History 10/03/20 in September 1985, Saudi Arabia dealt a terrible blow to the Soviet Union
In 1985 on the background of overproduction of oil by Saudi Arabia to the surprise of many decides to increase production of “black gold”, which causes the immediate collapse of oil prices. The drop in the price of the main resource of the planet hurts, and the Soviet economy.
Oil policy
the Countries-exporters of oil are interested in having their product used in constant demand, while the seller needs high price, and the buyer is low. But the fine adjustment of the pricing mechanism holds up as long as the case does not interfere with the largest player in the market. In October 1973, Saudi king Faisal Ibn Abd al-Aziz al-Saud decided to take advantage of this and withdrew Saudi oil from world trade. And this is neither more nor less than 25% of the proposals in the oil market. The Arabians joined other oil-producing countries from the middle East, dramatically reducing the volume of the traded commodities. As a result, in just a month the price of “black gold” soared from 3 to 12 dollars per barrel.
ultra-high oil prices forced many countries to reconsider the strategy of its behaviour. The UK and Norway will begin the development of new deposits on the shelf of the North sea: produced product – Brent – in the future will become the benchmark for the quotations of the world prices for “black gold”. The United States will be forced to start oil production in Alaska.
But in the monarchies of the Persian Gulf came a period of rapid prosperity. Thanks to petrodollars, one after another in the deserts grow luxury of the city, and Arab sheikhs have become the richest people on the planet. Saudi Arabia is now perceived worldwide as a serious economic and political force.
Raised the price of hydrocarbons has led to an unprecedented yield of the Soviet oil companies: then jumped prices for natural gas. The share of oil sector in the budget of the Union struck the bar at 50%. Begins active development of oil deposits in Western Siberia, in a few years they grow entire villages. By the early eighties, the volume of oil production in the region increased almost 10 times and reached more than 6 million barrels per day.
the Manufacturing boom in oil-producing countries seriously hit the economy of the Western powers are the main consumers of petroleum products. Thus, the United States by the spring of 1974 in two times increase in the unemployment rate and the GNP (gross national product) fell by 6%. The Americans have learned well the lesson: they now knew how to act, to destroy its main enemy – the Soviet Union.
In the service of the United States,
Saudi Arabia, transformed by the 1970 years in the oil Empire, is quickly becoming a new partner of the US in the confrontation with the Soviet Union. So, in 1975, the Washington with the participation of the London and Riyadh is developing a program on “Islam against communism,” one of whose goals is the creation of clandestine cells of the Islamists in the former Soviet Central Asian republics.
the Important role Saudi Arabia had played during the Afghan conflict. In the United States knew that in military terms the Saudis were in fact defenseless before their main enemies – Iran and Israel, and therefore offered a deal: in exchange for joining the collective West in its confrontation with the Soviet Union Saudi Arabia was guaranteed a protectorate of the USA. The Saudis had only to provide financial support to the Afghan Mujahideen and the Islamist organizations in the territory of the USSR. The money they had. In the end, the joint spending of the United States and Saudi Arabia sponsoring anti-government forces in Afghanistan amounted to more than 3.5 billion dollars
of Course, the White house plans to use Saudi Arabia as a major oil-producing countries in the world in oil war against the Soviet Union. Howeverabout “black gold” was more difficult, as it depended on him, the economy of the monarchy. Initially, Riyadh promised the U.S. not to participate in the decision of the petroleum exporting countries to raise prices for “black gold”. However, later, when he settled the question of arms supplies to Saudi Arabia (despite the desperate protests of Israel) in the Kingdom changed its position on the oil issue.
French journalist Eric Laurent in his book “Oil. The lies, the secrets and shenanigans”, released in 2006, tells the story of oil as an effective instrument of global politics. One of the chapters he devoted to the us operations of the mid-eighties the decline in oil prices, the main purpose of which, according to the author, was “smothering “evil Empire”” – the Soviet Union.
the Unexpected decision
By the early eighties, the high price of oil has not played into the hands of Saudi Arabia, because the Saudis by this time, there are many competitors. Decreased and the share of OPEC in the oil market: if at the beginning of the 1970s, they produced almost half the world’s oil, by 1984, this figure barely reached 30%. The cartel, of course, tried to maintain high prices by cutting production, but this does not lead to anything: the price of “black gold” has already started its decline: the barrel of Dubai crude oil from $ 36 in 1980 declined to $ 28 1984.
Saudi Arabia as the main regulator of prices OPEC suffered the most. The volume of production in the Kingdom dropped from 10.3 million tons of barrels per day in 1981 to 3.6 million in 1985. And then in Riyadh has made a decision that turned the oil market. September 13, 1985, oil Minister of Saudi Arabia Ahmed Zaki Yamani makes a statement: the authorities are reluctant to fight for the retention of oil prices and Saudi oil companies begin to increase production of “black gold”. And this at a time of falling demand for crude oil!
a Sharp change in the strategy of Saudi Arabia caused the collapse of the oil market: in just a few months the price of oil fell from $31 to $10 per barrel (about $ 20 at current exchange rate). Oil production where it is more costly, has become unprofitable. The decision of the Saudi government have seriously hit the economy of the Soviet Union. If in 1984, the Soviet Union took on the foreign market of $15 billion, in 1986 the amount of foreign loans has exceeded $30 billion. Then it just continued to grow. Not helped by the sale of gold reserves of the country. Ultimately, this led to economic and political bankruptcy of the state.
Why is the Saudi authorities took, at first glance, such a ridiculous decision? Because they knew the sharp increase in oil production will lead to the same sharp drop in prices, which will affect on their country, whose economy is entirely dependent on the sale of oil. For those concerned with the problems in the middle East is all obvious – they call this move finely calculated political combination.
Publicist Nikolai Starikov believes that the oil dumping is the result of joint us-Saudi operation, which was prepared as a response to the Soviet invasion of Afghanistan. In Washington, according to Starikov, understood that confrontation with the Soviet Union can be won bloodlessly – by cutting his “oil aorta”. But as it turned out this action they not only forced the Soviet Union to withdraw from Afghanistan, but in many ways hastened the collapse of the Soviet economic and political system.
the Crisis of money is not a hindrance
the Collapse of world oil prices in the mid-1980s hit hurt not only the USSR. From the shock suffered and other oil-dependent States. On the verge of bankruptcy were Venezuela, Mexico, Nigeria. Almost twice sank the income of Indonesia, Libya, Qatar, UAE, Bahrain. In a difficult situation was in Iraq, the resources spent on maintaining a long and costly war with Iran. Not bypassed the oil crisis and Saudi Arabia, with its record low cost of production of “black gold”: the country was in a economic pit until the rise in oil prices in the early 2000s.
From low cost of oil won in the US, Western Europe and Japan, which experienced a period of rapid economic and technological prosperity. The situation in the oil market has not affected the Persian sheikhs. For example, the Saudi ruling dynasty only increase their assets, safely hidden in US banks. Amount there lay a fabulous, measured in tens of billions of dollars – all of it was shrewdly accumulated in the fat of the seventies.
Another source of income for the Arabians was the financial help of the West, who thanked his partner for cooperation in the fight against the Soviet Union. While the oil sector have adapted to new prices Saudi sheikhs all also lavished untold wealth, for example, building a luxurious residence, when booking a private aircraft, or directing considerable funds on the maintenance of natural Park with rare species of animals.
Taras Repin
Source:
© Russian Seven
Recommended statesalaska… Share: Comments Comments on the article “How in September 1985, Saudi Arabia dealt a terrible blow to the Soviet Union” Please log in to leave a comment! br>
Share on Tumblr
