From Gotti today:
Last night’s arrangements between Saudi Arabia and Russia will go down as a historic turning point in global affairs.
It’s an enormous relief to Australia’s struggling LNG producers and underlines the view of CSL chief executive Paul Perreault that share markets may be too pessimistic about the world outlook.
In itself, the Russian-Saudi deal does not change the depressed oil market significantly. All the two major producers have agreed to do is freeze output. And the deal does not include Iran, which is certainly going to increase output.
What is unusual about the deal is that Saudi Arabia and Russia are on opposite sides of the military conflict in Syria and the deal becomes a potential game changer when put into the context of the ambitious agenda of Russian President Vladimir Putin.
The two have not agreed to freeze output, they have agreed to freeze output if other OPEC producers do so and Iran won’t do so the deal is meaningless beyond a little diplomatic blame shifting.
Gotti sees a grand plan laid out before him:
Russia is aiming at a market sharing agreement that has clear similarities to the agreement of the 1920s, but with one important difference — the US is left out.
I emphasise that the new cartel is not yet formed but the master strategist Putin is, step by step, putting all the links in place, including supply arrangements with China and Asian countries.
Russian gas is under assault in Europe from both Qatar and the US and the Syrian conflict is a useful foil against all three. It’s oil revenues are collapsing as well. It’s getting weaker not stronger with every passing day which is why its rattling the sabre madly for domestic consumption.
Putin is not some evil genius from a James Bond movie, he’s the despotic leader of a failing state under immense fiscal strain.