The Duran Podcast - Oil price cap collapses. Main stream media quietly reports

Episode Date: September 3, 2023

Oil price cap collapses. Main stream media quietly reports

All right, Alexandra, let's talk about the oil price ceiling, which looks like it's not much of a ceiling, at least according to a recent Bloomberg article. What is going on here? The Russian, sorry, the Russian oil price ceiling. Yeah. Be specific here. Yeah, it's Russian oil that has this ceiling. Anyway, what is going on here? This is such an interesting story in some ways, and it's interesting again, because of the enormous publicity that this whole thing. thing got last year and you remember Janet Yellen coming up with these proposals

there was discussions within the G7 in the autumn there was this decision of at the start of this year. There was a huge amount of publicity the media was talking about it, long articles in the Financial Times, long

articles in New York Times, long articles in all sorts of places and to all intents and purposes the All Price gap has collapsed. Nobody is talking about it. You have to look for places in places like Bloomberg and business insider to find out about that fact. Even zero hedges covered it, but only not very much actually. So what's happened is really very simple. Oil prices were low for much of this year. Oil prices have now been rising. In July, Euro's crude, which used to be the flagship

crude exported by Russia and which was supposed to set the price for Russian oil. It's less so today, by the way, because Euros crude was the oil that Russia exported to Europe. But Russian exports to the Far East to China and India and other places are different types of mixes of oil. I'm not an expert on this, so I'm not going to devote too much time to it. But anyway, the price of euros crude broke through the oil price gap in July, at the end of July.

Now, the point was that the way the oil price gap was supposed to work was that Western shipping companies and Western insurers would not participate in trade in Russian oil above the oil price cap. Now the oil price cap has been broken through Russian oil is trading above the $60 a barrel price which is the oil price the oil price cap set for Euro Scrood but Western shippers and insurers are still trading in oil even though it's around as I understand it or Eurocruid is about $73 a barrel

So they are not, in effect, complying with the oil price cap. And they're only able to do that, so it seems to me, because Western governments are looking the other way. They're letting them do it. Why are they letting them do it? It's not difficult to understand. I mean, the overriding priority at the moment in the West, in Europe, in the United States, is to bring inflation down.

What was driving up inflation last year? well many things but one of them was very high energy prices so how do you keep energy prices from rising even further you increase the amount of oil that is traded on global markets so that means that you can't ultimately push down push Russian oil out of the market because doing that would create a shortage of oil which would push up the price. So the result is that they have to trade in Russian oil in order to keep the edge of inflation in the West. Fighting inflation is more important than administering the price gap. It was always going to be so, and so it has proved. So what was the whole point of the whole price cap thing?

They must have known that this was a possibility to happen when they were putting together the price cap scheme. So why bother? Why did they bother doing it in the first place? Well, why did they bother doing it? First of all, I'm not convinced that they did all realize that it would be not. I mean, you know, we're talking about, you know, people who are not, let's put it like this, the sharpest knives in the drawer. I don't think even Janet Yellen really understood exactly how this worked. I mean, but why did they do it?

Well, I think ultimately, principally for PR reasons. None of them. Because, you know, they wanted to do something to cut back on Putin's, you know, receipts. There was a lot of talk about this from Ukraine. You remember Ukraine last year was, you know, pushing very hard for all. oil blockades of Russia and all of those kind of things. So they went along and they came up with this oil price gap idea. Everybody told them that it couldn't work.

Everybody said that if it was made to work, it would create an oil shortage. They can't risk an oil shortage. So they've allowed the oil price gap to be breached. And the word has gone out that outside the specialist press, you know, Orprice.com, Bloomberg, Business Insider, those sort of places. The mass media in the West, even the big broadsheet newspapers, you know, the Financial Times, the Washington Post, the New York Times, they're not running with a story. Yeah, I imagine that what they're going to do is to just allow this whole price cap,

price ceiling thing to just fade away. They'll never really remove it, or if they do remove it. They'll do it, you know, in a very quiet way somewhere down the future. But they're just going to just keep on looking the other way, like you said, and just allow, you know, oil to trade at whatever price is going to trade. Yes. And that'll be that. And they'll once again resort to media management and just make sure that the big mainstream media outlets that aren't specialized in oil or finance or stuff like that, just don't report on this story. You know, that's probably how they're going to handle this.

That's exactly. It doesn't work, but they're not going to admit that they failed. This was a stupid idea. That's exactly what they're going to do, and that's exactly what is happening, as I said. I mean, given how much importance was attached to the oil price gap last year and the start of this year, given how much publicity was given to this whole business of the price gap, you would have thought that the fact that Western shippers and insurers are dealing in Russian oil above the price gap, above the price gap would be big news, except of course, it's not. That tells you, but there is a great deal of news management going on. How has this hurt the collective West Biden White House,

the European Union? The oil price cap effort, the narrative, the whole thing that they put together, or what was it nine months ago? How has this hurt them? Because I don't think this was just, you know, a dumb idea, no harm done. I mean, harm was done. It wasn't done to Russia. No. Obviously, who was it done to?

Well, first of all, it has done real damage to the Western insurance market. I mean, the attempt to use London, the London insurance system, Lloyd's of London, to police an oil price cap, has accelerated moves across the world to develop. alternatives to London for shipping insurance. And by the way, if you remember, I warned it would happen. I said the idea that London has a monopoly of genius in this area is just absurd. Once upon a time, it might have been true. In the 1980s, or, you know, Heaven's Help us even before, in the 1960s, you know, it probably would have been true that in those days, insurance markets in

the rest of the world were not sophisticated enough. to pick up the slack if London was removed from the scene. But today they are, and we've seen that India is sorting out its insurance, Russia is sorting out its insurance, all of those things. It's also accelerated moves to trade in oil outside of the dollar. And by the way, just today, I've seen that India is now pushing hard to get companies to accept rupees, countries to accept oil producers

to accept rupees in return for oil. In other words, for India to pay for oil imports in rupees. Now, it's been a problematic issue in the past. By the way, and this is a different story, it suggests to me that something is being worked out with the BRICS payment and currency system. But we can see that all of that, there's been a big catalyst there.

And the third thing, and it is a geopolitical issue. The oil price cap infuriated the other oil producers. It enraged the Saudis. The Saudis were really, really angry about it. They said, you know, nobody sets the price of oil except us. That's what we do. That's not what you do.

And that caused a major deterioration in relations between Saudi Arabia and the United States. States at the start of this year. As we've discussed in previous programs, Biden is now trying to reverse that. Another reason may be why the West isn't enforcing the oil price gap.

But I think the damage with the Saudis has been done. They've seen that the United States is prepared even to consider these ideas and they've hedged, they've built up relations with China, they're seeking to join bricks, they've reconciled with Iran, all of those

kind of things. To repeat again for the Saudis, the oil price issue is a core national interest. It's an existential one. They will not ever accept a situation where other countries were Western countries set the price of oil. That is simply not something the Saudis will tolerate. Yeah, I agree with you on that one. The oil price cap scheme was what really pushed Saudi Arabia towards towards China, Russia, breaks. Yes.

It really moved the Saudis away from the United States. Yes. That's probably the most damage that this thing has done. Yes. That's an incredibly bad idea

altogether. And it took, I mean, I have to say it's fascinating to see how quickly it's unraveled. And it's even more fascinating to see how when it did unravel, nobody wants to talk

about it. Except as I said, a few people on Bloomberg where they have to talk about these things. It never really got started. It never really got off the ground. Absolutely. I mean, it never really, it never really worked. I mean, the Chinese and the unions ignored it. So did other Asian buyers. So did Japan. Japan basically opted out of it almost immediately, having initially agreed to it. And now we see that the whole thing has just crumbled. As expected. Okay. As expected. The Durant, yeah, the durand.com. are on Rumble Odyssey, which shoot the telegram and Rockfin and go to Durant Shop, 10% off, use the code.

Good day. Take care.