Putin Power Dwindling as Oil Prices Fade

  SAN JUAN, PUERTO RICO - 07/09/2017 (PRESS RELEASE JET)

                                                        The Boa Constrictor of Lower Oil Prices is Encircling Vladimir Putin

As global oil supplies surge, and the Trump White House doubles down on a fossil fuel based strategy, some oil producers may be having nightmares.  But, perhaps no  regime is being more undermined than Putin's Kremlin.    As oil prices continue lower, Putin's grip on power, and his ability to project military and political power both internally and externally is fading.

Miscalculating the repercussions of his Crimea foray, Putin was at first buffeted by multiple sanctions orchestrated by the Obama-Clinton team, and now more seriously he is being set back by a relentless and growing supply of world oil.    Multifaceted forces within the oil markets, slowly and stealthily, like a Boa constrictor, are encircling and choking the former KGB chief's military industrial complex.   Whether the source of surging oil production and distribution is coming from Canada's shale reserves (larger than Saudi Arabia and Venezuela combined),  technological breakthroughs in fracking and energy discovery, America's bounding reserves in the Dakotas and more recently in the Midland Basin portion of the Texas Permian Basin,  cheating members of OPEC,  or desperation selling by failing or failed states (Venezuela, Libya, and Algeria); the view is increasingly bleak from the Spires of the Kremlin.

Take for example, the aforementioned Wolfcamp shale discovery in the Texas Permian Basin, in November 2016, the U.S. Geological Survey announced that this U.S. reserve alone contains approximately 20 billion barrels of oil, and as much as 1.6 billion barrels of liquefied natural gas.   In the case of oil finds in Brazil, the still underutilized Lula oil field (formerly the Tupi oil field) is considered one of the largest oil discoveries in the last 30 years, with estimated recoverable oil in excess of 7.5 billion barrels.  With improving seismic data systems, including 3D and 4D technology, expect oil finds to become larger and more frequent, even in areas previously thought to be barren of black gold.

Internally within Russia, political opposition and resistance to the Putin cult, and the corrupted cabal of oligarchs who revolve around him is growing.  Vociferous opposition leader, Alexei Navalny has burnished a reputation as an unapologetic and aggressive critic of Putin and corruption within state controlled companies.  Calling out Putin's United Russia political party, as a "party of crooks and thieves", Navalny has built a massive political following, and he has organized large political protests throughout hundreds of cities in Russia.   These political fissures in Russia, will  be exacerbated by an oil export dependent economy throttled by lower oil prices.    While President Putin has been able to bully and intimidate the West with saber rattling, and the illegal annexation of Crimea in 2014, and  Georgian territories in 2008; he well may have met his match in battling the oil trading pits of the world.

John BlakeZuniga is a political and financial commentator based in San Juan, Puerto Rico and Las Vegas, Nevada.  He can be reached by email at:  johnblakezuniga@gmail.com