As I wrote previously, Saudi Arabia increased the price of oil being sold to the US market.

Some hypothesize this is in deference to Trump stating he may impose a higher tariff on oil imported to the US. It would make sense for them to do this, making a higher profit rather than having the price of their oil sold in the US, rather than have a tariff imposed, increasing the price while they get nothing additional in the bargain.

If you noticed that gas had been trending lower in price and then essentially froze, this explains that.

Meanwhile, the price of oil has continued declining on the international market, with Brent back below $30 a barrel, currently at $28.28. WTI crude is below $20 again, now at $19.71 a barrel. The decline continues even as production has decreased further, including in the US and we have seen the first of US producers declaring bankruptcy and banks considering seizing assets of oil companies in deep debt while interest free loans dry up and payments fall behind.

However, SA increasing oil prices to the US may not stop Trump from increasing tariffs on imported oil. He may well do exactly that due to the decline in US oil production to force increased domestic sales of domestic oil. Oil industry lobbyists have been pushing for him to do exactly that.

These people have no idea what the repercussions of this would be. In my last post regarding the oil decline I detailed my own fantasy and warnings about the collapse of the petrodollar. Of course, this has both good and bad sides. However, if Trump does impose higher tariffs on top of the higher oil prices, this would be a formula which would make all the warnings and fantasy come true.

If Trump imposes increased tariffs, it would have the effect of increasing domestic oil sales to the domestic market. However, the lower price of Saudi oil will make Saudi oil more attractive to other countries for purchase. Filling the domestic demand with domestic oil would decrease or eliminate Saudi oil imports. There would be basically no domestic oil available for export, as US producers would be unable to compete on price points with Saudi and Russian producers. As I mentioned before, this would obliterate the agreement which was the basis of the petrodollar system.

The end result of this would be the collapse of the petrodollar system, resulting in devaluation of the dollar and runaway inflation in the US. During a pandemic, while millions have lost their jobs and are struggling to survive.

The completion of the collapse of the petrodollar system is occurring right now in the ME, as Saudi Arabia has decreased or ceased the war on Yemen. It is likely that SA is unable to continue funding terrorist organizations like ISIS. All of that has a drastic effect on US arms sales, which is the other side of the petrodollar agreement.

With the possibility of diplomatic division due to oil competition between the US and SA, less need for weapons by SA, the war on terrorist organizations winding down, US encampments at significantly reduced numbers in Iraq and Syria, with some of those encampments surrounded and cut off mandating supply airlifts but completely immobilized, the US military facing demands to leave those countries all means the US is out of options in the Middle East. With Americans at home facing the largest quarantine in history and citizens facing ruin and starvation, the appetite for warfare is mostly gone. Yet the only options available for the US government in the ME is to either end our illegal occupations and support for proxy militias or conduct direct invasions of ME countries for the sake of corporate profit with no more delusions presented to make it seem honorable. In such a case, the remaining countries hosting US forces may close their air strips and facilities to US use.

Contrary to his bluster and popular belief, I do not believe Trump is insane enough to start a hot war with China and Russia. He seems to be weighing the idea of invading Venezuela but faces opposition from both China and Russia on that one because they are heavily invested in Venezuela.

Only time will tell what the result of the oil wars will be. It would be the utmost irony if the very oil for which the US has waged so many conflicts wound up being the basis for ending those conflicts.

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