ghani made a bold move by seeking Pakistan’s help on reconciliation with the Taliban which is seeking both geographical and political space in Afghanistan. Seventy-one per cent Afghans are not happy about reconciliation which has been left entirely for Pakistan to orchestrate but the Taliban has rejected face-to-face talks following their military victories. A spring offensive will likely place them in an unassailable position for a dialogue later in the year. Taliban is known to be seeking a change in the constitution, release of its prisoners and posts of Interior and Defence Ministers. Pakistan is also demanding concessions like recognition of the border (Durand Line) and dilution of Kabul’s relations with India. India remains the most popular country in Afghanistan with its extensive development assistance for institution and capacity-building programmes. It has told Kabul that it does not have an exit policy. Although India was initially relegated into the so-called fourth circle by Mr Ghani, there were growing demands for New Delhi to shoulder its responsibility as a regional power and net security provider. Afghanistan is calling for additional military assistance including equipment to strengthen the ANSF.

It wants full operationalisation of the Strategic Partnership Agreement of 2011 especially Para 5 of the security and political cooperation where India has agreed to assist as mutually determined in the training, equipping and capacity-building programmes. A comprehensive list of equipment was provided to New Delhi in 2013 but little materialised. The SPA was to be implemented through a Partnership Council consisting of foreign ministers which has met only twice. Only one of the four Joint Working Groups has convened despite Kabul’s many reminders. India appeared loath to operationalise the defence and security component till Mr Ghani met Prime Minister Modi last year during his official visit. Mr Modi asked: “What does Kabul need?” Only after Mr Ghani’s urging on military equipment that four Mi25 attack helicopters were provided to Kabul. There are some problems in supplying Russian equipment following US sanctions on Russia post-Ukraine. One of the biggest shortcomings in the ANSF capability is airpower which was withdrawn, US Commanders admit, prematurely from the battlefield. New Delhi has to do much more towards bolstering the fighting ability of ANSF.

Surprisingly Afghans are privately telling India that its alleged involvement in Balochistan and speculated links with Tehreek-e-Taliban Pakistan as promoted by Islamabad are worrying Kabul. New Delhi needs to clear the air on this and operationalise the institutional framework to implement the SPA. Let New Delhi not forget that India’s security frontiers lie in the Hindukush.

The author is convenor of a Track 2 Afghanistan Policy Group

If the Afghan Taliban Tried To Kill John Kerry, Whose Orders Were They Following, Islamabad or Langley?

Kerry listens during a conference with Afghan Foreign Minister Salahuddin Rabbani in Kabul on Saturday [Massoud Hossaini/AP]


AlJazeera reported that the Taliban “rockets struck a road outside the Presidential Palace complex where Kerry’s convoy had passed four times.”

afghan presidential palace
Afghan Presidential Palace, Kabul.

[Notice the RED DOT which I have placed upon the Google Map snapshot, at the intersection of the main road in front of the Palace, to the left of the dot, and the wider road running North from the red dot, which passes in front of CIA HQ and ISAF HQ.  The original AlJazerra article was unclear which road near the Presidential Palace was hit.  The Google Map embedded below will allow further examination of the Kabul area.  Either click on a pin, or zoom-in, to explore.]

Taliban Rockets Strike Near Afghan Presidential Palace, Along Route Just Used By SecState Kerry

[FOLLOW THE LOGIC…If Pakistan controls the Afghan Taliban, and the Taliban just tried to kill US SecState John Kerry in Kabul, then it was Pakistan who actually tried to kill John Kerry.   Why did they try to kill Kerry?   For pissing-off Islamabad by trying to bully them into nuclear reductions (SEE: US Secretary Of State John Kerry Asks Pakistan To Reduce Nuclear Arsenal), or did he piss Rawalpindi off for blocking ISI-dominated Afghan preparations for a “loya jirga,” which is scheduled to name the next govt (SEE: Kerry’s comments in Afghanistan on unity government spur anger, charges of U.S. interference)?

Nothing is as it seems in either Afghanistan or Pakistan, wherever the ISI holds dominance. 

A nuclear power which employs Islamist terrorists to effect foreign and domestic policies is a danger to the world.  If the Pakistani Army is somehow linked to the attempt upon Kerry’s life, then it would be seen for what it is…AN ACT OF WAR.  Pakistan has become very bold, under CIA direction and sucking-up billions from the Saudis and other Gulf states. 

But here we come to the heart of the matter…If Pakistan is responsible for the Taliban attack upon Kerry, and the Pak ISI is dominated by the CIA, THEN THE CIA IS ULTIMATELY BEHIND THE ATTEMPT TO EITHER KILL OR INTIMIDATE KERRY…BUT WHY?]

India-Pakistani Competition Translates Into Competing Economic/Transit Corridors

[Iran has guaranteed its place on the subcontinent’s “progress train” by pre-purchasing seats on both Indian and Pakistani development transports (SEE:  Iran Joins China-Pakistan Economic Corridor (CPEC))

Chabahar-port-draft-agreementAfghanistan, India, Iran finalize draft agreement for Chabahar port


The draft agreement for Chabahar strategic port was finalized between Afghanistan, Iran and India on Monday, the Ministry of Foreign Affairs (MoFA) said.

A statement by MoFA said the draft agreement is ready for the signing to create transportation and transit corridor in Chabahar port.

The draft agreement was finalized during a meeting organized in Ministry of External Affairs of India, MoFA said, adding that Afghanistan was represented by representatives from Ministry of Foreign Affairs, Commerce and Industries Ministry, Ministry of Finance, Ministry Transporation and Aviation Directorate of Railway Network and Embassy of Afghanistan in India.

According to MoFA, the Chabahar port, located in southeastern part of Iran in Sistan of Balochistan, could play a vital role in expanding sea trade among the regional countries.

The statement by MoFA further added that the port will also play a key role in reducing time and expenses for the transportation of commodities besides linking the South Asian countries with Central Asian countries as well as Middle Eastern countries with the Central Asia.

The three nations also agreed to establish a subsidiary committee in the format of the agreement to prepare transit and port protocols and other issues including custom and consulate affairs, the statement added.

According to MoFA, the meeting participants agreed to pave the way for the signing of the agreement by high level government officials of the three countries in two months.

%d bloggers like this: