WILL THE OIL PRICE CAP BRING RUSSIA TO ITS KNEES?

4 September 2022

As to the Western plan to cap the price of oil, we remember that the original idea was to weaken Russia and have a colour Revolution that would put out Putin and put in a government sympathetic to the West.

The three strategic axes have been military, economic and network. 

MILITARY DEFEAT STARING AMERICA IN THE FACE

The military looks like a big failure for Ukraine, with Russia gradually encrcling,  kettling, cauldroning or drag-netting and howver it is described, destroying the ukrainians - though I fear direct NATO / American involvement.

TABLED TURNED ON SANCTIONS

Russia has turned the table on sanctions by hooking new customers and old suppliers.

a) Russia is cutting off all supplies to Europe apart from the Turkman line - this will de-industrialise Europe, especially Germany ... it already is.

Plus America cannot replace with LNG as it has shortages of its own to deal with even if Europe have the infrastructure built and in place to re-gasify; Saudi can't or won't increase output and sees the price cap as a method to wrest control of pricing from OPEC; India is most unlikely to cooperate as it currently resells Russian oil to the West through numerous back-channels; Iran and Venezuela?....try.

b) New pipelines are being built out to China, meanwhile Lloyds of London will go down the pan because tanker owners will find other ways to insure the tankers, notably through Indian insurance and through Russia itself - although here I worry very much that the insurance will be a sham and in the event of an environmental disaster (clear-ups cost billions), there will be no money to clean up the mess.

c) Alternatives to Swift and bank cards have been developed and customers freely pay in roubles. This is weakening the need for US dollars as a reserve currency and safe haven in times of trouble.

ONE-WORLD NETWORK BROKEN

Networking is the fundamental point as the whole of the post World War II arrangement was designed to provide countries with safe navigation for imports and exports and if you start trying to politicise that, reducing its practical transactional value, then all those countries - the Global South - will turn against you and this is what's happening with the surprising addition of Argentina and  Saudi Arabia to the BRICS. 

So here's a rival system to the dollar and American world hegemony and there's no reason at all why any of Russia's new customers should agree to a ridiculous idea of a price cap when they're perfectly satisfied with the arrangements they have with Russia and do not need so much any more to kowtow to American pressure.

THE FUTURE

So where does this leave the West? It's in a position where the only positive progress possible out of this hole it's dug itself into is to concede some form of victory to Russia.  

It has lost Russia as a partner and it's China that has taken Russian resources in our place. I cannot see how Europe can find back the energy it needs to run its economies.

So it is Europe that is permanently weakened with the loss of Russian cheap energy; and its politicians lying prone before America, will be / are being kicked out of office.

Ukraine is run by thoroughly corrupt oligarchs and will never get into NATO or the EU - despite Zelinsky's maudlin and aggressive pleadings - and will find itself landlocked, cut off from the Black Sea as Russia takes back Novorossiya and the Khanet of Crimea.