tv Boom Bust RT April 25, 2019 3:30am-4:01am EDT
more centers to seven countries to do. with this is your choice of partners to wean themselves off of the real world if you're sure they will support world market. former pentagon official michael monk maloof and analyst david mack joins us to drill into what this movie not just for the global oil market but also what this means for the state of geopolitics. plus with iran's oil exports in the crosshairs what is the plan to compensate the global oil market and in particular how oil behemoth saudi arabia will react r.t. correspondent alex mahela bitch breaks down what this all means for other oil providers. and later with the e.u. and china building more in-roads literally in the wake of the american trade war two musters may be interested to know just how much of the e.u. does china now own professor richard joins us to analyze the potential superpower on their way across the atlantic all of that directly ahead but first we have some
headlines let's go. a budding bidding war in the energy sector leads our global report today as occidental petroleum makes an offer of four and a darko who had already been wooed by chevron and darko petroleum was already in fairly advanced talks with chevron for a sale at thirty three billion dollars occidental has now up that price to roughly thirty eight billion dollars at seventy six dollars per share eleven dollars above chevron's bid the broken engagement between anadarko and chevron would include a one billion dollars fee interestingly a spokesperson for occidental expressed frustration that anadarko had not informed occidental of that provision. the prize in the fight is a company with extensive global holdings including key asses in the much discussed hermes and basin in west texas a primary site of the or oil shale boom shares of anadarko were up more than twelve percent on the news while the stocks of the two other corporate suitors fell.
as we reported yesterday to trumpet ministrations decision to end all exemptions to their defacto blockade of the rainy and oil sector seemed to move markets with prices rising to recent highs the policy change affected five countries including major consumers china india and turkey which had been previously granted waivers happened ahrons oil exports go to china or did before the end of the extensions to the u.s. sanctions a spokesperson for the chinese foreign ministry denounced the move as an example of a quote unilateral sanctions and long arm dura stiction the turkish foreign minister was similarly indignant over the trump state department's policy change now a senior iranian military official has been quoted in state media saying that officials are prepared to block traffic through the strait of hormuz and all prices are hovering near a six month high. now about this strait of her months what and where it is and how
could it be a threat to the move of the oil markets the strait is a twenty one miles of ocean between iran and oman and geo graphically separates a permit her persian gulf from the gulf of oman roughly twenty percent of global oil production passes through the strait in route to markets around the world virtually all of qatar's output of liquefied natural gas is also shipped through the strait. in years past iran and the u.s. were in tangled in an international equivalent of trash talking around the strait for decades most seriously in one thousand nine hundred eighty eight u.s. forces on the u.s.s. vincennes shot down a civilian iranian airliner killing all two hundred ninety people on board which ostensibly protecting ships in the area from iranian forces oil prices are nearly at a six month high driven by the change in u.s. policy towards iran for the us that would mean an output loss of seven hundred to eight hundred thousand barrels
a day for iran this policy aims to cut down their one point four million barrel per day output to zero oil prices shot up to new highs for the year earlier this week with w.t.r. topping at sixty six dollars per barrel and brant above seventy four dollars this morning's e.i.a. data was positive showing rising u.s. crude stockpiles to counter the fears of a tight supply resulting from u.s. sanctions on venezuela and iran crude and mentors rose by five point five million barrels as imports increased the u.s. imported an average of seven point one million barrels per day up more than one point one merrill barrels b.p.t. from the previous week despite this big positive the market is still on edge and barely reacted to it as w t i take down by just half a percent joining us here to discuss is david make out of any c.e.o. of macau veiny financial companies and former pentagon official michael maloof.
hey michael. so right now if this conflict continues to escalate iran have threatened to close the strait of hormones what are the geographical ramifications of such a move and what it actually needs the cooperation of oman. the geo political ramifications would be almost instant overnight you would see a barrel of oil going up maybe five hundred to a thousand dollars because it would be cutting off something like thirty five percent of the of the oil that is. seaborne twenty percent of worldwide oil number one number two the instant disruption would probably have an impact on the oil exports for u.a.e. and saudi arabia which are the trump administration sought to fill the the absence of iranian oil with china and the other countries so it would the impact
would be almost immediate i mean you're talking maybe five hundred to a thousand dollars a barrel conceivably that could occur not to mention the fact that we would that such a blockade and also the u.s. response and the threat itself and the sanctions basically constitute a declaration of war. so there we turn to you how much of the oil is trading at this rate of each day and other opec nations are they affected by that. here certainly seventeen to eighteen million barrels per day trades through the region and so that's about a third of the seaborne oil and it is a critical piece of geography and it always has been if you go back in time one thousand nine hundred to one nine hundred eighty eight during the iran iraq war you had what was called the tanker war that's what it was also known as the tanker war because each side was trying to control the geography and not allow the opposing forces tankers to get through so the price of oil is. very sensitive to the flows
that come through there and as michael has said you could see dramatic impact pretty quickly if it was actually shut down it would impact saudi arabia it would impact the u.a.e. it would impact kuwait iraq so there is a number of countries that would have a lot at stake here in terms of revenue that would be cut off at least temporarily . some mycobacteria this entire complex right now is between basically the u.s. and iran however there are so many other casualties involved the other countries that previously were exempted under the sanctions and this includes the biggest customers china and india this further complicates the relationship between china and the u.s. so how is china reacting to this and could all of this be impact and affect the trade or negotiations i think it's going to have a cascading impact not only on trade but overall relationships because of the dependency the china has had on iranian oil you just cannot switch and as i said if
if the straits are cut off even temporarily it will have a dramatic impact on any flow of oil and that doesn't include and it's more than just oil we're talking about general commerce of all of these middle east countries that would be impacted by the way the straits are twenty one miles wide but the navigator navigational portion is only two miles wide so you can see the impact and it definitely goes into territorial waters you're wrong so we're wrong and could do what what was mentioned earlier the tanker war recreate the tanker war here and even in a short term cut off could be impactful i might add that iran is already. preparing for war we're getting indications that they are lying in the coastline now with a ground air missiles antiship missiles so i am the fact now that. foreign minister
zarif just a few hours ago offered to have a discussion about. prisoner exchanges tells me that iran is becoming increasingly concerned about the way things are coming down. thank you so much and will last one david. take on india india right now is also going to have a very hard time to disengaging from iraq. how are they going to risk clearly both in both of these countries can get oil supplies ultimately from other places where this ends up shifting the chessboard so to say is away from iran and it ends up favoring saudi arabia they have the easiest time of any country replacing the million to a million for in daily production that would be lost from iran and so really you're talking about a shift in the balance of pressure we talk a lot about china and clearly in our trade negotiations between trump and genie that's a big deal and i think ultimately who wins here is the saudi arabian royal family
what you see strategically that states is this year we have a one point one trillion dollar budget deficit we need friends like the saudis to recycle those petro dollars into our debt markets because we're at an unsustainable level at one point one trillion for this year and this is a non recessionary year. thank you so much former pentagon official michael maloof and david many of the many financial company thank you so much for your time here. thank you. and now to break down how all of this will affect other producers we welcome aarti correspondent alex mahela bitch. so with all the blacklist on the iranian oil we see the opec oil producers and others are proceeding cautiously with their reactions what can we expect. well let's see what we're seeing right look talk about what we're seeing right now and that's people like you and me in our viewers who are driving cars they've seen the numbers jump or rather you go to the gas station everything's got a little bit more expensive and this is something that we're going to see. happen
over the next few months and it's something that we've seen about six months ago this is the biggest spike in the six months so we're talking according to our b c capital markets they're saying that about supported loss about seven hundred fifty thousand barrels a day once you shut down a rant that kills or kicks in i should say into the whole ecosystem of things when it comes to oil and obviously it affects the countries that are under these waivers most prominently and that there were eight countries but five actually took advantage of this those cunt five countries are china india turkey south korea and japan so again i'm say this is a bigger scheme of things going on here and say comes from us driving cars all the way to these major economies having to figure out what are they going to do now we know what trumps initiatives all about here he wants to drive exports or oil exports down to about zero that he would love to shut this country down completely and as we just heard there is more to this it's geo political it's not just about
oil it's about politics it's about money like it always is so break it down now we're going to look at the saudis they're looking actually at a possible loss here even though that they're trying to keep a brave face at this moment if you remember that with the opec and russia last year when this holy radiant thing kicked in you know they said ok we're we're produce more oil flooded the market with oil and this wasn't good for oil prices the drums issued the same sions against iran basically the prices of oil collapsed and that's the way that this works now you know analysts of war did that every barrel pumped it will also to offset this is a barrel taken out of reserves which is another issue if oil prices get very volatile if things go if it's an emergency measure that needs to be taken in the country you're not going to have the oil to do it because this stuff is flowing way too quickly. and seems to believe that right now the gulf nations such as saudi arabia and the u.a.e. well gleefully fill the void but seems like they're not thrilled about the prospect
and the president as the president had hoped. well let's start with a quote here and this is from the energy minister of saudi arabia he says the saudi arabia will coordinate with fellow oil producers to ensure adequate supplies are available to consumers while i'm sure in the global oil market does not go out of balance now they're happy face a that's a that's a great growth rate but it's unclear how long it would to saudi arabia to actually kick up its oil production which is a massive thing and don't forget that then you just talked about that strait of hormuz a lot can happen there which will be very very volatile days for oil in the near future if that cools down but we're not in a good place that's for sure. our take or spawn alex thank you so much thank you. time now for a quick break but here because when we return what the china building more quite literally in the wake of the american trade war may be entrusted to know just how
much of the. rest are wolf joins us to analyze the potential fifty hour shift underway. and as we go to break here the numbers. we get only if you don't sort the rulebook. supper's you did something pretty soon if you don't have to keep. playing if. they were among the group. to belittle them if you
did what you except your letter says the calls for folks like me this fall for the security. oh. i. pity you well psycho. wall enclosure we're going to produce a. monkey in this. divisive as this was a lot to stop that the pollution i was. after the previous stage of my career was over everyone wondered what i was going to do next the ball different clubs on one hand it is logical to sit in the home field
where everything is familiar on the other i wanted a new challenge and a fresh perspective i'm used to surprising. if you think. i'm going to talk about football not be or else you can think i was going to go. by the way ways of that slide here. you know world of big partners. a lot and conspiracy it's time to wake up to dig deeper to hit this. henri's that mainstream media refuses to tell more than ever we need to be smart we need to stop slamming the door on the show. it's time for critical thinking it's time to fight for the middle for the truth the time is now we're watching closely for watching.
a plastic waste effectively banned its importation producing a big shift in the sector much of that material has been redirected to china's neighbors notably in malaysia or plastic imports have tripled since china's policy change according to a.f.p. in indonesia government statistics indicate that plastic imports increased by one hundred forty one percent in two thousand and eighteen and while the plastic import ban may make china a little cleaner those extra analyses of past production are now affecting their neighbors some malaysians who live near plastic recycling plants say they fear low grade plastics are being burned produce. dangerous peons the facts are being felt as far away as australia the president of the waste management and resource recovery association of australia told a.f.p. twelve months on and we're still feeling the effects but we have not moved to the solutions yet. the battle between the u.s. and huawei is still ongoing and according to recent reports one of washington's
closest allies the united kingdom has decided to allow the companies involvement in the creation of its five g. network artie's rachel blevins joins us now to discuss the details rachel so what are the reports saying right now about the possibility of the u.k. working with the way race to looks like the decision was made by u.k.'s national security council which is chaired by prime minister theresa may and according to the reports that have come out about it so far they're saying that the u.k. plans to give wall way limited access to help build non core elements of their five g. network so they're taking some of these privacy concerns into account but at the same time they're not completely ruling out working with wall way all together and that's a really big deal because right now the united states has been actively warning other countries about working with wall weigh on their five g. technology and u.s. officials like secretary of state might prompt has even gone as far as to say that
those countries that do decide to work with wall way could end up cutting intelligence ties with the united states because the u.s. doesn't trust them as a result of that. so the u.k. is a member of five eyes intelligence alliance along with the us how have the other members of the group we acted to washington's warning to stay away from holloway race in this alliance we have the u.s. the u.k. and then canada australia and new zealand and australia was actually the first country to come out and to band working with huawei on their five g. network and then new zealand follows suit shortly after and canada hasn't officially banned it but at the same time the canadian government did comply with the united states when they came out and asked canada to arrest wall way c.f.o. back in december so and they're also going forward with the extradition process to possibly send her to be united states so they may not have banned it but it's at the same time they still do appear to be working with the u.s. on it as it looks like right now the u.k.
is the only member of this intelligence alliance that is actually standing up and possibly not exactly following orders from the united states it's interesting then the decision to work with huawei was reportedly made by the u.k.'s national security council and this is something the entire government seems to be on board with well right now it looks like there are still members of members of parliament and a number of british officials who have warned about the possibility of working with wild way and who aren't completely on board right now so i think it's all going to be up to you how the united states responds to this news and if the us comes out and starts threatening either cutting ties or threatening in a number of ways against the u.k. we'll see how then the u.k. government will respond. thank you so much for this i r t correspondent rachel levin thank you. the european union has grown concerned over china's economic ambitions in europe and considers it
a strategic competitor since two thousand and ten china has made significant and increasingly large investments in the e.u. about a third of the blocks total assets are now in the hands of foreign owned companies all of these nine point five percent of these companies have their ownership based in china hong kong or macao or up significantly from two point five percent in two thousand and seven. the company compares that to the control of twenty nine percent controlled by either u.s. or canada right now and that is a significant decline from the forty two percent back in two thousand and seven analysts and estimate that comprehensibly china has invested three hundred eighteen billion euros into the e.u. over the past decade while the total amount is not huge relatively speaking that pace is alarming. chinese in to tease are already partially or wholly own at least four airports six seaports wind farms in nine countries and thirteen professional
football teams the volume and nature of these investments have raised a red flag and e.u. leaders are pressing for a strategy to handle china's relentless advances into europe thus the e.u. is introducing a new mechanism for screening foreign investments to evaluate if it threatens the security or public order of more than one member state or if it undermines and e.u. wide project joining us to break it all down is richard wolfe professor of economics m.r.s. at the university of massachusetts amherst and the author of democracy at work a cure for capitalism. welcome. thank you glad to be here so relatively speaking the total amount of chinese investments in egypt is still small compared to that of the u.s. and canada is this concern valid. no i think this is a normal part of economic growth it shouldn't alarm anybody unless you're alarmed
by the process of change which may be what's going on china is now the second most important economy in the world it's a world economy closer integrated across the world than ever before it's therefore inevitable it's built in that the chinese will develop interests for exporting their goods for importing their necessary inputs and they're going to want to make investments around the world that are consistent with what they're trying to do inside their own country since they've developed country based on its interactions buying and selling and so on with the rest of the world they would have increased as quickly in the united states in canada as they did in europe but the united states with kind of the acting as the lapdog of the united states in this situation the united states has closed itself. of has acted in a hostile way as discriminated has persecuted weiwei and other companies so they're
moving more into europe because it's important for americans to understand that the europeans have done none of this they don't tariff against the chinese they don't make statements about the chinese they don't behave in any way like mr trump and the g.o.p. have and so consequently the chinese are moving a bit more into europe but there's no way to stop that process and by the way one of the reasons it flourishes is that every time a european company is in trouble it turns to the chinese because they have the money to help them out they have the money to lend they have the money to invest and for them to close off connections with the chinese would be to shoot themselves in the foot precisely in the way that more and more americans companies are discovering that they're having to do because of this u.s. china war yeah you're absolutely right right now money flows where it's most needed where it's easy and if it and where it's most needed and right now cyprus and other
small territories all of those countries are actually responding poorly to this decision they welcome chinese investments so how if this policy came to pass what would happen to them. well i think that the irony is if the united states and china were to reach an agreement a genuine one which i don't think is about to happen although most of this fighting is field or political theater i don't think the basic tension is going to go away any time soon so i don't think the europeans have much to worry about they can go through the the theatre if you like the security concerns i find most of that beyond belief let me give you an example last week. the united states government released the fact they don't trust the weiwei corporation because the chinese government various agencies do business with how our way invest in while away well
let me remind everyone every single one of the major american telecommunications companies i.b.m. apple google any of them do lots of business with the united states government should the rest of the world not trust them either the logic is peculiar and doesn't go with the world economy either you embrace a world economy or you withdraw from it the united states currently seems to want to withdraw and that brings the rest of the world closer together in a way that should worry american policymakers a lot more than what huawei does professor richard roth thank you so much where inside. my pleasure thank you. that's it by this time you can catch boom bust on youtube dot com site must see and i sang.
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we have many things in this world and this is an email for everyone why some peoples also take our thing all the power just for themselves and to see. the image. of. the united states relations with russia or iran have never been particularly cordial but under the presidency of donald trump both took
a downward spiral there have been sanctions attempts at isolation and a badge of evil from both moscow and to iran how are the two leveraging american for. two hours a face to face told the russian president vladimir putin and. his north korean counterpart kim jong un hold their first ever summit describing the meeting as highly productive both expressed a willingness to work towards the denuclearize ation to kareen i mean should. we just have a fairly full right one two one conversation three q. for the great trial and should we are. also human rights groups condemned this great test saudi arabia's beheading of thirty seven mostly from the shia minority the body of one convict was even strung up in public following the largest mass execution in years and a un school claims that governments u.s. and.