Posted on 09/29/2016 9:39:17 PM PDT by aquila48
It took the kingdom’s new oil minister, Khalid Al-Falih, just six months to blink, ending the country’s two-year policy of pump-at-will.
The decision at this week’s meeting of the Organization of Petroleum Exporting Countries in Algiers to cut production was necessitated by Saudi Arabia’s tattered finances. The kingdom has the highest budget deficit among the world’s 20 biggest economies, may delay its first international bond issue and now faces fresh legal uncertainty after the U.S. Congress voted Wednesday to allow Americans to sue the country for its involvement in 9/11.
“Saudi Arabia wants higher prices,” said Amrita Sen, chief oil analyst at consulting firm Energy Aspects Ltd. in London.
The consequences could be vast. Giants such as Exxon Mobil Corp. may soon be flush enough to revive abandoned projects. Finances of cash-strapped OPEC countries like Venezuela will get a boost. Russia and other independent oil-rich countries will have to decide whether to follow Saudi Arabia’s lead. U.S. shale producers, which OPEC hoped it could push into bankruptcy, will use higher prices to drill new wells, and American consumers, who’ve enjoyed the lowest gasoline prices in more than a decade, will pay more at the pump.
Price Concern
Just months ago, Al-Falih’s predecessor, Ali Al-Naimi, proclaimed it didn’t matter whether oil prices went “down to $20, $40, $50, $60 a barrel — it is irrelevant.” Al-Falih now says prices, hovering under $50 a barrel, need to rise to encourage long-term investment.
In 2014, when Saudi Arabia led OPEC’s pump-at-will policy, Riyadh calculated that if it reduced output, prices wouldn’t rise enough to compensate. This time is different.
“Saudi Arabia is betting that a small cut will pay for itself through higher oil prices and hence higher revenues,” said Jamie Webster, a fellow at the Center on Global Energy Policy...
(Excerpt) Read more at calgaryherald.com ...
Deficit pain prompted Saudi Arabia to agree to oil production cuts
Bull Hockey
Every time someone talks about us using our own oil the saudis scream they are losing money but they still continue to make trillions a day when saudi oil has the power to sway elections its time to cut them off from american money and use our own let em suck rock ! same with venezuela their people are starving but we buy billions in sweet crude off them a year cut em off use our own !
Watch for consumption to drop and for domestic supply to rise.
**Venezuela's crude oil is very heavy by international standards, and as a result much of it must be processed by specialized domestic and international refineries.
Venezuela continues to be one of the largest suppliers of oil to the United States, sending about 1.4 million barrels per day (220×103 m3/d) to the U.S. Venezuela is also a major oil refiner and the owner of the Citgo gasoline chain.
Venezuelan crude is anything but sweet...
Do you all remember when it was said that Bin Laden would be the winner if there was an election there? Screw them. Let them bathe in their oil.
This will only force a brief increase in the crude price resulting in US frackers to restart production. A lose-lose for Saudi Arabia, a temporary win for US producers.
The low oil prices are even causing hardship here in the UAE. Guys are having to trade in their Ferrari’s for Porsche’s.
Yup, the sauds know they’ll need to pay billions in damages to many families of 9/11 victims. They’re gonna need more cash.
Watch for US private oil drilling and production to go up. Good for jobs and the economy.
Also might prevent anti-fracking nuts from making any serious gains in the various campaigns to stop it as an energy source technique.
This could be a great issue for the conservatives up for reelection this term.
Make America A Greater Energy Producer AGAIN!
Energy Jobs Create a Better and Stronger America!
Trillions a day? Sweet Venezuelan crude? No, and no.
http://abarrelfull.wikidot.com/citgo-lake-charles-refinery/date/2012.8
Citgo Lake Charles Refinery
The CITGO Lake Charles Refinery is a modern, deep-conversion facility with a processing capacity of 440,000 barrels of crude oil per day. The fifth largest refinery in the nation, it’s particularly suited to process heavy crudes into high-octane, unleaded gasoline.
1944 - Refinery commissioned
2004 - CITGO invested $500 million in the Crude Vacuum Expansion Project (CVEP)/Tier II Program to increase its crude processing capacity to 425,000 barrels per day (bpd), an increase of 105,000 bpd
2006 - The Lake Charles Manufacturing Complex completed a cat feed hydrotreater conversion projec
All ready happening here in NH.
My local Shell station just jumped regular 10 cents yesterday and diesel 20 cents.
None of the OPEC members adhere to their cuts. They drive up the price and then produce as much at the new price as they can and then the price goes down again. It will take a long time before any cutback affects the amount of oil because the pipeline is months long and it is full to capacity.
Prices won’t stay up for long. President Trump is going to build that Canadian oil pipeline, and get the Calgary oil into US domestic petro stations.
Trump will remove the moratorium on drilling off the Atlantic coast. Trump will drill in the Alaska tundra. Drill, baby drill.
Trump will revive the energy sector and create millions of high paying jobs. In doing so, he will crush OPEC forever.
“....brief increase.”
I tend to agree with this. They might get a $15 to $20 rise on prices for about six weeks and then the frackers will arrive. By mid-November...prices will drop back down to within five bucks of where they are today. Course, the airlines will pretend it’s a massive thing and jump ticket-prices by 25-percent, but that will also drop by late November as they go back to normal pricing.
I just can’t see Saudi Arabia being able to compete as long as the Iranians and the frackers are on the job. Whatever they were making a decade ago for profits each year.....that’s gone forever.
I spent years in the oil trading business and witnessed the Saudis make similar promises in the past. They seldom if ever kept them. Just because they say they will make cuts doesn’t mean they will. Don’t bet the ranch on it. They agree to cuts hoping other producers will also cut, then they cheat.
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