to unleash the full power of the federal government of the separate today i am officially declaring a national emergency the u.s. steps up its response to thwart the spread of the corona virus following suit with other countries across europe and asia. as the greek island of lesbos recorded its 1st infection locals fear that they will not be able to cope with an overcrowded refugee camp. will be doomed because the island only has one hospital displaced slight with at least. a lot of people who you don't know we saw. and u.s. markets react to a show of support from washington making gains after stocks took their worst hit

since 1980 seven's a black monday crash caused by investor fears over handling of the 1000 crisis. taylor is here next hour with the latest updates but 1st. prices are battering the world economy. ways and the issues next day with. hello and welcome to cross talk we're all things are considered i'm peter lavelle with the coronavirus now officially declared a pandemic the world faces the additional burden of an oil market collapse this comes at a time when demand for crude was already low some are calling this the ultimate perfect storm. ends is anyone's guess.

crude carnage i'm joined by my guess was me in beirut he's a professor of economics and international affairs in irvine we have pai and he is an independent economic and political analyst as well as a former commodities trader and in toronto we cross alexandre bruno he is an analyst at gulf state analytics sorry gentlemen cross-like rules in effect that means you can jump in anytime you want and i always appreciate pilot may go to you 1st in irvine because you got up early as for this program here all right it all happened quite quickly and a lot of analysts weren't too surprised by the deal that the russians and the saudis had collapsed. the russians didn't go along with what the saudis wanted to do and the saudis reacted and now we have carnage on the oil markets here what is saudi arabia's gambit here because you know in the if you look at its budgetary

constraints it can afford to have low oil for a very long time and we throw in the coronavirus that is also hurting crude demand all across the world what's the what's the gambit go ahead. well thank you yeah the timing the gambit of the gambit as well as a separate thing all this turmoil and black swans concurrently happening around the world really kind of begs certain geo political questions in my opinion you have coronavirus more or less announced really kind of command saying on new year's eve and then the rollout is fairly rapid and. in a sense the attention being kind of collapsing of as you said already low energy demand but as an energy demand especially within china's collapsing then you have the announcement of the pandemic and the timing then of opec really saudi arabia and to a certain extent now u.a.e.

. you know just insisting on the pullback which would in turn affect the desired medium term desired from russia to capture more of the global market share within the energy space and at some point there was a budding of hads russia i sensed saw through certain coordination issues he had unofficial accusations of coronavirus having been triggered out in the west from russia as well as from iran and russia did you know they do their math they do their homework and they sense that they can write out a price war much better than the very over leveraged you know $50000000000.00. budget constraint to saudi arabia that needs $83.00 a barrel of oil in order to balance its budgets as well as fund its longer term visions of getting off of oil and expanding its economy under the vision of mohamed

bin solomon so it's really people have to look at this as a sense of it these are not just necessarily coincidences in my point of view because the ruble was strengthening last year russia. has been on a de dollarization platform in order to diversify away from dollar reliance in part to fight sanctions thrown against it as well as its partners but also to strengthen its own ambitions to have its currency the currency of its allies really rival if not it's the 47 year old petro dollar standard which is the ascent effective monopoly globally with regard to oil or gas pricing so there's a lot of you know it's a game of chicken really high on the scenes there's a lot who is going to be able to see exactly if there's a lot of moving parts of the as you've just explained here a couple is go to you in beirut here i mean what. please explain to me why saudi arabia thinks that russia for example is going to blink 1st now its lifting costs

are very very low but its budgetary constraints are extraordinary considering what the the the crown prince wants to achieve there and russia has got a pretty good piggy bank to ride out this these tribulation. the price fluctuations that we're experiencing right now i don't understand the saudi reasoning here go ahead and beirut well obviously it could be there is no reasoning they make in the same mistake they made in 2014 they put themselves in a big deficit in a big big hole and they do in the same mistake all over again there is no economic victory before the sued by and turning into a confrontation with russia into this and it will backfire it's actually backfired and probably they have to go into the open market and borrow more money and be more that we all know that they're a break even to balance their budget has to be out of around $80.00 now the oil is

close to in the say it might be lower so actually they can to be in deep trouble especially they have in a war or with the money they have in the war now was russia and probably they they will face a very difficult situation especially now iran call it traded on the exchange and we've seen in the couple days how this aramco share has tumbled and all the world that. actually projected this is going to be the stock that's going to bring saudi arabia back into into the market and use all the wealth and investment from them or go to rebuild sudhir arabia. as in a deep deep trouble and the sudanese in deep trouble i think my best estimate. they miscalculated they should be gone along with the russian coordinating for it. will

be more healthful at this point you know let's go to toronto very interesting because it is public knowledge public knowledge that russia has planned for something like this and they have a budget separate budgets a certain price of oil i mean you can go as low as $25.00 in the russians can can ride it out ok i mean they don't want it to be that low but they've made budgetary considerations to be able to deal with that the saudis should have known that it's not a secret go ahead in toronto. yes well i think the saudis have no idea what they're doing and i. had to dig up some history and get some compared there is no so now seem to me plausible that could produce some vantage for saudi arabia right now. one of the scenarios in the $980.00 is the saudis had offered

action to sustain prices but. at that time they reflect what to invite more but users into the into the game forcing more competition on them so that backfired in the 80s now they're trying to the scorched earth. trajectory which seems to be though directed to me to meet seems more directed toward the us share for users and one else because they're the biggest losers and us banks that gave them the loans in fact this could really trigger another 2000 financial crisis and we're seeing we're seeing the effects on the market already and you've got ahead of me because you're reading my mind across the world there because that's exactly one of the things that i've been thinking about here let's go back to irvine i mean are you is the u.s. shale industry really the target of all of this the saudis have been complaining about it endlessly. it's expanded into the oil market to tremendously over the last

10 years this is the real target of saudi arabia not the russians the americans go ahead or enter a buying. i think the the shale issue is part is a large part a red herring peter because. you know your other guests are hinting at it there this is a currency and really currency standard for energy trading war that's happening but that cannot be announced in the mainstream corporate press u.s. u.k. or europe because of the sensitivities either like you know discussing the matters of of the financial risk posed to the banking system you know really from rivals across your asia rivaling that the dollar standard is equivalent to discussing the nuclear codes and corporate press so they have to go about it saying that a look russia now. is targeting our shale sector russia is doing is essentially geo political and geo economic jujitsu or judo or quito you choose the

martial art the west has traditionally as your other guest referenced utilize the oil price for geo political purposes mid eighty's it was a tactical drop in the energy price to torpedo the soviet union you had it reprise began you know with iran and kind of 7677 to take care of a wayward disobedient shah of iran back then and then just 6 years ago you had a aggressive drop that was coordinated in the price of oil to affect the books of russia iran venezuela nigeria really 'd kind of nations that have been leaning eastward or leaning certainly away from the washington consensus this time you had enough slack to where russia was reading the tea leaves preparing itself going in despite seeing eye to eye with the saudis on various things over the past few years sensing that this could be a tactical maneuver why again i'm

a broken record on this no one within saudi arabia runs saudi arabia saudi arabia takes dictate. from banks within london and new york and this is you know that's why there's infighting within the house a saudi have mohamed bin solomon resting in other members of the house of saudi is because there is the wanting to lean further towards the east because the numbers in the economics in the longer term are more sustainable makes sense whereas you have the traditional relationship you have the post world war 2 establishment you know between the u.s. and saudi arabia that has evolved into what the petrodollar set up after the gold standard ended in the early seventy's and that paradigm is starting to give none of this can be discussed out in the open you know have analysts on bloomberg or c m b c or in the f.t. or what not bluntly discussing the risks but as your other guests hinted there's already a you know a kara selling or

a cascading effect within western finance a 6 month spell of oil below $40.00 could devalue as much of the western financial system because $1.00 trillion dollars is the amount of energy or debt that's tied up just between you know larger banks as well as mid tear banks and energy producers and when the u.s. has nothing else really the west has nothing else but to throw the kitchen sink in order to try and prevent a an eclipse thing of the dollar standard what it's doing and shooting itself in the exactly one of the things that's very interesting is that you used the dollar is a political weapon it comes back like a boomerang and hits you this is what i've been saying for years here you shouldn't use it as a political weapon or a gentlemen we're going to go to a short break and after that short break we'll continue our discussion on crude carnage stay with our.

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. welcome back across the uk where all things are considered i'm peter lavelle to remind you we're discussing crude carnage. ok let's go back to come on in beirut on this program i always try to avoid hyperbole but it seems to me considering the behavior of saudi arabia over the last couple of years under the nominal leadership of the crown prince here he's putting the entire kingdom it risk isn't he this is an extraordinary gambit we just pajamas gave us the numbers there and i think that just the top level i mean when you see the whole financial ization of the energy markets here it doesn't take much to rattle the cage and the cage is being rattled go ahead in beirut. obviously he's taken there he used risk which is kind of backfired as of the early and

probably his going to hear it from the president of the united states because it's going to backfire not on them it's going to backfire on mr trump himself because he had built his his reputation as he's going to make the u.s. independent. term of oil and gas and today there is screaming in the united states from all these oil oil company who is actually the most of the there are stocks in the red some of them is down 50 percent some of them down 70 and 80 percent and some of them have really that basically they're going to go into bankruptcy protection so i think they probably somebody from those oil lobby they want to mamak been some man had because they but a mental business of this is in reality it does help russia on the other hand because you know you know the united states mr trump he tried to put sanction

against. against russia and nord stream and now they. gave a gift in and a sense to the restaurant because in a way this will eliminate some of the competition in direct plea for or for the russian by having a probably further investment in the shale gas in the united state if it's going to be a very impossible to continue as mr trump tried to do today i think amplification is going to be tough for the sudanese they can to face the bleeding of their financial resources there or they're there and downwind is going to be depleted gradually vest what what we will see those $500000000000.00 actually they can to be at least is going to be affected by this downturn in oil prices and i think it's going to be

a lot of anger in the in the in the in the united states the situation is very bleak for him personally because that gamble at this point doesn't help him it doesn't help his reputation it doesn't help iran cause stocks and it doesn't help that international economy in the end yes the international economy needs some economic boost but you have to remember these these stocks have basically a lot of countries live on them including the united states i was looking at some research there is 6 states depend on the price of oil and gas and today probably some of these jobs millions of jobs that were created by shell gaza devolution probably probably going to see a read for that revolution and defeat for the revolution probably a lot of those lobbyists are pointing at mohamed bin settlement as us probably the screaming that happened at the white house just recently. as. to

stay because they came and met with the president and they have a lot of and that baggins mamak been some man because they accuse him of being responsible for the crash of the oil and gas market yet and it's going to take a while to rebuild it even with a reverse here let's go to toronto you're outside or you're nodding your head in agreement there go ahead come out we just heard go ahead well i mean i agree because again as i mentioned earlier i don't see any logic whatsoever for been summoned to pursue this policy now putting it more in context the oil production increase and the was also announced in conjunction with the arrest of rivals to the throne or at least those who have been so mine considers rivals return his cousin now i have who was once head of military intelligence one very close to the

americans and he was the one that cooperated with the united states in fighting terrorism sarabi for many years and a few other princes now they're in house arrest but this strategy to isolate these very key figures in the kingdom and then to announce this policy it seems to me that he's really challenging the united states more than anyone else and. i'm wondering if this is blackmail to get trump to do something on geopolitical terms in the region. i don't we don't bring much about iran anymore on wednesday i believe the. there was a strike on i'm an american base in iraq where 2 american servicemen were killed and the british soldiers well will that have any implication as it did in. the late december against iran is. trying to get. united states to do more in

iran threatening these kind of economic weapons. looked at all those scenarios and again there's. so man must be a total gambler because and knowing why because he he himself probably cannot come up with explain the logic behind this. pie are we looking at upon another 2008 financial scenario here because it so much of the economy is leverage to energy and to the price of energy here i mean is it is this something that you that worries you go ahead in irvine. yes we were somewhat referencing it myself and i believe your guest in corona earlier but you already have essentially triple be rated bonds within the energy sector that's just just you know barely investment grade as of the timing of the dropping of prices within the energy sector

aggressively over the past 2 weeks you have those triple be rated bonds now effectively trading as junk bonds yeah now you give that enough time you know at a price sub 30 really sub $40.00 over 68 month period and that math does itself there's a collapsing within the wider credit space and just yesterday had trump sitting with you know the c.e.o. of bank of america to its immediate right the head of citi group to the right of him solomon of goldman sachs right across from him having a reprise of the sort of meeting that was taking place 12 years ago with the heads of banks reassuring the president as well as the country on camera that quote you know our books are safe or in solid shape which is you know a trillion in a cage and they don't you know you're in trouble you know you're ready for the debt from 12 years ago wasn't taking care of it when they do that you know you know just

a couple of things real quick i had good. so your other guest was referencing there were sanctions thrown yes the timing of the sanctions thrown against rose naf against gazprom naf against gazprom you know the clamping down on the north stream to the timing from the west from the u.s. from washington against these russian firms happen to just overlap and i don't think it's a coincidence with these firms going off of the dollar as far as their dealings with europe and the rest of the world for oil and natural gas and the ruble per se strengthening as i mentioned earlier so it's somewhat to most viewers you know the minutiae of finance within the energy space and banking but it really needs to be brought to the fore i would urge your viewers to really look behind kind of prescribe headlines to see this as an unprecedented war between the strongest. currency on record the dollar dissipating against rival currencies wanting to take

its place certainly with regard to the most important commodities on earth oil and natural gas. come out it's go back to you in beirut where is this going to go i mean i've read some reports that the saudis will come up with some kind of compromise up 3 is 6 months but you know m.b.'s doesn't strike me as that kind of person i mean he's decided in let the chips fall where they may and i and i think that. actually on point here it has a lot going on inside internal saudi politics as well it's quite frightening actually when you read about it and learn about what he's doing here he doesn't seem like a person that wants to change his mind or can have his mind changed the americans put pressure on him go ahead in beirut. i think it's this is this is cannot affect . the election in the united states because as i said early president trump put his

or petition on the line by having the united states to be a sovereign state in terms of its need for oil and gas and today as your guest mentioned they are all these companies that are actually in the red and most of them in junk status which is devastating for for for his. promise that he's going to make the united state independent this is against the objection of many people in the united states because he compromises the environment now he compromised the environment and he compromised this company by having a partnership by ways mohammad been summoned all those $500000000000.00 that he had received supposedly as an investment from from from suit they have they have been destroyed in this matter miscalculation and the probably the losses for american couple a company could be more than that and probably going to be devastating for

a for the u.s. company and they need a lot of time to work them out in the other side maybe the russian will feel some pain but they cannot be actually there that kind of come out winning the competition because all along. president trump who was trying to push europe to buy american shale gas that expense of their security where we noticed that he was a pressure in germany merkel other countries in the region and this is now maybe this is worked out for the russian without wanting to have this confrontation they can use it and play it but it and so do fades and then the american face and probably. this is going up but probably the whole for president from being elected again on the line because you have to remember he bragged about the market

is up there of the market to really and big trouble and the oil sector brain again one of out of the market so if he's probably going to grab that he can got a deal corp we're going to himself i have to jump in gentlemen he's run out of time one lesson to be learned here energy security and sovereignty is uppermost in russia's done that many thanks to my guests in beirut irvine and in toronto and thanks to our viewers for watching us here are to see you next time and remember rules. you see every passage is a death of something all passages involve some kind of conflict in between where one is trying to reconstitute the old way of doing things but it doesn't work as

a service i'm often working with people in those in-between so again i think the key is how do i find my path through all of this and where do i find in it's in those moments we have to start beginning to trust what is coming so lets in. as a nation from which to be a cement dust. i say. for you to go forward to the trip to prove. that these guys have to try to accomplish. the. because. it was because

of global warming. is it you don't want to. play the publishable business for. yourself but what about. the love. of mortar because of the. mags kaiser this is the kaiser report the pandemic that dish a special times require special reporting of course because report has been anticipating so much of what's going down around the world start a big surprise for those of you who've been watching us for so many years is that right stacy max it is a continuation of the pandemic and the pen demick response in

a pandemic situation we also have the oil wars going on allegedly some oil wars we have russia versus saudi arabia the price crash you know it kind of started with when the opec plus when they met you know saudi arabia essentially and russia and russia decided not to cut any production based on the decline in demand out of china and elsewhere but also right after that saudi arabia offered up to a $10.00 discount per barrel just because i guess. they'd been solomon got a little bit upset and threw a temper tantrum so that's what happened there but you know that seismic sell off a 30 percent and then followed by a like 101213 percent rise and boom bust and boom bust i thought this was an interesting tweet to kind of look at the whole situation is from that we mentioned the last episode and he was so prescient about this.