Russia is moving full steam ahead with its plan to kill the petro-dollar, and is burying OPEC’s influence along with it.
As we reported earlier, Russia has taken its next step toward de-dollarization by launching its own benchmark oil futures contract that will price oil in rubles instead of USD. Now, it appears as though Russia has deemed it is time to start chipping away at OPEC and its power within the oil space.
According to Reuters, Rosneft CEO and close Putin ally Igor Sechin had some harsh words to say about the oil cartel, and effectively announced its demise.
“At the moment a number of objective factors exclude the possibility for any cartels to dictate their will to the market. As for OPEC, it has practically stopped existing as a united organization.”
As a reminder, Russia was seemingly willing to agree to a deal in Doha earlier this year that would have frozen production at certain levels among the participating countries, however last minute changes by Saudi Arabia and other OPEC countries (namely that OPEC wanted Iran to be a part of the deal) blew the deal up and pissed Russia off.
“Some OPEC countries decided to change their terms at the last moment, trying to get concessions from countries that are not here. We were insisting on trying to concentrate on the countries which are. How can Iran be the reason for the talks’ failure, when it wasn’t even here.”
Perhaps that was the final straw for Russia, as it appears that Moscow now will choose to go it alone from here on out. Sechin was quick to remind everyone that Rosneft was skeptical of the Doha deal to begin with, and is now exhibiting a little bit of “I told you so.”
“The company was skeptical from the very beginning about the possibility of reaching any sort of joint agreement with OPEC’s involvement in current conditions. Just to remind you, the only one question with which we responded to those who were interested to know our position: ‘Who should we agree with, and how?’ The development of the situation has clearly shown we were right.“
Sechin indicates that the new normal will be one in which the market – and technology – sets the prices for oil, not OPEC.
“At the moment, key factors which are influencing the market are finance, technology and regulation. We can see this with the example of shale which became a powerful tool of influence on the global market.”
Meanwhile, just in case the Kremlin’s message is not being received clearly enough by everyone, Russia is fully intent to take advantage of what it sees as impotent White House leadership, is doing everything in its power to end US dominance both politically and economically, and is flexing its military muscles, as well as its economic power over the energy market in order to establish a resurgent global leadership position in both arenas.
via http://ift.tt/1ZDQcbX Tyler Durden