Saudi Arabia’s gambit to force down oil prices may lead to Russia becoming the new head of global cartel

Since the early 1970’s, the U.S. has relied upon Saudi Arabia’s place at the head of the global oil market to protect the dollar and its position as the global reserve currency.  But what would happen to the dollar, and America’s future if a different nation wrested control from the House of Saud?

That question may actually be coming upon us very soon as a paradigm shift is quickly taking place in the aftermath of Saudi Arabia’s gambit to force out other oil producers by driving down the price of oil.  And in Washington’s biggest fear realized, the country that may soon seize control over the global oil cartel is none other than Russia.

Russia has played a master stroke in the current oil crisis by taking the lead in forming a new cartel, but it’s a move that could spell geopolitical disaster.

The meeting between Russia, Qatar, Saudi Arabia and Venezuela on 16 February 2016 was the first step. During the next meeting in mid-March, which is with a larger group of participants, if Russia manages to build a consensus—however small—it will further strengthen its leadership position.

Until the current oil crisis, Saudi Arabia called the crude oil price shots; however, its clout has been weakening in the aftermath of the massive price drop with the emergence of US shale. The smaller OPEC nations have been calling for a production cut to support prices, but the last OPEC meeting in December 2015 ended without any agreement.

Now, with Russia stepping in to negotiate with OPEC nations, a new picture is emerging. With its military might, Russia can assume de facto leadership of the oil-producing nations in the name of stabilizing oil prices. – Oil

Over the past year, Russia has already implemented several new programs and processes that places them squarely capable of assuming control over global production and price determination, and just as importantly, in currencies other than the U.S. dollar.  In 2014 they signed an agreement with China to allow for oil to be sold in either Rubles or Yuan, and late last year they announced a new oil market mechanism to compete directly with Brent and WTI.


There are so many additional things Russia can offer nations currently in OPEC, which include access to pipelines, joint ventures in new oil discoveries, and access to currencies that don’t carry the threat of the U.S. sanctions and economic warfare.  And just as both China and Russia are setting the course for a new system of trade that involves the use of a nation’s own national currencies, so too is the future of oil not bound to a single cartel, or single petro-dollar currency.

Kenneth Schortgen Jr is a writer for,, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.

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