Saturday, July 30, 2016

Oil Glut Causes Anxiety in Moskva

       Well, now.   Stomach acid is replacing vodka as the new Russian cocktail.  With the RIO Games about to start and Russian athletes sitting at home waiting for a phone call from-: a) drug lab, b)  Federation authorities, c) Mom, d) Mr. Putin, e) Adele, f) Justin Timberlake, g) Gulag assignment staff, the Kremlinistas got more bad news to add to the mix.  Crude oil futures slid further in weak trading to $41.21/barrel as traders acknowledged that stored oil around the world exceeded 500 million barrels of crude.   Since Iranian oil reentered the market with pledges of continued pumping, prices have been testing 2016 bottoms again.  In January, half a year ago, prices reached $26/barrel, causing producers to shut down many marginally profitable locations.   US producers began layoffs that continue, and money for exploration has dried up.  Investment in equipment has been curtailed and manufacturers of same  have seen profits dip.
       These prices give Mr. John Kerry, US Secretary of State,, new leverage when he speaks with his Russian counterpart, Mr. Sergey Lavrov.  Given the complicated strategies of both the US and Russya in Syria, this price slide can only mean the military operations of the Kremlin with government forces of Bashar al Assad will be affected.   As forces convene on Aleppo, perhaps the Kremlin will be less obstinate and more agreeable to alignment with the US military , such as it is in the region.
      But then, they are Russyan.  They are confused.   They are the largest country in the world.  Why do WE have to negotiate with anybody?   Answer: M-O-N-E-Y!  Or lack there of.  With oil revenue still the NO.1 source of foreign exchange, the Kremlin is at the mercy of the market, which they cannot exert pressure upon no matter the politics.
      Maybe the few Russian athletes allowed to compete will pay their own way.  Maybe they'll have to secure quarters on AirBnb.  Maybe they'll have to bunk at the Russian Embassy.
     If the price of oil reaches $25/barrel,  maybe the forces in Ukraine and Crimea will go back to Moskva .  Maybe not.

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