Another Conspiracy Theory Becomes Fact: The Entire Oil Collapse Is All About Crushing Russian Control Over Syria

Tyler Durden's picture

While the markets are still debating whether the price of oil is more impacted by the excess pumping of crude here, or the lack of demand there, or if it is all just a mechanical squeeze by momentum-chasing HFT algos who also know to buy in the milliseconds before 2:30pm, we bring readers' attention back to what several months ago was debunked as a deep conspiracy theory.

Back then we wrote about a certain visit by John Kerry to Saudi Arabia, on September 11 of all days, to negotiate a secret deal with the now late King Abdullah so as to get a "green light" in order "to launch its airstrikes against ISIS, or rather, parts of Iraq and Syria. And, not surprising, it is once again Assad whose fate was the bargaining chip to get the Saudis on the US' side, because in order to launch the incursion into Syrian sovereign territory, it "took months of behind-the-scenes work by the U.S. and Arab leaders, who agreed on the need to cooperate against Islamic State, but not how or when. The process gave the Saudis leverage to extract a fresh U.S. commitment to beef up training for rebels fighting Mr. Assad, whose demise the Saudis still see as a top priority."


We concluded:

Said otherwise, the pound of flesh demanded by Saudi Arabia to "bless" US airstrikes and make them appear as an act of some coalition, is the removal of the Assad regime. Why? So that, as we also explained last year, the holdings of the great Qatar natural gas fields can finally make their way onward to Europe, which incidentally is also America's desire - what better way to punish Putin for his recent actions than by crushing the main leverage the Kremlin has over Europe?

Because at the end of the day it is all about energy. We made as much very clear one month later when in mid-October we said "If The Oil Plunge Continues, "Now May Be A Time To Panic" For US Shale Companies." The panic time has long since come, but only after we laid out the problem clearly enough for all to grasp:

... while we understand if Saudi Arabia is employing a dumping strategy to punish the Kremlin as per the "deal" with Obama's White House, very soon there will be a very vocal, very insolvent and very domestic shale community demanding answers from the Obama administration, as once again the "costs" meant to punish Russia end up crippling the only truly viable industry under the current presidency.


As a reminder, the last time Obama threatened Russia with "costs", he sent Europe into a triple-dip recession.


It would truly be the crowning achievement of Obama's career if, amazingly, he manages to bankrupt the US shale "miracle" next.

Of course, all of the above was purely in the realm of the conspiratorial, because the last thing the administration would admit is that the tradeoff to its bargain with Saudi Arabia to implement a (largely failed) foreign policy regarding ISIS (which has grown in size since the coalition campaign) was to put at risk the entire US shale miracle, a miracle which is evaporating in front of everyone's eyes. And all thanks to that "closest" of US allies in the middle east: Saudi Arabia.

It was conspiratorial, that is, until today, when thanks to the far less "tinfoil" NYT one more conspiracy theory becomes conspiracy fact, following a report that "Saudi Arabia has been trying to pressure President Vladimir V. Putin of Russia to abandon his support for President Bashar al-Assad of Syria, using its dominance of the global oil markets at a time when the Russian government is reeling from the effects of plummeting oil prices."

From the NYT:

Saudi Arabia and Russia have had numerous discussions over the past several months that have yet to produce a significant breakthrough, according to American and Saudi officials. It is unclear how explicitly Saudi officials have linked oil to the issue of Syria during the talks, but Saudi officials say — and they have told the United States — that they think they have some leverage over Mr. Putin because of their ability to reduce the supply of oil and possibly drive up prices."

As we predicted, correctly, in September: it was all about Syria:

“If oil can serve to bring peace in Syria, I don’t see how Saudi Arabia would back away from trying to reach a deal,” a Saudi diplomat said. An array of diplomatic, intelligence and political officials from the United States and Middle East spoke on the condition of anonymity to adhere to protocols of diplomacy.

So what would it take for the price of oil to finally jump? Not much: Putin's announcement that Syria's leader Bashar is no longer a strategic ally of Russia.

Any weakening of Russian support for Mr. Assad could be one of the first signs that the recent tumult in the oil market is having an impact on global statecraft. Saudi officials have said publicly that the price of oil reflects only global supply and demand, and they have insisted that Saudi Arabia will not let geopolitics drive its economic agenda. But they believe that there could be ancillary diplomatic benefits to the country’s current strategy of allowing oil prices to stay low — including a chance to negotiate an exit for Mr. Assad.


"Russia has been one of the Syrian president’s most steadfast supporters, selling military equipment to the government for years to bolster Mr. Assad’s forces in their battle against rebel groups, including the Islamic State, and supplying everything from spare parts and specialty fuels to sniper training and helicopter maintenance."

Will Putin relent?

"Mr. Putin, however, has frequently demonstrated that he would rather accept economic hardship than buckle to outside pressures to change his policies. Sanctions imposed by the United States and European countries have not prompted Moscow to end its military involvement in Ukraine, and Mr. Putin has remained steadfast in his support for Mr. Assad, whom he sees as a bulwark in a region made increasingly volatile by Islamic extremism."

Actually that's not it: Syria, as we have been explaining for nearly two years is the critical transit zone of a proposed natural gas pipeline, originating in Qatar, and one which would terminate somewhere in central Europe. The same Qatar which was the "mystery sponsor of weapons and money to Syrian mercenary rebels" who eventually became ISIS. The same Qatar which is now directly funding ISIS. Of course, if Putin were to handover Syria to the Saudi princes (and to Qatar), he would effectively shoot himself in the foot by ending any leverage Gazprom has over Europe.

This too is very well known to Putin. For now he has shown that he has no intention of abdicating Syria, and losing critical leverage when it comes to being the provider of last resort of European gas:

The Saudis have offered economic enticements to Russian leaders in return for concessions on regional issues like Syria before, but never with oil prices so low. It is unclear what effect, if any, the discussions are having. While the United States would support initiatives to end Russian backing for Mr. Assad, any success by the Saudis to cut production and raise global oil prices could hurt many parts of the American economy.


After the meeting in Moscow in November between Prince Saud al-Faisal, the Saudi foreign minister, and Sergey V. Lavrov, the Russian foreign minister, Mr. Lavrov rejected the idea that international politics should play a role in setting oil prices.


We see eye to eye with our Saudi colleagues in that we believe the oil market should be based on the balance of supply and demand,” Mr. Lavrov said, “and that it should be free of any attempts to influence it for political or geopolitical purposes.”

Which, in retrospect puts the Ukraine conflict, and the western isolation of Russia in a very simple spotlight - the whole point is to inflict as much pain as possible, so Putin has no choice but to hand over Syria.

Russia is feeling financial pain and diplomatic isolation because of international sanctions stemming from its incursion into Crimea and eastern Ukraine, American officials said. But Mr. Putin still wants to be viewed as a pivotal player in the Middle East. The Russians hosted a conference last week in Moscow between the Assad government and some of Syria’s opposition groups, though few analysts believe the talks will amount to much, especially since many of the opposition groups boycotted them. Some Russia experts expressed skepticism that Mr. Putin would be amenable to any deal that involved removing support for Mr. Assad.


Saudi Arabia’s leverage depends on how seriously Moscow views its declining oil revenues. “If they are hurting so bad that they need the oil deal right away, the Saudis are in a good position to make them pay a geopolitical price as well,” said F. Gregory Gause III, a Middle East specialist at Texas A&M’s Bush School of Government and Public Service.


As for Assad, the Syrian president "has shown no inclination to step aside. He said in a recent interview with Foreign Affairs magazine that the true threat in Syria comes from the Islamic State and Qaeda-affiliated groups that, in his words, make up the “majority” of rebellion. American and Arab officials said that even if Russia were to abandon Mr. Assad, the Syrian president would still have his most generous benefactor, Iran. Iranian aid to the Syrian government has been one of the principal reasons that Mr. Assad has been able to hold power as other autocrats in the Middle East have been deposed.


And as a major oil producer, Iran would benefit if Saudi Arabia helped push up oil prices as part of a bargain with Russia.


“You are going to strengthen your enemy whether you like it or not, and the Iranians are not showing any flexibility here,” said Mustafa Alani, an analyst at the Gulf Research Center who is close to the Saudi royal family.


But the military aid that Russia provides to Syria is different enough from what Damascus receives from Iran, its other major supplier, that if “Russia withdrew all military support, I don’t think the Syrian Army could function,” a senior Obama administration official said.

The conclusion:

A number of Arab nations have been pushing for the Saudis and Russians — polar extremes in their positions toward Mr. Assad — to find common ground on the matter as a step toward ending the carnage of Syria’s civil war, now almost four years old. But, as one Arab diplomat put it, “This decision is ultimately in Putin’s hands.”

And that, ladies and gentlemen, is what the great oil collapse of 2014/2015 is all about. For those who want to know when to buy oil, the answer is simple: just after (or ideally before) Putin announces he will no longer support the Assad regime. If, that is, he ever does because that act will effectively destroy all leverage Putin may ever have over Europe, and in the process, also end - quite prematurely - his career.

Until then, every single HFT-induced spike in oil is one to be ultimately faded, because as the past few months have shown, it is the Saudis who set the price, and they will not take no for an answer, even if it means crippling the entire US shale, and energy, industry in the process.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
TeamDepends's picture

The tin-foil Fedora NEVER goes out of style.

noben's picture
noben (not verified) TeamDepends Feb 3, 2015 8:16 PM

"I am Charlie Tinfoilhat" - US Oil Workers

Occident Mortal's picture

It is the US who is flooding the oil market NOT Saudi Arabia!!

US production has risen from 5MM bopd to 9.3MM bopd whilst the Saudis have stayed flat.

Why is everyone looking at OPEC?? They haven't done ANYTHING AT ALL.

This article talks about the "shale miracle" but is somehow oblivious to the fact that it is the shale boom which has brought about its own demise via oversupply.

This whole oil narrative is bullshit. OPEC voted to sit on its hands and do nothing. The oil glut didn't come from OPEC it came from Eagle Ford and the Brakken. The numbers do not lie.

Why can't anybody see the glaringly obvious reason for the oil crash? Shale has crashed the supply/demand curve. NOT Saudi Arabia who have added zero extra production.

nmewn's picture

You're disrupting the whole narrative here ;-)

Uncle Remus's picture

Yeah, a lot of that going around.


'Bout time.

Supernova Born's picture

It is all about the man that gave sanctuary to Edward Snowden.

That is when they decided Putin had to go no matter the cost.

Uncle Remus's picture


told the West to fuck off


That's trending too...

nmewn's picture

Yeah, and Snowden being Snowden asked Putin with a smirk if Russia does the same thing, on live TV. Takes balls Eddie, gotta give him that but I'll say this for Putin (who I distrust) Snowden is still alive and not in jail.

Fools Mate? ;-)

chindit13's picture

Eddie is not in jail because he has the goods on Puti.  Well, he left the goods with Glenn and Laura, in the event anything untoward were to happen.

As for the oil "conspiracy", perhaps---just perhaps---it's all about shale (as Occident Mortal pointed out).  This, another "conspiracy theory" remains locked under a tin-foil hat, where it belongs.  Oh, and since I'm here, the effects of the Van Allen Belts are easily defeated by, of all things, aluminum shielding.  Now there's a proper use for the stuff!

nmewn's picture

lol...I'm gonna disagree on the first (Snowden had no where else to run and Pootie likes having a pointed stick to jab with, so the set goes to Snowden) and agree with OM on the second as it really is domestic oil production not OPEC staying level and agree with the third, provided HARRP or chemtrails don't blow or melt the tin foil off ;-)

Handful of Dust's picture

We've got Putin right where we want him [with a 96% Russian approval rating] and as collateral damage [as Rumsffield would say] millions of O&G workers and related sectors [and some unrelated sectors like restaurants near rig fields] now unemployed.


Forward !


knukles's picture

The enemy of my frien's enemy is the enemy of my friend's friend's nephew's best bud mom's friend who may or may not be my friend until he friends me on Friendbook then he'll be my enemy until he's unfriended by the emeny of my enemy who might of might not be my friend's befriended friend.  But he's an asshole, nonetheless.
Now that's who I talkin' about


As I told many people many times, put the whole Syria/Ukraine shows into one and only one context.  Natural gas pipelines to Europe from the Gulf and Russia.  Only then does it all fall into place.

Ghordius's picture

the context is that there is a lot of blood being spilled by many interests in order to... careful, here it comes... service the european consumer of gas and oil

that's a service and supply economy red in tooth and claw, complete with state armies, volunteer armies funded by well-meaning zealots and mercenaries

TD: "Actually that's not it: Syria, as we have been explaining for nearly two years is the critical transit zone of a proposed natural gas pipeline, originating in Qatar, and one which would terminate somewhere in central Europe. The same Qatar which was the "mystery sponsor of weapons and money to Syrian mercenary rebels" who eventually became ISIS. The same Qatar which is now directly funding ISIS. Of course, if Putin were to handover Syria to the Saudi princes (and to Qatar), he would effectively shoot himself in the foot by ending any leverage Gazprom has over Europe. "

The Qatary sponsors of ISIS? They remind me how long the Irish Republican Army (IRA) were sponsored by well meaning Americans of Irish descent who donated money to a "just cause" of which they were only vaguely aware of it's details

The leverage Gazprom has over Europe? Well, isn't that swell how a huge Russian corporation has the full Russian state backing (it is, after all, a mostly state company) to try to corner the European Markets?

from which perspective can this be seen as a good thing? A libertarian one? An anarchic one? Don't kid yourself, even if we would have all states magically vanish, similar armed players would move their pawns for the same monopolistic profit motives

and in fact, money is already funding voluntarystic armies like the IS and mercenaries in previously unheard quantities

commercial interests don't need states. they can have imperial ambitions without any state support... but of course if it is there, they can co-opt it, gladly

this is the perfect example how the monopolist is the oligarch is the imperialist is the war monger is the enemy of mankind

this is the oldfashioned Great Game. a Clash of Empires, fuelled by monopolists and wannabe monopolists

ah, what the heck, give me an article about the evils of the EU and the ECB, quick, before I get distracted by reality

new game's picture

then killing people to get the pipeline through is good. i remeber a day when you chatted with your neighbors and came to a mututal understanding...

Ghordius's picture

I have no clue what you are trying to say, here and in most of your comments. perhaps it's a mutual non-understanding

rccalhoun's picture

kerry is the guy you'd love to fight face to face but would shoot you in the back while you sleep without hesitation

Manthong's picture

..poor, poor Russia..

stuck with egg on their face and all the f’n energy and resources in the world.

.. and WTF?.. somebody claims they are accumulating Au.


LawsofPhysics's picture

You have no clue? Really?  Ever get out and talk to your neighbors?  Sounds to me like you might be the type of good neighbor that exists behind a good fence.

Ghordius's picture

more often then not I have them all at my place, drinking my best wine and spirits, and forcing me to arbitrate in their squabbles. I hope it makes me one, it sure costs me a bundle! and I have an impression that you have yourself a similar expense account for a similar setup

JRobby's picture

Right, right. So you are at the "in control, grandiosity" stage of the illness. A severe case sadly.

You have a bunch of "yet's" to come before you see the light.

Ghordius's picture

btw, for all EU citizens (but anyone can sign), here is the petition: at               

                                                                  STOP TTIP

frankly scarlet's picture

you sir have the facts and motives correct as no one else here has.

Dugald's picture


Who's on first???

sandhillexit's picture

And then there is Greece.  Greece is in play, and its not about a few bonds, or interest payments.  

I know Hollywood has done its patriotic best to raise our consciousness, with gad-awful movies like 300, where the emperor of Persia is depicted in transvestite burlesque.  Despite these classy efforts to invoke well, the classics.....

The bankers have overplayed their hand.  I think they believe their own propaganda.  They are so filled with contempt for the Greeks, that they forget how long, and how many times, Greece has governed the whole Eastern Med.

The Greek navy is quite large, and everyone in the country has a boat, of necessity.  The country has an much a claim on the resources under the eastern Med as Egypt, Turkey, Cyprus and Gaza.  Not to mention Israel.  An alliance of Russia, Syria, Persia and Greece changes the dynamic in a fundamental way.  (They are all Orthodox.)  Call it the Byzantine strategy.  


JRev's picture

You're absolutely incorrect and entirely short-sighted on Snowden, as is most of the "alternative" media. NSA whistleblowers out the fucking anus for ten goddamn years and the only one that gets any attention is a former CIA agent who tells us nothing we (at least those of us paying attention) didn't already know? Gimme a break.

Look, this is very simple. A wholesale domestic surveillance program serves two major purposes. One is, of course, intelligence gathering and analysis. The other is psychological warfare on the target populous. Have you figured it out yet? The latter ONLY works until AFTER you've told the mouth-breathing masses they live in a digital East Germany, and the only way to do it is to drag a character out on MSNBS/FAUX/MSMFUCKERY to inform them.

...or do you really believe that good 'ol Eddie just really, really has an affectation towards his broken, crooked pair of glasses that he wears to every interview and hasn't replaced in nearly two years now? He's an invented character. Whether or not the Russians know that is another question entirely, but I'd suspect they do, which raises more questions than it answers.

UselessEater's picture

"It will be a society increasingly unlike any of its predecessors, a Technetronic
society that could easily become a Technetronic dictatorship characterized by
an information revolution, cybernetics, amusement focus with spectator
spectacles providing an opiate for increasingly purposeless masses....

It will soon be possible to assert almost continuous surveillance over every
citizen and to maintain up-to-date complete files, containing even the most
personal information about health or personal behavior of a citizen in addition
to the more customary data. These files will be subject to instantaneous
retrieval by the authorities."


walktheline's picture

Prescient or what? This is something we can all understand and beats the shit out of reading Orwell.

BigJim's picture

Orwell's useful for understanding why. Brzzzzzzinski never reveals that underlying it all is an endless, unquenchable thirst for domination.

walktheline's picture

Would you care to clarify that for those of us who are semantically challenged, by which I mean "And your point is?"

sleigher's picture

You're right about having to drag him on TV to tell everyone.  All Snowden did is tell my friends and family that I wasn't nuts.  The weird part is that "everyone" didn't seem to give a shit about the psych warfare against them.  How's that for "hope" and "change"?

JRev's picture

The sad part is, a sizable percentage of people did give a shit about the psych warfare program (whether they identified it as such or not), only instead of overtly opposing it they responded exactly as it intended:

Almost Solvent's picture

Agreed - and I'm not saying this as an excuse or rationale for these acts - but goddamn WTF the vast majority of mouth breathers have worth spying on is zip nada nothing of any real use. They can track us, pull up our shit at will and find what exactly? That most 'mericans live a shitty existence?

This is not the “I have nothing to hide” thing, this is the “what a clusterfuck waste of time money and blood to track people not worth tracking”. It’s all reactive – not proactive.

Fuck you Langley, we could have done so much more with technology then track when I shit and some fat fucker falls off his scooter at Wallymart.

Shaznardickleze the Doon's picture

What you value isn't what they value, obviously. Maybe they want to know everything about everyone because they can, not because it makes sense or should make sense to you. "Mouth Breather".
Analytics of proles makes for more effective propaganda campaigns... afterall you're property of the religious non-profit United States of America Inc. of Delaware if you have an SSN.

Shaznardickleze the Doon's picture

Don't sit there and pretend you don't breathe from your mouth.

tired1's picture

Goods on Putin? What could he possibly have that hasn't already been claimed against Putin?

That's pretty funny.

Calmyourself's picture

Goods on Putin seriously??  He fucks 20 year old gymnasts, so yeah baggage and goods and alot of jealously not that I'm jealous, you might be..

Calmyourself's picture

10 guys here hate screwing gymnasts...  Battalion (B77) has arrived and their all English peter puffers..


boogerbently's picture

Sanctions. (With our Saudi allies)

It kills Russia AND the US oil industry. A win-win for the tree hugging liberal agenda.

(sorry about all those lost US jobs, though)


strannick's picture

Thank you.

What BS about the Saudis attacking shale oil.

The Saudis have always been America's desert bitches, and that will never change.

angel_of_joy's picture

Well, they sure didn't help shale oil either...

USisCorrupt's picture

To HELL with the shale, I like CLEAN water to drink.


Now lets import the Indian Car that runs on AIR for under 10K.

new game's picture

so unamerican-moar oil, moar oil baby...

air drive pickup, ha...

MontgomeryScott's picture


Snowden is a prime example of a sentient human being with scruples.

A 'Wild-card', they like to say.

A 'terrorist' (according to the SPLC).

IF he was in the custody of the CONUS, his CIA sex-change operation would have already been completed (shades of 'Chelsea' Bradley Manning, here).

It KNOW it's bad when I can get more authentic 'news' from RT than I can glean from the CONUS 'networks'. The BIG NEWS STORY on A.M. 'talk radio' is that Boston's mayor has decided to cancel the N.E. 'patriots' celebration parade in 'winning' the StuporBowl due to too much SNOW. I'm currently checking my balls for 'proper and legal inflation'.

"AND, THE MONKEY FLIPS THE SWITCH..." (Did you ever see the movie that this quote is from, nmewn?)


Beowulf55's picture

Either "The Right Stuff" or "Lost in Space"

SoDamnMad's picture

Hotel California

Check in but you can't check out (???)

new game's picture

so s.a. are going to pump 10m/day at 50 instead of 8 at 80. hmmm fish are rotting, calling the fed and slush funding activities(printing moar).


new game's picture

or mic controlled protection is a BIG chip in the discussion with da king

all financed by the fed - ultimatly...

nothing suprises me anymoar.

evil shit going on. now it appears much moar brazen.

sad shit man, just sad ass shit...

asiafinancenews's picture

It is all about the man that gave sanctuary to Edward Snowden.

That is when they decided Putin had to go no matter the cost.

Totally agree.  That and the red faces handed to Obama, Kerry & the low life scum McCain over Syria was too much.