Pepe Escobar — How the Iran sanctions drama intersects with OPEC-plus

The bottom line is that despite the agreement in Vienna, the price of oil, in the short-term, is bound to go up. Analyses by BNP Paribas, among others, are adamant that supply problems with Venezuela and Libya, plus the proverbial “uncertainty” about the sanctions on Iran, lead to “oil fundamentals still…favorable for oil prices to rise over the next six months despite the OPEC+ decision.”...

Take-away.

Considering that in realpolitik terms Riyadh simply is not allowed any “decision” in oil policy without clearing it first with the US, what remains to be seen is how Washington will react to the new, long-term Riyadh-Moscow entente cordiale. As far as oil geopolitics goes, this is in fact the major game-changer....

The OPEC-plus-Iran puzzle is far from solved. Only one thing is certain; the future spells out brutal, covert resource wars.

Asia Times
How the Iran sanctions drama intersects with OPEC-plus

Pepe Escobar

Sputnik — Choice of Tillerson for US Secretary of State Important for Whole World - OPEC

Earlier on Tuesday, Trump’s transition team confirmed his intention to nominate Tillerson, who heads the ExxonMobil oil company, for the post of US secretary of state. 

"There’s no doubt that the choice of Rex Tillerson is a very important one," 
[OPEC Secretary-General Mohammad Sanusi] Barkindo said at a forum in Washington, DC. "It’s not only important for the United States, but I think is important for the global community because of what he’s bringing on board as an accomplished oil technocrat who rose to became a very successful CEO for what is probably the world’s largest listed oil and gas company…" Barkindo noted that there is a very thin line between oil, geopolitics and diplomacy, and added he looks forward to continuing to interact with Tillerson in his new role.

"It's about the oil, stupid." Now that it's on the table, we can leave aside all the BS and get down to business.

Sputnik International
Choice of Tillerson for US Secretary of State Important for Whole World - OPEC

McConnell Gives Strong Support for Tillerson as Next Secretary of State

F. William Engdahl — Washington Again Underestimated the Iranian Mind

De-dollarization.

NEO
Washington Again Underestimated the Iranian Mind
F. William Engdahl

Ambrose Evans-Pritchard — Russia plans $40 a barrel oil for next seven years as Saudi showdown intensifies

What happens when one goes poking into a bear's lair.

The Russian contingency plans convey a clear message to Riyadh and to Opec’s high command that the country can withstand very low oil prices indefinitely, thanks to a floating rouble that protects the internal budget.

Saudi Arabia is trapped by a fixed exchange peg, forcing it to bleed foreign reserves to cover a budget deficit running at 20pc of GDP.
Russia claims to have the strategic depth to sit out a long siege. It is pursuing an import-substitution policy to revive its industrial and engineering core. It can ultimately feed itself. The Gulf Opec states are one-trick ponies by comparison.…

Russia is not entirely in the clear economically however:

Saudi Arabia’s leaders are fully aware of the Kremlin’s painful predicament. They appear certain that they can outlast Russia in a long duel. By the time we find out which of these two petro-giants is stronger, both may be on their knees.

The Saudis are probably figuring that the US will support them if things yet rough, but after they wiped out the profitability of nascent US shale industry, that may be wishful thinking.

The Telegraph
Russia plans $40 a barrel oil for next seven years as Saudi showdown intensifies
Ambrose Evans-Pritchard

Aaron Menenberg — The Crafty Saudis: How They’re Sustaining Low Oil Prices

The oil market continues to be oversupplied and barrel prices remain low. It’s mostly the Saudis’ doing, and its part of their strategy to replace OPEC with a new Global Corporate Oil Board. The newest developing is boost in domestic refining and growth in their refined product exports. Where does everyone else stand, and where will this go?….

EconoMonitor
The Crafty Saudis: How They’re Sustaining Low Oil Prices
Aaron Menenberg

Nick Cunningham — Shale Rivals OPEC As Swing Producer

Although those two reports differ on the direction of oil prices in the short-term, they both underscore the flexibility of shale. With the oil bust, U.S. production is expected to contract, leaving latent production capacity in the ground. Unlike conventional fields, shale wells can be drilled quickly, and can be shuttered quickly. That makes U.S. shale, “as close to inventory-on-demand as oil ever comes,” as Steve LeVine at Qz.com puts it. 

This may not present the “existential threat” that Citigroup suggests, nor will it be “the end of OPEC.” OPEC is still exacting a very large influence over the price of oil. And whereas OPEC spare capacity can be directed by decision-makers at the top, shale output will fluctuate depending on the price of oil, outside of the control of market producers. But by having developed several million barrels per day in “spare capacity” that dozens of shale drillers collectively form, shale is acting as a swing producer.

Oil Price
Shale Rivals OPEC As Swing Producer
Nick Cunningham of Oilprice.com

Lord Keynes — US Inflation Rates (1946–1987), Keynesianism and Stagflation

Lord Keynes explains Seventies stagflation in terms of 1) wage pressure due to increased labor bargaining power, 2) dismantling of commodity buffer stock policies, 3) collapse of Bretton Woods, and 4) oil crisis. Bookmark it.

Social Democracy for the 21st Century

US Inflation Rates (1946–1987), Keynesianism and Stagflation

Lord Keynes

Philip Pilkington — Why MMT is Right and the Dreamers are Wrong – Kaldor Versus the Kaldorians

Nicholas Kaldor was one of the most famous economists of the 20th century. He was considered by many to be the direct heir to John Maynard Keynes as he was not only an extremely accomplished theoretical economist but also played a key role in the construction of British economic policy after World War II and was an all-round politically savvy individual – he ended his life, like Keynes, with a Lordship.

We mention this because if you read his writings you note that there were really two Kaldors. One was the Kaldor of the halls of Cambridge University. This was the Kaldor of abstract mathematical models of how capitalist economies function (some of the finest ever produced, mind you). The other Kaldor was the Kaldor that actually analysed economic problems and proposed solutions – while keeping firmly in mind the political situation of whatever time he was giving advice.

Naked Capitalism
Philip Pilkington: Why MMT is Right and the Dreamers are Wrong – Kaldor Versus the Kaldorians

Economics v. political economy.

Phil and Ramanan debate in the comments.