Evolution of the crude oil weapon

June 4, 2015 09:11 AM

How the United States and the Saudi's colluded to topple the USSR 

In 1982, a secret declaration for economic war with The Soviet Union was signed. This declaration included:

• No new contracts to buy Soviet natural gas
• Accelerate development of an alternate supply to Soviet gas for parts of Europe
• A plan to substantially raise interest rates on credit to the USSR
• The requirement of higher down payments and shorter maturities on Russian bonds. 

This declaration made the USSR's debt load much more burdensome, but what delivered the final blow to the USSR was the doubling of oil production from Saudi Arabia in 1986. This pushed oil prices down to roughly 10 dollars per barrel, thus vastly decreasing the USSR's government revenue. This declaration combined with low oil prices, according to James Norman, author of the 2008 book, "The Oil Card," is what led to the collapse of the USSR. 

Today, the international financial system is much more sophisticated. Still, using financial sanctions with the intention of creating a de facto embargo on oil is a widespread practice today, just look at the cases of Iran and Russia. 

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About the Author

John Manfreda, http://oilprice.com