HISTORIC PUTIN'S OIL DIPLOMACY, AND LATIN AMERICAN LEADERS DURING 22022022 WAR TIMES

By the end of 2021, the U.S. EIA came with this miscalculation for the main Oil Market Prices for 2022... https://www.hydrocarbonprocessing.com/news/2021/11/eia-predicts-falling-crude-oil-prices-in-2022 Probably, the federal bureaucrats in charge supposed that the USA and its eternal allies in Europe controlled the Oil Game and no dispute on that was possible from other American countries, Europe, Asia, or other key players around the globe. Fortunately, there are markets, data, and expectations. If the prices were to be expected according to the levels of the trading of "futures"(e.g. NYMEX), by taking information from private, global, and regional intelligence teams, the confidence interval had to be reported in the following upwards-biassed graph by the very same agency stating that prices would (counterintuitively) go down during 2022: https://www.naturalgasintel.com/brent-crude-prices-to-average-87-in-february-before-declining-later-in-2022-eia-predicts/ Well, that happens when you take the past as certain and forget about the future as a matter of games being played in the background of expectations of traders. Starting February, the EIA upgraded $8/barrel in the prices, and for February 14, one week before the war, it was saying that Brent Crude (UK) was to be traded in $88/barrel. Yesterday, it mentioned that Renewable Energy will outgrow rivals in the US, but oil & gas will remain dominant past 2050. That is good for the long run. However, today, this is the chart of prices during the first week of the last month of the first quarter of 2022: As the reader can see, the official expectations from EIA for the short run are out of the game, while the barrel of Oil searches for a level of US$ 120 per unit, and while Putin and the World of Energy have entered his Oil Diplomacy Game... In 22022022, the Invasion of Ukraine began. 22022022 is a palindromic number: it can be read from left to right the same it can be done in the opposite way. Oil Diplomacy is like a palindrome: what we see clearly is that Russia gives support to some Latin American leaders, while they go from right to left and the same way around towards supporting Vladimir Putin. OIl diplomacy was Putin´s not-so-secret weapon in his HISTORIC preparation for the current war times. Let's play the game of oil diplomacy: 18 countries play; Some of them are prepared for war; The top players are Venezuela and the USA in America, Russia, Belgium, and China in Eurasia. Some countries have managed to play a Stackelberg (1934) competition game, where they are leaders followed by others -under diplomacy, and in special under oil diplomacy-. Multiple leaders can reach a single final equilibrium of oil distribution among territories (Sherali, 1984) 50 years after the Seminal paper of Stackelberg (1934), 6 years after China decided to change its communist model for one of State-Capitalism, and 7 years before the fall of the former USSR (1991), a paper of Sherali (1984, Virginia Polytechnic Institute) discussed a new multiple leader-follower model that showed to be a consistent extension of Stackelberg's leader-follower "duopoly" (e.g. USA as a corporation vs the former USSR as its competing counterpart). For the Oil Diplomacy Game, where the European Union, together with Russia, China, and the USA are playing, Sherali's development can be used to include the 2 other leaders that have emerged in the Oil Diplomacy game after 1978 (China) 1989 (Germany), 1991 (Russia) and 2002 (Europe). They are all disputing the global predominance of the USA in the market, as the key player. China was the first block that decided to compete with the USA in 1978. Their decision was followed by Germany, which was able to reunite and get Europe together after the Berlin Wall´s fall in 1989. A couple of years later, the flag of the USSR was seen for the last time, and the Russian flag started to become a future player under the secondary and later primary leadership of Vladimir Putin. While all that happened, in 2002, 20 years ago, the Euro came to markets in the form of physical notes in order to play a role in the trading of the multiple-parts games in the global oil arena. Sherali's paper contributes to understanding all these movements by creating a contrast not only among firms (in a duopoly), but creating a "corporative" oligopoly (e.g. countries, or blocks) compatible with other existing extensions but demonstrating how the leader-"firms" (countries) can utilize games (diplomatic, for example) for getting the true reaction curve of the follower-firms. That is the game we are playing, and Putin plays simultaneously in several boards, all the time with the whites, as in a chess game itself, but with a real army -in fact-. In technical terms, Sherali's extension provides sufficient conditions for some useful convexity and differentiability properties of his function for reaching equilibrium without needing to use nuclear powers from any side. For reaching peace, we can use his proposed model, that he designed after conducting a static analysis and after discussing the existence, uniqueness, and computation of an equilibrium solution. In the coming paragraphs, we will study certain countries where we have sufficient information for generating expectations of issues regarding the relative profits to be expected by the final leader and the resulting "salaries" to be gained by the capital of the follower firms (countries). Since the Cournot oligopoly and the Stackelberg leader-follower models are special cases of Sherali's model, the analysis in his paper provides some further insights over those classic types of models in microeconomics; therefore, our understanding of the fundamentals of the War in Ukraine can be grounded over a theoretical strong base. They say that there is nothing more practical than using a good theory. Let´s then explore some static data with expectations in the FOREX markets, the same as comparing results on inflationary grounds, and later, comparing reserves of oil in 18 countries (stock) and also their usage and production of flows of oil for the regional, continental or global markets: Source: Hexagon Group Database. Ellaboration: Roberto F. Salazar-Córdova, ADN@+ Russia is losing the short-run game, while Colombia is advancing heavily in the FOREX. US Dollars are flying away from Russia and are flying towards Colombia, the neighbor of Venezuela, a country that is also gaining access to US Dollars that are maybe coming from his Russian allies. As we said before for the oil price and its futures, market data never lies, regardless of what bureaucrats expect. But while devaluation and lack of access to markets in the short-run is the result of adopting an economic and physical war, the game can be also played in terms of the oil market, the reserves balance in the long run, and the sequence of production and consumption in the very short and medium runs. The dynamics of oil get affected by Oil Diplomacy in the long and medium run, and that is why using multiple-leaders models can help explain how official expectations have led to multiple equilibriums that go against what the original defied leader (the USA) is now feeling like a cost of its moves. Oil prices are going up and up, and that is not expected to end before getting to a final equilibrium among several countries related to oil markets, oil balance, and oil diplomacy. OIL DIPLOMACY BETWEEN RUSSIA AND VENEZUELA The table above showed how Venezuela and Russia can interplay because of their superavits in oil, pressing over China, Europe, and the USA, which have deficits. If the game is sequential, the USA would never invade Venezuela, as long as its reserves are needed for covering the USA deficit which does not get covered by Mexican surpluses. In Latin America, some investment can come from the USA, not only in Colombia, or the very same Venezuela but also in Ecuador and Mexico. The USA will not invade any country in America but will trade and invest heavily in oil production in order to take the oil price down in futures and soon in live prices. If the whole-American surplus is played well by the USA, the problem is European and even Chinese. They are the ones that have to deal with Russia. In fact, the Brent WTI spread was 6.95 USD/barrel on February 28th, 2022: https://ycharts.com/indicators/brent_wti_spread The game in America will change after the start of the war in Europe. Venezuela will not be invaded but controlled. The same will come for Nicaragua. Cuba will keep calm, while other countries will activate their actions against the anti-American and pro-Russian forces fighting for power in the local arena of each country. Russia will not be there for its allies in Latin America, while it is focused on Ukraine and Europe. China will see the game as part of the audience, betting and supporting, but mainly trading and playing the role of the median voter in a political election. Something similar will happen to Latin America and Africa: they will be part of the diplomacy game and the Presidents will receive donations, projects, funds, investments, cooperation, and visits from many countries, blocks, and will have the chance of playing multilateralism as never before. COMING BACK TO OIL Inside Latin America, Ecuador and Chile will have a key role in balancing the forces in South America: Boric and Lasso, from the left and right, are already playing multilateral games, but also are playing cooperation games together with Peru, Mexico, Colombia, and the USA inside the Pacific Alliance. In March, Boric will play towards Social Democrat policies, and if the Constitutional Convention is wise, it would play the same. There is no room nowadays for pro-Russian statements, nor for policies similar to the ones coming from Venezuela or Nicaragua. Boric has condemned the political acts of the leaders of Nicaragua, the same as has condemned the economic acts of the leaders of Venezuela. Communist woes in Chile are starting to end. In fact, they have to go away because Chile is weak in energy, and relies on the support of other countries that produce and export that in America. Venezuela plays the game in a global dimension, while Chile has to play it in a regional and South American dimension because it has a visible deficit. That deficit can be covered with the production of other South American countries able to export oil to Chile, like Ecuador. Ecuador, on the other hand, started long ago to play the Oil Diplomacy Game with Russia, the USA, China, and other countries. The Ecuadorian superavit is sufficient even for covering not only Chile´s deficit, but also China's one. The Oil Diplomacy Game after Reaching Equilibrium in America When Europe enters in the game after the Asia-Pacific game gets in equilibrium, the UK, Spain and Belgium exhaust the superavits that America as a whole could offer to its continent and Asia. There is where Russia enters as the other key player. Russia does not cover the whole European deficit after using other countries' reserves but gets enough resources for playing hard as it is doing with its neighbors, not only by playing together with Irán, China, and Venezuela but also by applying -on the side- some maintenance in its old dear (to them) Oil Diplomacy Game in Central and South America. Russia as a Global Player Again There is no doubt about Russia playing hardball in order to see itself converted into one big leader in the multi-leader game. Russia is playing a global game, the same as Europe and the USA are trying to stop Russia from an entrance in a multiple leaders competition. Remember, this is a game where collusion exists. NATO is colluding in order to compete and cover their energetic needs above the single oil game, including not only nuclear power (e.g. Ukraine) but also gas, and of course, renewable energies game. The End of Oil Diplomacy in Latin America Time continues to run against Putin´s game. He now considers every country imposing sanctions over Russia an enemy. Fortunately for the World, all the countries, except a few, have chosen to work with Ukraine and go against Putin's Russia (not again Russia). If Putin made grow its power through Oil Diplomacy, now, he is losing ground. Latin American leaders are abandoning Putin. After reviewing the game we have shown here, many others will consider abandoning the old world of the socialism of the 21st century, as Putin's son, and become part of the bright capitalism of the day that has shown strong enough to create uncertainty in Putin´s team. The miscalculation of Putin will cost him the power, and his allies in Latin America to lose their positions due to the social, local, and global public opinion that is -even in his own country- turning its back to Vladimir Putin. We will see more and more Latin-American leaders getting aligned with freedom and independence, Ukraine, the USA, Europe, NATO, and against what Russia built during the last decades as a spiderweb where the very same big spider will be eaten by its own new generation that will have used Russia and Putin as means to get into power and play its own Oil Game in their own small spiderwebs. We will start seeing that process soon happening in Chile, for sure. At the end: oil is oil, war is war, and politics are politics.