by John Galt
February 15, 2016 20:05 ET
The long anticipated Wild West face to face showdown with Russia and Saudi Arabia occurs on Tuesday, February 16th in Doha Qater per Bloomberg today:
The reaction in the crude oil futures markets was fast and obvious (chart via Investing.com):
The so-called secret meeting was leaked by someone with a financial interest in moving the futures markets. Here is an excerpt from the Bloomberg article linked above:
Ali al-Naimi, the most senior oil official of the world’s biggest crude exporter, will speak with Russia’s Alexander Novak in the Qatari capital, according to the person, who asked not to be identified because the talks are private. The person didn’t say what the agenda of the meeting will be, which will also be attended by the kingdom’s fellow OPEC member Venezuela. The energy ministries of Russia and Saudi Arabia declined to comment.
Saudi Arabia has insisted that it won’t reduce production to tackle the global oil glut unless major producers outside the Organization of Petroleum Exporting Countries co-operate. While Novak has said he could consider output cuts if other producers joined in, Igor Sechin, chief executive officer of the country’s largest oil company Rosneft OJSC, said last week he would defend traditional markets and expressed doubts over coordinated action.
The funny thing about this meeting?
Nothing will happen barring Saudi Arabia and Qatar meeting one condition:
Saudi Arabia and Qatar must cut all support for ISIS and anti-Assad rebels immediately. Then and only then will Russia agree to a reduction in publicly available output which impacts oil prices on a global scale.
The reason this is they key issue Russia is holding over the Bedouin Beggars of the Arabian Peninsula is that Iranian and Syrian forces, along with Iraqi militias and Russian air and special forces support are about to eradicate pro-Turkish and anti-Assad forces in the North, South near Damascus, and then continue to march towards the ISIS capital of Raqqa. With ISIS cut off from its Saudi/Qatari funding and Turkish resupply, Assad’s military can quickly finish the job of ejecting the majority of terrorist revolutionaries from his territory and eradicate any further threats.
The wildcard will be if Saudi Arabia and Qatar do not have enough influence to force Turkey to stand down as this annihilation occurs. If they can not, there will be no output cut by Russia or its allies in the emerging new non-aligned movement. While most U.S. analysts focus on foreign currency reserves and economic conditions in Saudi Arabia and Russia, the reality is that Putin is making a calculated move once and for all to reduce American influence in the region and stabilize Assad’s reign while humiliating Erdogan and Obama in one shot.
If the Saudis fail to all into line and agree with this, then in the end, Russia will redouble its output and commitment to eradicating any pro-Sunni radical groups inside of Syria up to and possibly including shooting down Saudi aircraft operating over Syria without prior authorization.
It’s the culminating moment of a game of chess that has been in motion for several months now and Putin is ready to declare “checkmate!”