Russia's Rouble Collapsing as Oil Prices in Freefall

As the price of oil plummeted to below $60 a barrel on increased Saudi production, Russia's already sluggish economy took a significant hit when Russia's central bank announced they would increase the key interest rate from 10.5% to 17% in a drastic move announced earlier this week.

The move was done in part to halt the Russian Ruble's drastic slide against the Dollar and Euro- as of Wednesday afternoon, the Ruble was trading at just over 60 to the dollar [down from 68 prior to interest rate hikes- NANESB!] and just under 75 to the Euro.

Although Russia has been on the receiving end of lukewarm sanctions from the USA and European Union after Russia annexed the Crimea and parts of eastern Ukraine, it's apparent that the recently plummeting energy prices have played a role in Russia's latest economic crisis.

This leaves Putin with the difficult choice of trying to prop up the mostly resource-based Russian economy or continue his costly military campaign against the Ukraine [I'm of two minds on this- while I'm glad Putin's finally reeling after attacking a neighboring country unprovoked, let's also keep in mind that no matter how dangerous and belligerent a Kremlin flush with petrodollars was the Eastern Europe, an unstable Russia that feels it has nothing left to lose may end up being more dangerous to the region. Also, who's to say the contagion would be confined exclusively to Russia?- NANESB!].

A financial joke devised to poke fun at Putin comes true http://t.co/WNRH5tkHFo pic.twitter.com/3DigQSw7Qt

— The Political Hat (@ThePoliticalHat) December 16, 2014

Over the last several weeks, the implied rationale behind Saudi Arabia's increase in production was that they were attempting to undermine the fracking boom in the US and Canada, temporarily saturating the global market with cheap oil and making the labor intensive practice unprofitable for North American companies. While this strategy would mean the Saudis would lose money in the short-term, they would (in theory) benefit in the long run from reduced competition from oil shale in west Texas and North Dakota.

However, others have theorized that Russia was the intended target of a clandestine Saudi economic attack all along. With President Obama ignoring his own self-declared 'Red Line' in Syria and seeking rapprochement with Iran- despite the Islamic Republic's stated desire to obtain nuclear weapons- the Arabian kingdom has decided to act unilaterally and go after Syria and Iran's benefactor in Russia economically. If that is the case, then undercutting Russia's state-run Gazprom by flooding the global marketplace with cheap oil has proven devastatingly effective so far- moreso than tepid the tepid sanctions levied on Russia after invading the eastern Ukraine.

Whether it's to undercut Russia or the fracking boom in the USA, the Saudi strategy is sure to cause problems among other OPEC members who are just as reliant on oil as Russia and may not be able to ride out low prices like the House of Saud. Even more problematic for some OPEC nations such as Iran and Venezuela is that Russia is their primary benefactor.

The move by Russia's Central Bank comes a little over a month after Russia and China agreed to a lucrative $300B energy deal which would give China's quasi-state run China National Petroleum Corp a partial stake in west Siberian oil and gas fields. In October, China and Russia had signed an agreement to swap nearly $100B of currency, so China may be on the hook as well if the Ruble continues its collapse.

The rate increase has also triggered bickering amid Putin's inner circle and prompted many Russians swarming markets to buy goods before the prices went up.

Saudi Prince- US Shale Oil Could Undermine Kingdom, OPEC Nations

A Saudi prince and business investor has warned that the kingdom and other OPEC members that their economies were under a growing threat from the 'fracking revolution' in the USA that has shaken up the energy landscape in recent years.

Prince Alwaleed bin Talal, the country’s best-known global investor, said the business model of Middle East oil exporters risks unravelling rich industrial states find ways of cutting demand. “Our country is facing a threat with the continuation of its near-complete reliance on oil: 92% of the budget for this year depends on oil,” he said in a letter to Saudi oil minister Ali Al-Naimi.

Opec admits that new output from hydraulic “fracking” could chip away its dominant position in the market but the group is more worried about recession in Europe and a hard landing in China.

Prince Alwaleed said oil demand from OECD rich states is in “continuous decline”, and the Saudis will not be able to ratchet up their output from 12.5m to 15m barrels per day (bpd) to cover growing budget costs. “It is necessary to diversify sources of revenue, establish a clear vision, and start implementing it immediately,” he said.

A report last month by Leonardo Maugeri at Harvard University said US shale oil output could triple to 5m bpd by 2017, turning America into the world’s top producer once again.

If shale does deliver on its promise and keeps prices low for decades, it will be a mortal threat to OPEC states that rely on oil revenue to cover social spending and placate fast-growing populations.

Prince Alwaleed was ranked by Forbes magazine as the world's 6th richest man at one point and is most infamous for his comments urging that the United States "should re-examine its policies in the Middle East and adopt a more balanced stance toward the Palestinian cause" just weeks after the September 11th, 2001 terrorist attacks. Then-mayor Rudy Giuliani and other New York officials rejected a $10 million donation from Alwaleed after his remarks.

A trio of Dakota, Missouri Valley & Western units approach the Canadian Pacific interchange in Flaxton, ND as a recently-constructed oil pump works in the foreground in November 2012. Steven M Welch photo.

Hydraulic fracture drilling- also known as hydrofracking or fracking- uses a mix of water and chemically treated sand or 'mud' that's injected into the ground to get to otherwise inaccessible deposits of oil or natural gas. The 'Shale revolution'- as some have called it- has led to the formation of oil boomtowns in North Dakota and breathed new life into Rust Belt towns in Pennsylvania and Ohio. This in turn has led to increased manufacturing for components, mining for 'frac sand' and rail activity moving the supplies into the oilfields and the oil out and to refineries.

Drilling for natural gas in Pennsylvania's Marcellus Shale has become particularly contentious recently, with environmentalists and movie stars weighing in on the purported dangers of fracking to groundwater supplies [although some wells were contaminated decades before fracking began in the area- NANESB!]. A 2012 movie titled Promised Land starring Matt Damon as an energy company representative who has a change of heart after being sent to a struggling Pennsylvania town to secure leases for wells was financed in part by the United Arab Emirates- another OPEC member.

The shale revolution isn't just limited to the United States or Canada, either. Earlier this year, there was a massive oil discovery in Australia's outback while fracking for both natural gas and oil began in Argentina in April. Energy companies believe that Poland may contain central Europe's largest reserves of natural gas, and development of that could reduce Europe's dependence on the Russian energy giant Gazprom. Meanwhile, data from the British Geological Survey indicates that the UK's own shale gas reserves are nearly twice the size of original estimates.

Three More Arrested in Boston Marathon Bombing Investigation

Three acquaintances of Boston Marathon bombing suspect Dzhokhar Tsarnaev were arrested on Wednesday afternoon for lying to federal investigators and obstruction of justice after admitting to removing evidence from Tsarnaev's dorm room at UMass-Dartmouth after the Patriot's Day terrorist attack.

BOSTON (AP) — Three college friends of Boston Marathon bombing suspect Dzhokhar Tsarnaev were arrested and accused Wednesday of removing a backpack containing hollowed-out fireworks from Tsarnaev's dorm room three days after the attack to keep him from getting into trouble.

In court papers, the FBI said one of them threw the backpack in the garbage — it was later found in a landfill by law enforcement officers — after they concluded from news reports that Tsarnaev was one of the bombers.

Azamat Tazhayakov and Dias Kadyrbayev, who are from Kazakhstan, were charged with conspiring to obstruct justice by concealing and destroying evidence. A third man, Robel Phillipos, was charged with lying to investigators about the visit to Tsarnaev's room.

At a court appearance in the afternoon, the Kazakh men did not request bail and will be held for another hearing May 14. Phillipos was held for a hearing on Monday. Their lawyers refused to comment ahead of the proceeding.

All three men charged had been attending UMass-Dartmouth around the same time as the younger Tsarnaev brother. Tazhayakov and Kadyrbayev were detained on charges they had violated their student visas last week. Not only was Tazhaykov allowed back into the USA from the former Soviet republic of Kazakhstan back in January, but Tsarnaev had reportedly bragged to the two Kazakhs that he knew how to make a bomb about a month before the Marathon bombings.

Tazhayakov and Kadyrbayev were reportedly in communication with Dzhokhar after the FBI press conference on April 18th where images of the two brothers pulled from surveillance cameras were released to the general public. The younger Tsarnaev communicated with the two Kazakhs via text message and reportedly removed a backpack, Vaseline and Dzhokhar's laptop computer from the dorm room and threw the items in the garbage. Police later recovered the items from a nearby landfill.

It was also reported on Tuesday that Saudi Arabia rejected Tamerlan Tsarnaev's visa application to make the pilgrimage to Mecca in 2011 although the Saudi ambassador to the USA denies that the kingdom sent written warnings about the older Boston Marathon bombing suspect to the Department of Homeland Security and officials in the UK.

There were also reports that a woman's DNA was found on one of the pressure cooker IEDs. Federal agents in Rhode Island collected a sample from Katherine Russell- Tamerlan Tsarnaev's American wife- for comparison.

Feds Disrupt Iranian-Backed Plot to Bomb Israeli Embassy, Assasinate Saudi Envoy to USA

Agents from the FBI and DEA have reportedly disrupted a terror plot liked directly to Iran's Quds force that involved simultaneous attacks against the Israeli and Saudi embassies in Washington D.C.

Federal investigatos allege that an Iranian American identified as 56 year old Mansour Arbabsiar, a Corpus Christi TX used car salesman as the man who approached what he thought was a member of the Los Zetas cartel with a proposal to kill the Saudi ambassador to the USA and bomb the Israeli embassy in Washington D.C. in exchange for $1.5 million and an undisclosed amount of opium.

Arbabsiar and the informant met twice in Reynosa in the northern Mexican state of Tamaulipas, across the border from McAllen, TX [interestingly, observers note that Reynosa is in territory still under control of the Gulf Cartel, but the accused was meeting with what he thought was an enforcer from the archrival Los Zetas- NANESB!] where Arbabsiar bragged that he had a cousin who was a high-ranking member of the Quds force of Iran's Revolutionary Guard and that they were being directed by senior-level officials of the Iranian regime.

The five count criminal complaint names Gohlam Shakuri, an Iranian based member of the Quds force still at large in Iran, as a co-conspirator in the plot. Arbabsiar and the informant negotiated a $1.5 million payment to carry out the attacks, with the accused wiring two seperate payments of $49,960 into a dummy FBI bank account. Arbabsiar also told the informant that his contacts in Iran couild provide Los Zetas with 'tons' of opium if they were interested.

Federal agents said they recorded a number of phone calls and meeting with the informant and Arbabsiar, some of the calls coming from Iran. In late September, when Arbabsiar was flying to Mexico City from Iran via Frankfurt, he was refused entry into Mexico by immigration officers at Arturo Beneitez international airport and was put on a flight to New York where he was taken into custody.

Not surprisingly, Iran has denied the charges against their regime, claiming the case is a 'prefabricated scenario' and propaganda against the Islamic regime.

Interestingly, even though Arbabsiar was taken into custody nearly two weeks ago, Attorney General Eric Holder's press conference announcing the disruption of the plot came a day before House Oversight and Government Reform Committee chariman, Darrell Issa (R- CA49) issued Holder a subpoena in regards to their ongoing Fast & Furious probe in which the ATF allowed firearms to be trafficked from the USA to Mexican drug cartels. In fact, one of the reporters brought up Fast & Furious during the press conference, only to have Holder dismiss it with a boilerplate statement about turning over the relelvant documents before walking out.

There is precedent for Iranian-backed groups co-ordinating attacks out of Latin America. In 1992, 29 people were killed when a truck bomb exploded outside the Israeli embassy in Buenos Aires. A group with links to the Iranian back Hezbollah terrorist group and Iran called the Islamic Jihad organization claimed responsibility. The Isreali Embassy attacks were followed up by the 1994 bombing of the AMIA (Asociación Mutual Israelita Argentina) building in Buenos Aires, which killed 85 people. Argentine investigators believe that both operations were planned and financed in the Tri-Border area where the boundaries of Paraguay, Argentina and Brazil meet near Iguazu Falls and where Hezbollah has been active over the last two decades. More recently, Mexican intelligence has been aware of a Hezbollah presence in Tijuana and Durango.

Feds Arrest Saudi National in Texas Bomb Plot

A 20 year old Saudi man was arrested late last week after a chemical company in North Carolina reported suspicious purchases he had been making to the FBI.

Federal prosecutors say [Khalid] Aldawsari had been researching online how to construct an improvised explosive device using several chemicals as ingredients. Authorities say Aldawsari's diary indicated the young man had been plotting an attack for years and obtained a scholarship so he could come directly to the United State to carry out jihad.

"After mastering the English language, learning how to build explosives and continuous planning to target the infidel Americans, it is time for jihad," the student wrote in his journal, according to court documents.

In e-mails Aldawsari apparently sent himself, he listed the names of 12 reservoir dams in Colorado and California. He also wrote an e-mail that mentioned "Tyrant's House" with the address of President Bush's home. The FBI's affidavit said he considered using infant dolls to hide explosives and was possibly targeting a nightclub with a backpack filled with explosives.

Employees at Carolina Biological Supply and Con-Way, Inc. alerted the authorities after Aldawsari purchased ten 500 milliliter bottles. The tip led federal investigators to track other purchases the 20 year old Saudi made online. The North Carolina supplier sells chemicals and equipment for classroom use from kindergarten up through the university level.