SAUDI Arabia’s oil minister, Ali al-Naimi, has said the oil producers’ cartel, Opec, will not cut production even if the price falls to $20 a barrel.
His comments reinforce Opec’s recent policy shift away from its long time policy of restricting output to keep prices up. In November, Opec said it would keep its target output at 30 million barrels per day. Yesterday Kuwait’s Oil Minister, Ali al-Omair, said Opec did not need to cut production and would not consider an emergency meeting. ‘I don’t think we need to cut. We gave a chance to others and they were not willing to do so,’ he said in Abu Dhabi.
The new policy is a declaration of war on Iran, Venezuela and Russia by the US’ allies in the Gulf, since the economies of these three anti-imperialist states are based on higher oil prices. It also deepens the world crisis of the capitalist system, and brings a new world wide crash much closer.
For decades, Saudi Arabia, the world’s largest producer, has acted to rein in output to support prices, but no longer.
The price of Brent crude oil has now fallen by more than 46% since hitting its $116 peak in June.
Naimi spoke after the International Monetary Fund warned on Monday of a deepening of the global financial crisis as the plunge in the price of the rouble claimed its first banking victim, when Russia’s central bank threw a $530m (£340m) lifeline to Moscow’s Trust Bank.
Alexei Kudrin, Russia’s former finance minister, and a champion of the ‘free market’ and the Russian Oligarchs, said 2015 would be a tough year as he blamed the Kremlin for failing to act quickly enough and said the country’s debt would be downgraded to ‘junk’
‘Today, I can say that we have entered or are entering a real, full-fledged economic crisis. Next year, we will feel it clearly,’ Kudrin said.
He said that there was going to be a wave of corporate failures and state bailouts of the banks, adding: ‘The government has not been quick enough to address the situation . . . I am yet to hear . . . its clear assessment of the current situation.’
Russian MPs rushed through a bill last Friday, authorising a 1tn-rouble recapitalisation of the country’s banks.
However the emerging crisis is not a Russian or a Middle Eastern crisis, it is part of the rapidly developing and deepening crisis of the bankrupt and vastly indebted world capitalist system.
Olivier Blanchard, the IMF’s chief economist, and Rabah Arezki, head of its commodities research team, pointed out yesterday: ‘One of the lessons from the Great Financial Crisis is that large changes in prices and exchange rates, and the implied increased uncertainty about the position of some firms and some countries, can lead to increases in global risk aversion, with major implications for repricing of risk and for shifts in capital flows. This is all the more true when combined with other developments such as what is happening in Russia. One cannot completely dismiss this tail risk.’
The IMF fears another great crash!
On Thursday, Robin Allan, chairman of the North Sea Oil association Brindex, told the BBC that the industry was ‘close to collapse’. He claimed almost no new projects in the North Sea were profitable with oil below $60 a barrel.
A plan for a summit to look at the challenges facing the North Sea oil industry has been announced by Aberdeen City Council. Council leader Jenny Laing said the UK and Scottish governments, trade unions and industry bodies needed ‘to get round the table as soon as possible’ to work out a strategic plan to save jobs.
As capitalism hurtles towards the edge of the abyss once again, it is clear that the future of the workers of the world rests on getting rid of crisis-ridden capitalism and replacing it with world socialism and a worldwide planned economy.
This means building the Fourth International in the major capitalist countries to organise and lead socialist revolutions, to put an end to capitalism and imperialism.
There is a different task in Russia and China as part of this world socialist revolution.
This is to organise political revolutions to expropriate the Russian and Chinese oligarchs and restore the Soviet Union in the case of Russia, and rule through workers soviets in both countries. Their socialist future rests on the victory of the world socialist revolution. Dominated by the the capitalist world market they are being dragged to disaster.