MIDEAST TURMOIL: FOLLOW THE OIL, FOLLOW THE MONEY( Source blacklistednews.com)

While there are numerous dynamics at work in the turmoil roiling Saudi Arabia and by extension, the Mideast, one way to cut to the chase is to follow the oil, follow the money.

Correspondent B.D. recently proposed a factor that has been largely overlooked in the geopolitical / fate-of-the-petrodollar.

Perhaps the core dynamic is a technical one of diminished oil production. Here is Bart’s commentary:

“I think the Saudis may be quickly running out of profitable oil to produce/export. I think they tried to over-produce for a while to damage the competition and they now have production issues resulting from that. I think they may have recently slipped over the event horizon for being the world’s swing producer of ‘cheap-ish and abundant’ oil. That has huge ramifications for the global markets ability to quickly respond to supply/demand fluctuations. I suspect they’re no longer cutting production voluntarily. They are now in the grip of a technically driven decline in output. What I assume should happen is relentless severe volatility in the absence of a big swing producer that can open up or shut in production with comparative ease.” The possibility of a global recession unfolding in 2018 is rising. In a global recession, oil demand will fall, crushing the marginal pricing power of exporters. The Saudi royal family and the Kingdom’s vast state welfare system is no longer sustainable should oil fall into the $30-$35/barrel range due to a collapse of global demand. The only way out is to grab the power now that will be needed to slash domestic welfare and domestic consumption of oil/gas, i.e. the power to overcome resistance within the royal family to severe reductions in royal/central state budgets. Geopolitically speaking, very few if any oil exporters are able to prosper and fund their regional/global ambitions if oil plummets to $35/barrel and stays there for years. Every oil exporter makes brave statements about being just fine with $25/barrel oil, but the

]’`reality is every major oil exporter is dependent on oil revenues of a scale that can only be generated at $50/barral and up. The discovery of new oil fields has fallen far below global consumption.