tv Cross Talk RT March 13, 2020 5:30pm-6:01pm EDT
they've long sought to make this area the capital the change in american terminology comes amid increased wrangling over the contested says she the american president donald trump's middle east plan. should remain the softened capital of the state of israel for ever. r t east resulin political analyst summer or an intel of eve says jerusalem's palestinians could have more political leverage in israel but that would mean they've got to accept israeli citizenship the residents off jerusalem be palestinian residents could claim israeli citizenship and in death case they could vote in the elections to the knesset and flip the government from netanyahu to his adversaries but. choose not to do it choose to remain loyal palestinians and this is where they clash with both the government and the
trumpet in this race for the united states has. used various terms in order to describe israel the west bank and the gaza strip you can. look it up throughout the years it has changed so one headlines the coronavirus story and everything else to talk about at r.t. dot com pictures and features there for you or a very social media check if you get a minute it's midnight 31 here in moscow my name is kevin owen thank you for watching our channel we are r.t. international.
hello and welcome to cross talk where all things are considered i'm peter lavelle with the coronavirus now officially declared a pandemic the world faces the additional burden of an oil market collapse this comes at a time when demand for crude was already low some are calling this the ultimate perfect storm how this all ends is anyone's guess. crude carnage i'm joined by my guest was me in beirut he's a professor of economics and international affairs in irvine we have pai and he is an independent economic and political analyst as well as a former commodities trader and in toronto we cross alexandre bruno he is an analyst at gulf state analytics sorry gentlemen cross-like rules in effect that means you can jump in anytime you want and i always appreciate pilot may go to you 1st in irvine because you got up early as for this program here all right it all
happened quite quickly and a lot of analysts weren't too surprised by the deal that the russians and the saudis had collapsed. the russians didn't go along with what the saudis wanted to do and the saudis reacted and now we have carnage on the oil markets here what is saudi arabia's gambit here because you know in the if you look at its budgetary constraints it can afford to have low oil for a very long time and we throw in the coronavirus that is also hurting crude demand all across the world what's the what's the gambit go ahead. well thank you yeah the timing of the gambit of the gambit as well as a separate thing all this turmoil and black swans concurrently happening around the world really kind of begs certain geo political questions in my opinion you have coronavirus more or less announced really kind of command saying on new year's eve and then the rollout is fairly rapid and. in
a sense the attention being kind of collapsing of as you said already low energy demand but as an energy demand especially within china's collapsing then you have the announcement of the pandemic and the timing then of opec really saudi arabia and to a certain extent now u.a.e. . you know just insisting on the pullback which would in turn affect the desired medium term desired from russia to capture more of the global market share within the energy space and at some point there was a budding of hads russia i sensed saw through certain coordination issues he had unofficial accusations of coronavirus having been triggered out in the west from russia as well as from iran and russia did you know they do their math they do their homework and they sense that they can write out
a price war much better than the very over leveraged you know $50000000000.00. budget constraint to saudi arabia that needs $83.00 a barrel of oil in order to balance its budgets as well as fund its longer term visions of getting off of oil and expanding its economy under the vision of mohamed bin solomon so it's really people have to look at this as a sense of it these are not just necessarily coincidences in my point of view because the ruble was strengthening last year russia. has been on a de dollarization platform in order to diversify away from dollar reliance in part to fight sanctions thrown against it as well as its partners but also to strengthen its own ambitions to have its currency the currency of its allies really rival if. it's the 47 year old petro dollar standard which is the effective monopoly globally
with regard to oil or gas pricing so there's a lot of you know it's a game of chicken really funny scenes there's a lot who is going to be able to see exactly and there's a lot of moving parts of the as you've just explained here a couple is go to you in beirut here i mean what. i'd please explain to me why saudi arabia thinks that russia for example is going to blink 1st now its lifting costs are very very low but it's budgetary constraints are extraordinary considering what the the the crown prince wants to achieve there and russia has got a pretty good piggy bank to ride out this these tribulations the price fluctuations that we're experiencing right now i don't understand the saudi reasoning here go ahead and beirut well obviously it could be there is no reasoning they make in the same mistake they made in 2014 they put themselves in a big deficit in a big hole and they do in the same mistake all over again there is no economic
victory before the su would be by and turning into a confrontation with russia into this and it will backfire it's actually backfired and probably they have to go into the open market and borrow more money and be more that we all know that they're a break even to balance their budget has to be out of around $80.00 now the oil is close to in the say it might be lower so actually they can be and in deep trouble especially if they haven't had a war with the money. they have in a war now was russia and probably the they will face a very difficult situation especially now iran call it that traded on the exchange and we've seen in the couple days how this aramco share has tumbled and all the world that. actually projected this is going to be the stock
that's going to bring saudi arabia back into into the market and use all of the wealth and investment from them or go to rebuild sudhir arabia or as in a deep deep trouble and the sudanese in deep trouble i think my best estimate they miscalculated they should be gone along with the russian coordinating there for. that will be more helpful at this point you know let's go to toronto very interesting because it is public knowledge public knowledge that russia has planned for something like this and they have a budget set separate budgets a certain price of oil i mean you can go as low as $25.00 in the russians can can ride it out ok i mean they don't want it to be that low but they've made budgetary considerations to be able to deal with that the saudis should have known that it's not a secret go ahead in toronto. yes well i think the saudis have no
idea what they're doing and i. had to dig up some history and get some compared there is no so now seem to me plausible that could produce some vantage for saudi arabia right now. one of the scenarios in the 1980 s. the saudis had offered action to sustain prices but. at that time they reflect what to invite more but users into the into the game forcing more competition on them so that backfired in the eighty's now they are trying the scorched earth. trajectory which seems to be though directed to me to meet seems more directed toward the us share for users and one else because they're the biggest losers and us banks that gave them the loans in fact this could really trigger another 2000 financial crisis and we're seeing we're seeing the effects on
the market already that well you know you got ahead of me because you're reading my mind across the world there because that's exactly one of the things that i've been thinking about here let's go back to irvine i mean are you is the u.s. shale industry really the target of all of this the saudis have been complaining about it endlessly. it's expanded into the oil market a tremendously over the last 10 years this is the real target of saudi arabia not the russians the americans go ahead or enter a buying. i think the the shale issue is part is a large part a red herring peter because. you know your other guests are hinting at it there this is a currency and really currency standard for energy trading war that's happening but that cannot be announced in the mainstream corporate press u.s. u.k. or europe because of the sensitivities either like you know discussing the matters
of of the financial risk posed to the banking system you know really from rivals across your asia rivaling that the dollar standard is equivalent to discussing the nuclear codes and corporate press so they have to go about it saying that a look russia now. is targeting our shale sector russia is doing is essentially geo political and geo economic jujitsu or judo or quito you choose the martial art ok the west has traditionally as your other guest referenced utilize the oil price for geo political purposes mid eighty's it was a tactical drop in the energy price to torpedo the soviet union you had a reprise began you know with iran and kind of 7677 to take care of a wayward disobedient shah of iran back then and then just 6 years ago you had a aggressive drop that was coordinated in the price of oil to affect the books of
russia iran venezuela nigeria really kind of nations that have been leaning eastward or leaning certainly away from the washington consensus this time you had enough slack to where russia was reading the tea leaves preparing itself going in despite seeing eye to eye with the saudis on various things over the past few years sensing that this could be a tactical maneuver why again i'm a broken record on this no one within saudi arabia runs saudi arabia saudi arabia takes dictate. from banks within london and new york and this is you know that's why there's infighting within the house a saudi have mohamed bin solomon resting in other members of the house of saudi is because there is the wanting to lean further towards the east because the numbers in the economics in the longer term are more sustainable makes sense whereas you have the traditional relationship you have the post world war 2 establishment you know between the u.s.
and saudi arabia that has evolved into what the petrodollar set up after the gold standard ended in the early seventy's and that paradigm is starting to give none of this can be discussed out in the open you know have analysts on bloomberg or c m b c or in the f.t. or what not bluntly discussing the risks but as your other guests hinted there's already a you know a kara selling or a cascading effect within western finance a 6 month spell of oil below $40.00 could devalue as much of the western financial system because $1.00 trillion dollars is the amount of energy or debt that's tied up just between you know larger banks as well as made here banks and energy producers and when the u.s. has nothing else really the west has nothing else but to throw the kitchen sink yet in order to try and prevent a an eclipse thing of the dollar standard what it's doing and shooting itself in the exactly one of the things that's very interesting is that you used the dollar
is a political weapon it comes back like a boomerang and hits you this is what i've been saying for years here you shouldn't use it as a political weapon or gentlemen we're going to go to a short break and after that short break we'll continue our discussion on the crude carnage stay with our team. we have to realize. we are all living on a small fragile spaceship together and it's really no different than a bunch of people in a harsh environment trying to it rely on each other to survive we we are interconnected on this planet we rely on each other or who are around the world to survive as a species. as a budget we talk about trouble he's got to demystified this whole political space
if you weren't clear before like these folks are no better deny us so you know i you know you can reach out to friends say you know take responsibility maybe run for office at the end of the day you know i don't see how we move a lot of system where these people get away with you know misrepresenting us why not step up and do it yourself. time after time called parishioners repeat the same mantra sustainability it's very important it's accelerate the transition to sustainable transport sustainability stay in her manner more equitable and sustainable well. they claim that production is completely hama's. this number. isn't designed to present companies want us to feel good about buying their products while the damage is being done far away and this is something else
this let's keep going to an even and i mean look. this is the move in unison we didn't do any minute and i'm stunned then the undisputed. welcome back across the uk where all things are considered i'm peter lavelle to remind you we're discussing crude carnage. ok. it's go back a mile in beirut on this program i always try to avoid hyperbole but it seems to me considering the behavior of saudi arabia over the last couple of years under the nominal leadership of the crown prince here he's putting the entire kingdom it risk isn't he this is an extraordinary gambit we just pajamas gave us the numbers there and i think that just the top level i mean when you see the whole financial ization
of the energy markets here it doesn't take much to rattle the cage and the cage is being rattled go ahead in beirut. obviously he's taken there he usually risks which is kind of backfired as the early and probably is going to hear it from the president of the united states because it's going to backfire not on them it's going to backfire on mr trump himself because he had built his his reputation as he's going to make the u.s. independent. term of oil and gas and today there is screaming in the united states from all these oil company who is actually the most of the there are stocks in the red some of them is down 50 percent some of them down 70 and 80 percent and some of them have really that basically they're going to go into bankruptcy protection so i think they probably somebody from those oil lobby they wanted to mamak been some man had because they but oh mental
business of this is in reality it does help russia on the other hand because you know you know the united states mr trump he tried to put sanction against against russia annoyed stream and now they. gave a gift and a sense to the restaurant because in a way this will eliminate some of the competition in directly for or for the. by having probably further investment in the shale gas in the united state if it's going to be a very impossible to continue as mr trump tried to do today i think the implication is going to be tough for the sudanese they can to face the bleeding of their financial resources there or they're there and down when there's going to be depleted gradually that's what what we will see those $500000000000.00
actually they cannot be at least is going to be affected by this downturn in oil prices and i think it's going to be a lot of anger in the in the in the in the united states the situation is very bleak for him personally because that gamble at this point it doesn't help him it doesn't help his reputation it doesn't help iran cause stocks and it doesn't help that international economy in the end yes the international economy needs some economic boost but you have to remember these these stocks basically a lot of countries live on them including the united states i was looking at some research there is 6 states depend on the price of oil and gas and today probably some of these jobs millions of jobs that were created by shale gas revolution probably probably going to see
a read for that revolution and defeat for that revolution probably a lot of those lobbyists are pointing out been some amount as us probably the screaming that happened at the white house just recently. as. jews day because they came and met with the president and they have a lot of and that baggins mamak been some man because they accuse him of being responsible for the crash of the oil and gas market yet and it's going to take a while to rebuild it they reverse here let's go to toronto you're. outsider you're nodding your head in agreement there go ahead will reflect on what we just heard go ahead well i mean i agree because again as i mentioned earlier i don't see any logic whatsoever for been summoned to pursue this policy now putting it more in context the oil production increase and the was also announced in conjunction with the arrest of rivals to the throne or at least those
who have been so mine considers rivals or thrown his cousin now i have who was once head of military intelligence one very costly americans and he was the one that cooperated with the united states in fighting terrorism sarabi for many years and a few other princes now they're in house arrest but this strategy to isolate these very key figures in the kingdom and then to announce this policy it seems to me that he's really challenging the united states more than anyone else and. i'm wondering if this is blackmail to get trump to do something on geopolitical terms in the region. i don't we don't bring much about iran anymore on wednesday i believe the. there was a strike an american base in iraq where 2 american servicemen were
killed and the british soldiers well will that have any implication as it did in. the late december against iran is. some man trying to get the united states to do more in iran threatening these kind of economic weapons. looked at all those scenarios and again there is. some one must be a total gambler because half and knowing why because he he himself. probably cannot come up with explain the logic behind this. pie are we looking at upon another 2008 financial scenario here because it so much of the economy is leverage to energy and to the price of energy here i mean is it is this something that you that worries you go ahead in irvine. yes we were somewhat referencing it myself and i believe your guest and her on earlier but you already have essentially
triple be rated bonds within the energy sector that's just just you know barely investment grade as of the timing of the dropping of prices within the energy sector aggressively over the past 2 weeks you have those triple be rated bonds now effectively trading is junk bonds yeah now you give that enough time you know at a price sub $30.00 really sub $40.00 over a 6 day month period and the math does itself there's a collapsing within the wider credit space and just yesterday had trouble sitting with you know the c.e.o. of bank of america to its immediate right the head of citi group to the right of him solomon of goldman sachs right across from him having a century a reprise of the sort of meeting that was taking place 12 years ago with the heads of banks reassuring the president as well as the country on camera that quote you
know our books are safe or in solid shape which is you know a trillion in a cage and they don't you know you're in trouble you know you're ready for the death from 12 years ago wasn't taken care of it when they do that you know you know in just a couple of things real quick i had good. so your other guest was referencing there were sanctions thrown yes the timing of the sanctions thrown against rose naf against gazprom naf against gazprom you know the clamping down on the north stream to the timing from the west from the u.s. from washington against these russian firms happen to just overlap and i don't think it's a coincidence with these firms going off of the dollar as far as their dealings with europe and the rest of the world for oil and natural gas and the ruble per se strengthening as i mentioned earlier so it's somewhat terek to most viewers you know the minutiae of finance within the energy space and banking but it really needs to be brought to the fore i would urge your viewers to really look behind
kind of prescribe headlines to see this as an unprecedented war between the strongest. currency on record the dollar dissipating against rival currencies wanting to take its place certainly with regard to the most important commodities on earth oil and natural gas. come out it's go back to you in beirut where is this going to go i mean i've read some reports that the saudis will come up with some kind of compromise up 3 is 6 months but you know m.b.'s doesn't strike me as that kind of person i mean he's decided in let the chips fall where they may and i and i think that. actually point here and have a lot going on inside internal saudi politics as well is quite frightening actually when you read about it and learn about what he's doing here he doesn't seem like a person that wants to change his mind or can have his mind changed the americans
put pressure on him go ahead in beirut. i think it's this is this is. a fact. election in the united states because as i said early president put his or petition on the line by having the united states to be a sovereign state in terms of its need for oil and gas and today as your guest mentioned they are all these companies that are actually in the red and most of them in junk status which is devastating for for for his. promise that he's going to make the united state independent this is against the objection of many people in the united states because he compromises the environment now he compromised the environment and he compromised this company by having a partnership by ways mohammad been summoned all those $500000000000.00 that he had received supposedly as an investment from from from. they have
they have been destroyed in this matter miscalculation and the probably the losses for american couple a company could be more than that and probably going to be devastating for a for the u.s. company and they need a lot of time to work them out in the other side maybe the russian will feel some pain but they cannot be actually there that kind of come out winning the competition because all along. president trump who was trying to push europe to buy american shale gas that expense of their security where we noticed that he was a pressure in germany merkel other countries in the region and this is now maybe this is worked out for the russian without wanting to have this confrontation they can use it and play it but it and so do fades and then the american face and
probably. this is going up but probably the there's a hope for president from being elected again on the line because you have to remember he bragged about the market is up there of the market to really in big trouble and the oil sector brain going one further out of the market so if he's probably going to grab that he can got a good deal of corporation we let him self i have to jump in gentlemen he is ruan out of time one lesson to be learned here energy security and sovereignty is of upmost in russia is done that many thanks to my guests in beirut irvine and in toronto and thanks to our viewers for watching us here at r.t. see you next time and remember rostock rules.
join lease the full power of the federal government of this effort today i am officially declaring a national emergency this is art international that's the main story this hour the u.s. stepping up its response to thwart the spread of the corona virus following suit with other countries across europe in asia. as the greek island of lesbos records its 1st infection it's a big deal locals there fear they won't be able to cope therefore while they contending with an overcrowded refugee camp on the island. if it gets like italy will be doomed because the island only has one hospital displaced slaves with lots of a lot of people yeah you don't know we saw also u.s. markets react to that shows support from washington making sure.