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Khashoggi’s Murder: Why Oil Markets Will Override Grisly Details – Dan Kunle

Energy expert, Mr. Dan Kunle, speaks on how oil markets will react to Jamal Khashoggi’s murder…

Mr. Dan Kunle
Mr. Dan Kunle

In this interview, energy expert, Mr. Dan Kunle, explains why no matter what President Donald Trump may or may not know about the murder of Saudi journalist, Jamal Khashoggi, nothing is about to change.

The CIA only a few days ago turned in a report to President Trump that suggested that the Saudi Arabia Crown Prince directly authorized the murder of journalist Jamal Khashoggi.  Do you think Trump might further tighten economic sanctions against Saudi Arabia?

From all indications, the CIA report appears to confirm that the killing of Jamal Khashoggi was state sponsored. But one must not forget the history of Saudi Arabia and its relationship with Britain and America.

From the late 1800s and early 1900s the then king of Saudi Arabia, Ibn Saud, engaged and charmed American and British oil explorers, geologists, and merchants, like Holmes, Harry St. John Bridger, Philby, and so on.

The King even gave them Islamic names! There was an understanding rooted in the philosophy, “money for my oil and other things can be managed by the Saudi King”. The security and intelligence architecture of Saudi Arabia was designed and structured by the British and Americans, to support the young Saudi kingdom for their new economic prosperity to be derived from oil and gas.

This is why till today, the arms and defence contract of the Saudi kingdom are largely executed by Britain and America. This runs into billions of dollars annually. For this reason and for the fact that oil and gas fuelled wars in the last two centuries, one will not be surprised if America is not too keen to impose a heavy economic sanction on the Saudi kingdom.

America and Britain may, however, embark on a calculated measure to deny the young prince and heir apparent, the chance of becoming king. This is because the security and intelligence infrastructure of Saudi Arabia is heavily influenced by Britain and America.

"Oil prices may be affected when serious anxiety over sanctions is hovering over Saudi Arabia, a major oil supplier to the world market. But there is a counter strategic oil supply balance in the world market today."

Initial anxiety that US sanction against Saudi Arabia over Khashoggi might affect crude oil prices appears to have petered out. Why is this so?

Oil prices may be affected when serious anxiety over sanctions is hovering over Saudi Arabia, a major oil supplier to the world market. But there is a counter strategic oil supply balance in the world market today. US on her own supplies in excess 10 million barrels per day.

And that indicates that they need less oil imports from any source in the world. Secondly, Russia and Iraq and other Oil producing nations, will quickly fill the gap that any heavy sanction in Saudi Arabia may create.

It is for this strategic reason that the anxiety of a US sanction against Saudi Arabia may not spark oil price rise in the manner that it would have been 30 years ago, when countries like America had not perfected the shale oil and gas technology.

"OPEC as an oil and gas cartel lost its relevance since the day US perfected the shale oil and gas technology. The US today produces about 10 million barrels of oil domestically and produces sufficient gas for her domestic use plus her new LNG export drive."

Do you think the market is still on edge, unsure of what further steps the US might take in the matter?

No! Because the other oil and gas suppliers in the world had anticipated the extent to which America may go or not go because of their strategic interest in the Saudi kingdom, which America must protect against Iran.

Other oil-rich countries, like Angola, Libya and Venezuela are watching the American president’s body language every second. The oil and gas market can only be heavily disrupted if the Persian Gulf is blocked, which will not be in the interest of Saudi Arabia, Kuwait and Iraq. Hence, the American decision will be weighed along all these merits and de-merits.

How does all of this affect OPEC, and specifically, Nigeria?

OPEC as an oil and gas cartel lost its relevance since the day US perfected the shale oil and gas technology. The US today produces about 10 million barrels of oil domestically and produces sufficient gas for her domestic use plus her new LNG export drive.

OPEC as at today is just a toothless organisation, which Saudi Arabia continues to manipulate to its own advantage. Nigeria’s place in OPEC is just a façade to nurture its relationship with Saudi Arabia; it’s not about economic interest anymore.

Nigeria’s OPEC membership is now irrelevant.  What Nigeria needs today is to strategically evaluate her domestic strength and opportunities to utilise her oil and gas resources effectively, rather than the political romance and endless OPEC seminars and conferences that will never support our economic survival.

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