The EU has been outplayed yet again

By Romegas

Despite opposition from multiple members including Greece, Cyprus, and our own Malta who are seriously worried that the new package of EU sanctions against Russia, could deprive them of vital shipping revenue, after much haggling, the EU nonetheless seems to have come to some sort of compromise and have announced an embargo on all seaborne oil imports from Russia priced above a certain point (the much-vaunted price capping). The amount would be set just above the cost of production, giving Russian producers just enough revenue to stay in business, while denying them the record profits they have been reaping since earlier sanctions drove market prices skyward. 

But hardly had the agreement been inked and triumphantly announced that the Russians did not make their counter-move.

First, they announced that they would simply refuse to ship their oil to countries that refuse to buy it at a market price and sell it instead to other foreign buyers. Turkey, China, and India are the three largest non-EU importers of Russian fossil fuels, and none would be obliged to abide by the new sanctions.

Secondly and more devastatingly, Russia in an agreement with OPEC announced that they would slash oil production by two million barrels a day. The reduction, which is the largest cut since early 2020, will take effect in November, the cartel announced on Wednesday. The cuts are much harsher than most experts had anticipated earlier this week, and are now expected not only to stem the latest drop in global prices for crude oil but to actually prop them up.

The decision on output reduction comes despite intense lobbying by the White House to keep oil production at current levels or higher – something US President Joe Biden had hoped to secure during his visit to Saudi Arabia earlier in July.

CNN cited an unnamed senior official as saying that Washington had mobilized all available resources ahead of the oil cartel gathering, with the Biden administration “having a spasm and panicking.” The efforts were described as “taking the gloves off.” Some of the talking points drafted by the US administration suggested the potential cut would be viewed as “a hostile act” and a “total disaster.

Despite the threats from the US, even what were previously thought to be staunch US allies such as Saudi Arabia and the UAE have gone ahead with the decision.

The so-called ‘collective West’ is about to realise, that most nations have had it with its hubristic notion that the rest of the world is some sort of vassal obliged to prop up our economies to the detriment of their own interests. They have had it with us dictating everything – particularly when it is us who are totally dependent on them for the resources we require to function and not the other way round.

They are also beginning to realise that our bark is much greater than our bite – this is one of the consequences of the war in Ukraine – the opening salvo in a much larger global confrontation that will determine geopolitics for decades to come. It is in decisions such as those taken by OPEC that we begin to understand that a global realignment is happening and will happen whatever our elite may think or pretend. Worst of all, it seems that our elite are the last ones who seem to get it – and in their hubris likewise miss the fact that the deck of cards they hold is one of diminishing returns.

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