Energy Markets Are On The Brink Of Crisis

Tyler Durden's picture

Submitted by Brandon Smith of,

The multitudes of people, especially Americans, who view U.S. government activity in a negative light often make the mistake of attributing all corruption to some covert battle for global oil fields. In fact, the average leftist seems to believe that everything the establishment does somehow revolves around oil. This is a very simplistic and naïve view.

Modern wars are rarely, if ever, fought over resources, despite what the mainstream gatekeepers might tell you. If a powerful nation wants oil, for instance, it lines the right pocketbooks, intimidates the right individuals, blackmails the right officials or swindles the right politicians. It has no need to go to war when politicians and nations are so easily bought. Modern wars, rather, are fought in order to affect psychological change within a particular country or population. Wars today are fought to cover up corrupt deals and create desperation. Oil is used as an all-encompassing excuse for war, but it is never the true cause of war.

In reality, oil demand has become static and is even falling in many parts of the world, while new oil and gas-producing fields are discovered on a yearly basis. Petroleum is not a rare resource — at least, not at the present. And the propaganda surrounding the “peak oil” Armageddon scenario is pure nonsense. Oil prices, unfortunately, do not rise and fall according to supply - instead they rise and fall according to market tensions and, most importantly, the value and perceived safety of the U.S. dollar. Supply and demand have little to do with commodity values in our age of fiat manipulation and false investor perception.

That said, certain political and regional events are currently in motion that could, in fact, change investor perception to the negative, and convince the world of a false fear of reduced supply. While supply is more than ample, the expectation of continued supply can be jilted, shocking commodities markets into running for the hills or rushing into mass speculation, generally resulting in a sharp spike in prices.

A very real danger within energy markets is the undeniable threat that the U.S. dollar may soon lose its petrodollar status and, thus, Americans may lose the advantage of relatively low gas prices they have come to expect.  That is to say, the coming market crisis will have far more to do with the health of the dollar than the readiness of supply.

In the span of only a few years, as the derivatives crisis took hold and the fed began its relentless bailout regime, petroleum costs have doubled. It wasn’t that long ago that someone could fill his vehicle's tank with a $20 bill. Those days are long gone, and they are not coming back. The expectation has always been that prices would recede as the overall economy began to heal. Of course, our economy will not be healed until it is allowed to crash, as it naturally should crash. And as it crashes, because of our currency's unique place in history, the price of oil will continue to climb.

The petrodollar has always been seen as invincible — a common denominator, a mathematical constant. This is a delusion propagated by a lack of knowledge and common sense amongst establishment economists.

As I have covered in great detail in numerous articles, the U.S. dollar’s world reserve status is nearing extinction. Multiple major economies now trade bilaterally without the use of the dollar; and with foreign conflicts on the rise, this trend is going to become the norm.

In the past week alone, Putin adviser Sergey Glazyev recommended to the Kremlin that a coalition of nations be formed to end the dollar's reserve status and initiate a form of economic warfare to stop "U.S. aggression".  Of course, anyone familiar with the escapades of international banking cartels knows that it is the money elite that dictate U.S. aggression, just as they dictate the policy initiatives of Russia.  I would note that there is only ONE currency exchange structure that could be used at this time to shift global forex reserves away from the dollar system, and that is the IMF's Special Drawing Rights.

The argument has always been that the IMF is a U.S. controlled institution, however, this is a faulty assumption.  The IMF is a GLOBAL BANKER controlled institution, a front organization for the Bank of International Settlements, which is why the recent refusal by the U.S. Congress to vote on new capital allocations for the IMF has resulted in the world's central bank threatening to remove U.S. veto power. Globalists have no loyalty to any single nation, and the reality is, the fall of the dollar actually benefits these financiers in the long term.

Russia’s historic oil and gas deal with China, just signed weeks ago, removes the dollar as the petroleum reserve currency.

Russia’s largest gas company, Gazprom, has all but excluded the dollar in all transactions with foreign nations. In fact, nine out of 10 of Gazprom’s foreign clients were more than happy to buy their products without using dollars.  This fact cripples the arguments of dollar cheerleaders who have always claimed that even if Russia broke from the dollar, no one else would go along.

Gazprom and the Russian government have followed through with their threats to cut off gas pipelines to Ukraine, and now, some analysts fear this strategy may extend to the EU, in which many countries are still 30% dependent on Russian energy.

China is currently striking oil deals not only with Russia but also with Iran. New oil deals are being signed even after a $2 billion agreement fell through this spring.  And, despite common misinformation, it was actually China that was reaping the greatest rewards through the reopening of Iraqi oil fields, not the U.S., all while U.S. military assets were essentially wasted in the region.

Now, any U.S. benefits are coming into question as Iraq disintegrates into chaos yet again. With the speed of the new Islamic State of Iraq and Syria (ISIS) insurgency growing, it is unclear whether America will have ANY access to Iraqi oil in the near future.  If ISIS is successful in overrunning Iraq, it is unlikely that Iraqi oil will ever be traded for dollars again. Unrest in Iraq has already caused substantial market spikes in oil prices, and I can say with considerable confidence that this trend is going to continue through the rest of the year.

Interestingly, mainstream news sources suggest that Saudi Arabia has been a primary funding source for the ISIS movement.  It is true that the Saudis have warned for years that they would fund and arm Sunni insurgents if America ever pulled out of the country.  But, I would point out that the U.S. has also been covertly supporting such extremist groups in the Mideast for quite some time, and this is not discussed at all in the MSM storyline. The mainstream narrative is painting a picture of betrayal by the Saudis against the U.S. through subversive groups designed to break the foundations of nations opposed to its policy views.  When, in fact, the destabilization of Iraq has been nurtured by money and weapons from both America and Saudi Arabia.

It was the CIA which trained ISIS insurgents secretly in Jordan in preparation for their subversive war in Syria.  It was an agreement signed by George W. Bush and delegated under Obama's watch that allowed ISIS leader, Abu Bakr al-Baghdadi, to be set free in 2009.  Saudi Arabia has been openly arming the Sunni's for years with the full knowledge of the U.S. government.  So then, why is the narrative being created that America and Saudi Arabia are at odds over ISIS?

Such a development would place the U.S. squarely in conflict with the Saudi government, our only remaining toehold in the global oil market. Without Saudi Arabia’s patronage of the dollar, most OPEC nations will follow (including Kuwait), and the dollar WILL lose its petrodollar status. Period.

In the past few days, Saudi Arabia has demanded that the foreign interests refrain from any military intervention in Iraq.  While Barack Obama has repositioned an aircraft carrier, armed troops, and special forces in the area.

Now, my regular readers understand that this was going to happen eventually anyway. The Federal Reserve’s quantitative easing bonanza has destroyed true dollar value and spread unknown trillions of dollars in fiat across the planet. The dollar’s death has been assured. It has been slated for execution. This is why half the world is positioning to dump the currency altogether. My regular readers also know that the destruction of the dollar is not an accident; it is part of a carefully engineered strategy leading to the centralization of all economic power under the umbrella of a new global currency basket system controlled by the International Monetary Fund.

I believe Saudi Arabia may be a near term trigger in the next great shift in petroleum markets away from the dollar. Renewed U.S. involvement in Iraq, diplomatic tensions over ISIS, and more lucrative offers from Eastern partners have been edging Saudi Arabia away from strict petrodollar ties. This shift is also not limited to Saudi Arabia.

“Abu Dhabi, the most influential member of the United Arab Emirates,” has suddenly ended its long-standing exclusive relationship with Western oil companies and has signed a historic deal with China’s state-owned China National Petroleum Corporation (CNPC).

Russia has formed the new Eurasian Economic Union with Belarus and Kazakhstan, two countries with freshly discovered oil fields.

On the surface, it appears as though the world is huddling itself around oil resources in an environment of East versus West conflict. However, these changes are not as much about petroleum as they are about the petrodollar. The reality is the dollar’s reserve-status days are numbered and this is all part of the plan.

What does this mean for us? It means much higher gas prices in the coming months and years. Is $4 to $5 per gallon gasoline a burden on your pocketbook? Try $10 to $11 per gallon, perhaps more. Do you think the economy is straining as it is under the weight of current gas prices? Imagine the earthquake within our freight-based system when the cost of trucking shipments triples. And guess who will end up paying for the increased costs? That’s right: you, the consumer. High energy prices affect everything, including shelf prices of retail goods. This is just the beginning of what I believe will be ever expanding inflation in oil prices, leading to the end of the dollar’s petroleum reserve status, then it's world reserve status by default, and the introduction of a basket currency system that will ultimately benefit a select few global financiers while diminishing the quality of living for millions, if not billions, of people.

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kliguy38's picture

WHY do you think we really are in chaos in the ME and in the Ukraine........? TO HOLD THE PRICE OF OIL UP.....

jbvtme's picture

$10/gal of gas?  Piece of cake. Raise the minimum wage.

SoberOne's picture

Alt media infiltrated! Will reread now.

Pladizow's picture

It's rare to see bullshit so condensed!

CrashisOptimistic's picture

"Modern wars are rarely, if ever, fought over resources"

What in the FUCK are you posting, Tyler.  Who is this guy?

What is a modern war.  Does it include World War II in the Pacific?  Because if so this wacko needs to go read up on why the Japanese bombed Pearl Harbor.


29.5 hours's picture



Yes, hard to swallow, eh? This may not be the very worst ZH article but it surely is a contender.



Vampyroteuthis infernalis's picture

Petroleum is not a rare resource — at least, not at the present. 

WTF! It is not that oil is a rare resource is the problem. We have plenty of low grade oil out there. We are running out of easily, accessible high quality that is useful. I agree with comments here. This article stinks!!

Abi Normal's picture

LOL, you peak oilers are is not rare, you just think so, because you have been brainwashed...there is enough oil in the ground to last a hundred years, until we can come up with a viable alternative(s)...but keep thinking you're right, won't make a bit of difference to you anyway.


i_call_you_my_base's picture

You'd also have to contort "modern warfare" to mean that which takes place between first world countries. There are countless examples of smaller countries.

holdbuysell's picture

"Because if so this wacko needs to go read up on why the Japanese bombed Pearl Harbor."

You mean the Germans, right?



TrumpXVI's picture

Yeah, really distorted analysis....and faulty history, too.

His political analysis is dead wrong, too.  The “Left” is just as drunk on the idea that “normal” economic growth (+2% avg.) will return as the people on the right.  The Left’s pet fears are environmental degradation and climate change.  The Left is completely vested in the idea that we will experience perpetual economic growth and a linear progression toward continued environmental degradation; forever.  They don’t get the economic implications of debt implosion due to impaired, resource constrained (oil price constrained) economic growth any better than the Right (or Brandon Smith).

All the Left's fantasies of perpetually expanding government and pension benefits depend entirely upon the "ever expanding economy" meme.


eishund's picture

This actually isn't bullshit. With a little digging, one can easily verify the assertions made in the article.

The IMF is owned by a cartel of banksters and it is ready to replace the USD with SDRs.

The USD has been engineered for collapse by some of the smartest people on the planet.

Yes they are smart, not morons without common-sense like we like to fantasize them to be.

The only question one should be asking is: why are they doing this?

That's where the rabbit hole begins.

new game's picture

sociopaths-they would fuck your grandma on her dying bed...

all you need to know.

new game's picture

wtf, war is about power and resources.

monetary policy is about power and contol of the majority, therfor

war is the politics of control of the people and the resource they are dependant on!

yes it could spin out of control, but my guess is steady increase with spikes followed by mini depressions with moar abenomics...

Abi Normal's picture

War, my friend, is about nationality, about land, about control, about money...resources just happen to be a part of it...damn it to hell, we are fast approaching zero hour and we talk about this bullshit?


Panafrican Funktron Robot's picture

He is correct about de-dollarization, but gets an F minus on the "why".  It's really not that hard to understand, but he seems to want to make it more complicated/obfuscated than it needs to be.  

Drop out's picture

Not sure why you have been voted down. I voted you up. I guess I will get voted down too. Oh well, I guess everyone likes the wonderfull plan - print more and give us (us = Me - otherwise known as "the greater good") more...

Buck Johnson's picture

Imagine the workers who have to drive to work everyday and if gas was 10 dollar or more a gallon you would need to pay close to 150 to 200 dollars a week to fill your tank.  And if your making 10 bucks an hour you couldn't survive and thats just on the cost of buying fuel and driving to work.

jbvtme's picture

and to defend the dollar

BandGap's picture

Consider this - the current situation in the ME facilitates Iran selling to China. China WILL build refineries. Oblaamama has sold out the Saudis again. The fucking Saudis are so Jonesing for the US the fuck with ISIS. Ain't gonna happen.

And I have been drinking. Again.

Jumbotron's picture

Sigh.....this douche nozzle STILL doesn't get it.

It's NOT about the total amount of oil's about the amount of CHEAP oil that's left.

CHEAP to extract....CHEAP to refine....CHEAP to derive.

CHEAP oil has peaked.  There is a LOT left....not to mention total agregate left in the earth to find.

But the CHEAP stuff has peaked and is in decline.  And it is precisely this CHEAP oil that has fueled our Utopia since the late 1800's.  Our Utopia can not exist in a EXPENSIVE energy regime.  Period.  End of story.

To make up the difference in the lessening of CHEAP energy we have introduced Ponzi Economics.  That can only last so long.  And that is peaking as well.

fonzannoon's picture

The fuckfaces on CNBC were debating the merits of this

all day today. One of the meathead retards kept claiming that he had a long commute to work there everyday and was afraid a bridge would fall down at some point if they did not fix it. He did not mention specifically what bridge it must not have occurred to him that whatever bridge it was had been paid for 100x over and he was still paying $15 round tripo to cross it and never wondered where that money was going to. But the gas tax rev will certainly go into the right hands and not ket skanked along the way.....

rosiescenario's picture

....and are dumb enough to own up to it here?

I MISS KUDLOW's picture

actually if you are smart enough and see thru the bullshit u can still make money by watching maybe one little thing for the week, its better then watching judge judy and for example the other morning they had the nigeria oil minister on claiming that they wouldn't be selling oil to the united states anymore? I questioned why inquiering minds want to know, but they never said, never got that part of it

fonzannoon's picture

The day someone creates a channel with just tickers streaming across it and hopefully naked chicks washing cars somehow involved I will stop having to keep on such shitty channels just to see updated quotes running across the screen.

WillyGroper's picture

And let's say you work for any of the retail brokerages, think it might be on all day there?

Wahooo's picture

Always thought it interesting that just two years after Nixon unpegged the dollar from the gold standard and pegged it to oil, OPEC raised oil prices to raise the value of the petro-dollar. That couldn't have been a coincidence.

lunaticfringe's picture

Not to worry. We have the Department of Energy which was created to reduce our reliance on foreign oil. They have been around for 40 years now and I am sure they are close to a solution.

dryam's picture

Yep, this is where the rubber meets the road.  Rising oil prices are the kryptonite to the western central bankers & their manipulation of the 'markets'. 

This is my personal pick for the one thing that makes the Ponzi crash.  All the other black swan possibilities are fun to ponder, but much less unlikely to be the cause.

WillyGroper's picture

I wouldn't be so sure.

You can live without oil, NOT water.

With water being monetized the globalists are going to control life itself.

This guy may be right about the SDR among other things, but it sounds to me like he's listening to the "Insider" Rickards. What I don't like about Rickards is the speed in which he talks as though trying like hell to convince you, like any other swindler, I can't say I completely believe him.


dryam's picture

I agree with you about Rickards.  It's hard for me to put my finger on it, but I get the distinct impression he has an unseen agenda.  I had a favorable opinion of him in the past, but not so much now.

29.5 hours's picture



" the average leftist seems to believe that everything the establishment does somehow revolves around oil"

Yeah, it's just leftists who have such weird ideas about petrodollar regimes...




Yes_Questions's picture



I agree.


as if anyone awakened to the petrodollar regime remained tard'd (left or right) much longer.






greatbeard's picture

>> the average leftist

WTF is that? 

fonzannoon's picture

the leftist slightly above the below average leftist and slightly below the above average leftist. That is my take anyway.

shovelhead's picture

Trick question.

All leftist are average.

They believe in equal outcomes.

shovelhead's picture

Trick question.

All leftist are average.

They believe in equal outcomes.

29.5 hours's picture

apparently the original poster thinks a large proportion of ZH are average leftists. This is a quaint idea.



therover's picture

A left handed pitcher with a 9-8 record and 3.25 ERA.

Oh sorry, that's an average lefty.