The "Moscow Declaration" -- Connecting Some Dots -- And There Are A Lot Of Dots To Connect; New Poll -- Will We See $145 Oil Soon?

A few moments ago, I updated an earlier post regarding Saudi's decreasing oil production and the concerns of the kingdom (scroll to the bottom at the link).

Coincidentally, a reader sent me this article linking Russia, Syria, and the Kingdom of Saudi Arabia:

Saudi Arabia has secretly offered Russia a sweeping deal to control the global oil market and safeguard Russia’s gas contracts, if the Kremlin backs away from the Assad regime in Syria.

The revelations come amid high tension in the Middle East, with US, British, and French warships poised for missile strikes against Syria, and Iran threatening to retaliate. The strategic jitters pushed Brent crude prices to a five-month high of $112 a barrel (US dollars).

‘‘We are only one incident away from a serious oil spike. The market is a lot tighter than people think,’’ said Chris Skrebowski, editor of Petroleum Review.

Leaked transcripts of a behind closed doors meeting between Russia’s Vladimir Putin and Saudi Prince Bandar bin Sultan shed an extraordinary light on the hard-nosed Realpolitik of the two sides.

Prince Bandar, head of Saudi intelligence, allegedly confronted the Kremlin with a mix of inducements and threats in a bid to break the deadlock over Syria.

The "Moscow Declaration":

President Putin has long been pushing for a global gas cartel, issuing the ‘‘Moscow Declaration’’ last month to ‘‘defend suppliers and resist unfair pressure."

Mr Skrebowski said it is unclear what the Saudis can really offer the Russians on gas, beyond using leverage over Qatar and others to cut output of liquefied natural gas.

Saudi Arabia could help boost oil prices by restricting its own supply. This would be a shot in the arm for Russia, but it would be a dangerous strategy if it pushed prices to levels that put the global economic recovery at risk. Mr Skrebowski said trouble is brewing in supply states.

‘Libya is reverting to war lordism. Nigeria is drifting into a bandit state with steady loss of output. And Iraq is going back to the sort of Sunni-Shia civil war we saw in 2006-07,’’ he said.

The Putin-Bandar meeting took place three weeks ago. Mr Putin was unmoved by the Saudi offer.

Vladimir looks more and more like the "big man on campus" with a weakened, "in-over-his-head" O'Bama presidency who still believes the future of the US rests with wind. And solar. And it does: in about two hundred years.

A huge "thank you" to the reader for sending me this article from Australia's The Age.

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So, finally, time for a new poll.  But first the results of the "open book test" about Japan's total public debt (in which the readers were overwhelmingly correct). Japan's total public debt is what percent of its GDP?

• 5%: 5%
• 7.5%: 3%
• 10%: 4%
• 250%: 70%

I don't know about you, but I find it incredible that Japan's total debt represents 250% of their GDP and folks here in the US get excited when our total debt represents 6% of our GDP and the debt appears to be falling in percentage terms. Whatever.

So, the new poll. In light of the story above ("The Moscow Declaration?), will we see $145 Brent oil by the end of next month? It could be a "yes/no" poll but I hate binary. So, some options. Will we see $145 Brent oil by the end of September, 2013?

• Yes
• No, the high will be less than $130
• No, the high will be less than $120
• No, we have already seen the high ($114)