Posted on 12/10/2014 7:55:44 AM PST by C19fan
Iran's President Hassan Rouhani said Wednesday that the sharp fall in global oil prices is the result of "treachery," in an apparent reference to regional rival Saudi Arabia, which opposed production cuts.
Oil prices have plunged by more than 40 percent since June to around $65 a barrel, placing severe strain on Iran's economy, which is already hobbled by international sanctions imposed over its nuclear program. An OPEC meeting last month failed to reach agreement on production curbs, mainly because of Saudi opposition.
(Excerpt) Read more at news.yahoo.com ...
The Saudis don’t want their ‘’regional rival’’ Iran to be building nuclear weapons that will be pointed at them.
In 1962, the U.S. risked a nuclear war because the Soviets were planning to deploy nuclear missiles in Cuba, ninety miles from our shores. So why should we be surprised that the Saudis are also trying to prevent nuclear missiles from being deployed by their neighbor and rival Iran?
The Saudis’ weapon is OPEC, which it is using to ruin Iran’s economy, and thereby do what the U.S. and Israel have solemnly promised to do for years but have not — destroy Iran’s nuclear capabilities.
The Saudis have taken on themselves the heroic role of the Little Red Hen in the children’s story — they’re doing it themselves. And we should be grateful. And we should also be embarrassed that our government made promises that it refused to honor.
Right.....
You have to just know that Iran would love to take the Kuwait and Saudi oil fields. Possibly even the Iraqi oil fields as well. Why not? Syria might even help them, which would open another front on the ground. They could probably take the whole thing within a month, if Iran catches them on their heels with a well executed plan. Russia might even offer some support. THAT would be the opening of WWIII, as shit would hit the fan everywhere once that got going.
“How can a producing well loose money?”
Expected cash flow will shrink, thereby shrinking expected profits, hence the value of the company.
In simple terms, there are many costs associated with an oil well, items such as Acquisition Costs, Exploration Costs, Development Costs, and Production Costs, Maintenance and Transportation costs. Some of these costs are expensed or capitalized. Producers also pay royalties to the land owners.
When the combined costs exceed the sale price, you shut the well. I don't know the specifics of his wells.
Guess they will have to start a crisis. Then the prices will spike for a while.
“It is hurting companies here in the US too.”
Here in Canada, too (although the drop in the Canadian dollar has offset that somewhat). It’s worth it if it screws places like Iran, Venezuela and Russia, though.
I'm well aware of all that. But charging capitalized costs against current production income is an insane way to do business.
Capitalized costs have already been spent. They are "sunk". Operating costs for producing wells, however, are quite low. If you shut down an operating well, even if it producing $40 oil, but operating costs are $20/bbl, that is a positive $20/bbl cash flow.
Shutting down the well means zero income, while capitalized costs continue.
Shutting down the well and reducing cash flow to zero will shrink profits even faster.
“Shutting down the well and reducing cash flow to zero will shrink profits even faster.”
Well, the other side of the argument is that a zero profit is better than a negative profit. It all depends on how much reduction in price can the companies take before they decide to just stop.
You understand that your "negative profit" is a function of sunk costs -- acquisition, drilling costs, etc. -- which are unaffected by production.
My point is that production income will generally exceed cost of production, creating positive cash flow.
If you’d like to be on or off, please FR mail me.
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Finally something is Saudi not Zionist treachery.
It is in my view a mistake to be speaking of “the Saudis”
The reality includes all of the CGG nations that are gradually coalescing into some undefinable entity. The emirates of Dubai and Abu dhabi are growing at a phenomenal rate and have become the de facto gate way to Africa and the mid east. They have just grown up and taken much of this from Europe.
They are the anthisis of the ISIS wacko’s and represent all the wackos disdain. The GCC don’t say much but are a force to be reckoned with. This week they announced some kind of joint police force and naval efforts.
Iran is their enemy. The USA is their ally
The GCC include from the top...... Kuwait, Saudi Arabia, Bahrain, Qater, the United Arab Emirates and Oman
Ha Ha!!!!
Check with Martha Stewart. Maybe she has some recipes for sand and oil casseroles!!
Businesses, countries...they’ll get over it. The Indians—sorry—Native Americans did. If we (as in the sane members of the West) don’t do for all these bastards (Iran, DAESH, House of Saud, etc.), they will do for us much worse. Later there can be recoveries and profits. If they need a rope to hang you, don’t sell them that rope.
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