Posted on 08/11/2015 2:07:11 PM PDT by rickmichaels
If the oil futures market is correct, Saudi Arabia will run into trouble within two years. It will be in existential crisis by the end of the decade.
The contract price of U.S. crude for delivery in December 2020 is currently US$62.05, implying a drastic change in the economic landscape for the Middle East and petro-states.
The Saudis took a huge gamble last November when they stopped supporting prices and opted instead to flood the market to drive out rivals, boosting output to 10.6m barrels a day (b/d) into the teeth of the downturn. Bank of America says the Organization of the Petroleum Exporting Countries (OPEC) is now “effectively dissolved.”
If the aim was to choke the U.S. shale industry, the Saudis have misjudged badly.
“It is becoming apparent that non-OPEC producers are not as responsive to low oil prices as had been thought, at least in the short run,” said the Saudi central bank in its latest stability report.
One Saudi expert was more blunt. “The policy hasn’t worked and it will never work,” he said.
By causing the oil price to crash, the Saudis and their Gulf allies have certainly killed off prospects for a raft of high-cost ventures in the Arctic, the Gulf of Mexico, the waters of the mid-Atlantic and the Canadian oilsands.
Consultants Wood Mackenzie said the major oil and gas companies have shelved 46 large projects, deferring US$200 billion of investments.
(Excerpt) Read more at business.financialpost.com ...
“Existential” has replaced “wake-up call” (and before that “perfect storm”) as the way to say “I’m a pseudointellectual phony” among the chattering classes.
OPEC is dead?
Good.
All I know is that it costs a lot less to heat my house and drive my car. It’s fine with me.
I hope they eat sand. It might be worth a global depression, maybe...
They’ll have to sell all their Rolls-Royces and solid gold bathroom fixtures.
Ambrose did the lord’s work on the Clinton’s Whitewater and related scandals while covering the US for the London Telegraph. Since then, though, he has gone on to be a financial Cassandra of the sort who predicts ten out of the last two market crashes.
BTW, now that the price of oil is cratering, where are all the pundits and conspiracy theorists who keep shouting that we have a collusion of big oil companies to manipulate energy prices?
Hello Bill O’Reilly are you there?
http://www.americanthinker.com/articles/2012/03/wild_bill_oreilly.html
The Rothschilds are getting out of petroleum and putting everything on the Kardashians.
They have to keep oil prices low to make US shale unprofitable.
Eventually, as their easily-accessed oil is gone, that tactic will no longer be profitable.
And the US shale supplies will still be there.
I have zero respect for Saudis and anything remotely associated with Islam. The height of modern Muslim society came from nationalizing the oil business created by the west. Their religion and culture (one and the same) deserve to be in the 7th century. I have no pitty for such filth.
There’s a piece I’m missing. If we are to take the article at face value SA opted to let prices fall. OK let’s go with that. So how would they have done that? Well only way I know of would be to turn on the spigots in both SA and elsewhere. So the prices are low but volume is high. Now had they chosen the opposite policy they (and the other OPEC states had they chosen to go along with the plan) would have tightened the spigots so prices would have been high(er) but volume would have been low. Either way - there is not quick fix when viewed from their perspective. They were either going to get relatively high prices and relatively low volume or relatively lower prices at relatively higher volume. But at least (again from their perspective) they get to squeeze their high cost competitors. So I don’t think they made a poor choice - just that they have a Hobbsian choice with no good answers (for them).
Saudi’s have already been investing in more costly heavy oil production. They don’t have a surplus of cheap oil to keep up the production rates.
Facing Up to End of ‘Easy Oil’
http://www.wsj.com/articles/SB10001424052748704436004576299421455133398
May 24, 2011
The Saudis’ are about to have a very bad run of luck.
With oil prices crashing they do not have the ability to manipulate the news about themselves and cracks are appearing in the stone wall they erected around their backing and support of the 9/11 hijackers, remember 19 of them were Saudis.
When that news of their involvement comes out they do not have enough money to stop the wrath that will befall them...
If that is true; about time I say.
I seem to remember that Michael Savage was another one constantly whining about the seven sisters oil companies. Have you heard this?
The Saudis and every other muslim on the planet might as well live large on this earth—Hell patiently awaits.
Great news. Buy low, sell high. Opportunities like this happen maybe once a decade.
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