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‘Oil war’: How US and Saudi crashed crude prices to hurt Russia, Iran, Venezuela in 2014

In a 2014 “oil war,” the US pressured Saudi Arabia to overproduce crude and intentionally crash prices on the global market, in order to hurt the export-reliant economies of Russia, Iran, and Venezuela.

US Saudi oil crash 2014 Russia Iran

The United States and Saudi Arabia waged a very important yet little-known “oil war” in 2014, which had huge geopolitical and economic consequences for the world.

Washington pressured Riyadh to significantly overproduce crude and intentionally crash prices on the global market, in order to hurt the export-reliant economies of Russia, Iran, and Venezuela.

Multipolarista host Ben Norton analyzed this crucial historical episode in the video and podcast below:

Historian and political scientist Aaron Good also joined Norton to discuss how oil is used as a geopolitical weapon in the following video and podcast:

Oil as a geopolitical weapon: US hegemony, OPEC, Saudi Arabia, and the petrodollar

Sources

Reuters published a new wire on June 27, 2014 titled “Kerry, Saudi King discuss oil supply, U.S. official says,” reporting:

U.S. Secretary of State John Kerry and Saudi King Abdullah briefly discussed global oil supplies during a meeting on the crisis in Iraq on Friday, a senior State Department official said.

During the talks, Kerry referred to recent comments by a Saudi oil official that the world’s largest oil producer would increase supplies should crises in Iraq or Syria disrupt supplies, the official said.

“The secretary noted positively a recent statement from an oil official in the kingdom reflecting the kingdom’s desire to do what will be required in the event of any turbulence,” said the State Department official, who briefed reporters on the talks.

US Secretary of State Kerry subsequently returned to Riyadh in September 2014.

The economics editor of Britain’s top newspaper The Guardian, Larry Elliott, explained the scenario most clearly in a November 9, 2014 column titled “Stakes are high as US plays the oil card against Iran and Russia.”

US state media outlet NPR published a report on October 28, 2014 titled “Why Does Saudi Arabia Seem So Comfortable With Falling Oil Prices?” It answered its own question with the following:

While that’s good for consumers and most businesses in the U.S., the falling price is bad for oil-exporting countries such as Russia, Venezuela, Iran and Iraq.

“The Saudis have shown themselves to use oil politically throughout their recent history. They’re quite good at it; they think of oil as a strategic commodity and kind of their key lever of influence globally,” says Bronson, a senior fellow with the Chicago Council on Global Affairs.

German state media outlet DW published a column on December 16, 2014 titled “Oil price tanks,” writing:

Oil prices have dropped nearly by half since June, with declines accelerating recently after member nations of OPEC, the Organization of Petroleum Exporting Countries – led by Saudi Arabia – decided on November 27 they would not cut back production despite an oversupplied oil market.

“Political and social tensions arise in producing countries that depend on income from oil and gas. Vladimir Putin has warned of harsh economic times in Russia. Venezuela and Nigeria are under pressure, and people speculate just how long [oil-exports-dependent] countries can dig into their savings, when they need $70 to $100 per barrel to balance the books,” [David Elmes, head of the Global Energy Research Network at Warwick University] said.

Geopolitical aims are in part responsible for the oil price plunge

Analysts speculate that US Secretary of State John Kerry, who visited Saudi Arabia and other Gulf states in summer, may have pressed the Gulf Arab oil states to overproduce oil in order to depress global oil prices and thereby weaken Russia – and Iran.

Jason Furman, chairman of the US White House’s Council of Economic Advisors, on Tuesday expressed satisfaction at the impact of low oil prices on Russia.

“They are between a rock and a hard place in economic policy,” Furman said. “The combination of our sanctions, the uncertainty they’ve created for themselves with their international actions, and the falling price of oil has put their economy on the brink of crisis.”

Reuters released a report titled “Saudi Arabia is playing chicken with its oil,” which was republished by CNBC on December 16, 2014, noting:

Today, Saudi Arabia is once again using its “oil weapon,” but instead of driving up prices and cutting supply, it’s doing the reverse. In the face of a global slide in oil prices since June, the kingdom has refused to cut its production, which would help to drive prices back up. Instead, the Saudis led the charge to prevent OPEC from cutting production at the cartel’s last meeting on Nov 27.

“What is the reason for the United States and some U.S. allies wanting to drive down the price of oil?” Venezuelan President Nicolas Maduro asked rhetorically in October. His answer? “To harm Russia.”

More broadly, the Saudis are also punishing two rivals, Russia and Iran, for their support of Bashar al-Assad’s regime in the Syrian civil war.

Former US military intelligence officer Ralph Peters, a notorious neoconservative, wrote a column in the right-wing New York Post on December 14, 2014, titled “Saudi Arabia’s oil war against Iran and Russia,” in which he boasted that the crashed oil market would hurt Russia, Iran, Iraq, Venezuela, and Brazil.

Reuters published a news wire titled “Saudi Arabia to Raise Spending, Cover Deficit with Reserves,” which was republished by US state media outlet Voice of America on December 25, 2014, stating:

Saudi Arabia plans to raise government spending 0.6 percent to a record high in its 2015 budget while covering a large deficit due to plunging oil prices with its huge fiscal reserves, the Ministry of Finance said on Thursday.

the plan suggests Saudi authorities are confident of their ability to ride out a period of low oil prices and see no need for major austerity.

Some analysts believe Riyadh is content to see oil prices fall as a way to squeeze out competing producers in non-OPEC nations.

The geopolitical situation has changed somewhat drastically since 2014, however.

The Wall Street Journal published an article on March 15, 2022 titled “Saudi Arabia Considers Accepting Yuan Instead of Dollars for Chinese Oil Sales,” in which it reported:

Saudi Arabia is in active talks with Beijing to price some of its oil sales to China in yuan, people familiar with the matter said, a move that would dent the U.S. dollar’s dominance of the global petroleum market and mark another shift by the world’s top crude exporter toward Asia.

1 Comment

1 Comment

  1. Simon Silverby

    2022-11-23 at 16:39

    This report is misleading. The 2014 price crash was caused by overproduction in *all* oil-producing countries, and especially the U.S. — it was the peak of the fracking boom. Producers here in the U.S. incurred a lot of debt to invest in fracking equipment, and were aggressively producing to generate returns for investors. The price crash was a disaster for small and mid-size U.S. companies, but also to every oil-producing country, including S.A. In fact, the U.S. fracking boom marks OPEC’S *decline* in influence over the global market, and is one of the central causes of the Arab Spring (which is what you should really be reporting on, as it’s sorely under-reported).

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