Posted on 03/15/2020 6:18:41 PM PDT by nickcarraway
Those with a functioning memory may have thought that last week’s decision by Saudi Arabia to maximise oil production to crash oil prices and bankrupt U.S. shale producers was an early April Fool’s Day joke. Apparently, though, it is not, and collective amnesia seems to have gripped senior Saudis and other OPEC members alike about how disastrous the last Saudi Arabia-led attempt to destroy the U.S. shale oil industry from 2014 to 2016 actually was. Appalling though the consequences were last time for Saudi and its now-much-poorer allies, this time around things are likely to be much, much, worse.
The last time the Saudis tried this exact same strategy in 2014, it had a much greater chance of success than it does now. Back then, it was widely assumed that U.S. shale producers could not produce oil on a sustained basis for a breakeven price of less than around US$70 per barrel of Brent. Saudi also had record high foreign assets reserves of US$737 billion in August 2014, allowing it real room for manoeuvre in terms of sustaining its SAR-US$-currency peg and covering the huge budget deficits that would be caused by the oil price fall caused by overproduction. In addition, Russia at that point was just an interested observer on the sidelines.
Saudi Arabia was so confident in its plan that in October 2014 during private meetings in New York between Saudi officials and other senior figures in the global oil industry, as analysed in full in my latest book on the global oil markets, the Saudis revealed that the Kingdom was willing to tolerate Brent prices ‘between US$80-90 per barrel for a period of one to two years’. This was a 180 degree turn from the previous understanding by other OPEC members that Saudi was their champion, doing
(Excerpt) Read more at oilprice.com ...
Russia can last a lot longer with low oil prices than they can
Good. Watching Russia vs. the Saudis is like watching the Eastern Front in WW2 - you find yourself wishing everyone could lose. But I’d be happy with the Saudis losing.
I came away from this article thinking the Saudis could ‘disappear’ within my lifetime.
It’s a pleasant thought.
Thank you President Trump.
darn it! That means lower gas prices.
You mean the House of Saud would disappear.
No it doesn’t. Gas prices where I am have only fallen $0.10 in the last six weeks.
Yes, because the Russians live like pigs while the Saudis prefer to live like kings. If Russia wanted the Saudi standard of living, they’d need $500 oil.
Are you rooting for the Wahhabis?
The Saudi Royal family has invested billions around the world in diversified ventures.
They’ll be around for quite a long time to come.
Are you?
You should read up on it. A lot of their diversification is a sham or wishful thinking. They are still pretty much a one-trick pony.
I would imagine the Saudis have a much larger cushion of cash reserves than , say, the Russians or Iranians. Not to mention the fact that the oil in Saudi Arabia is closer to the surface and cheaper to produce than anywhere else in the world.
In the 70’s, the Media tried to tell us we were running out of oil....forever
Most people ignore the elephant in the room.
“Saudi Arabia’s Oil War Could Bankrupt The Kingdom”
Watch the US taxpayers be forced to bail them out. They’re our “allies”, supposedly.
And as far as Saudi Arabia going bankrupt; our country has been bankrupt for many years, and we are going more down that road with our many more billions of expenditures on solving the corona virus problem.-Tom
The best investment the Saudis have made to “diversify” their economy has been to purchase the Congress of the United States.
Maybe the Saudis will stop sending Orthodox (extremist) Imams to the United States and will stop funding idiot professors at our colleges who indoctrinate our young people.
Just maybe the Saudis will have less money with which to attack our culture.
Gas stations usually only adjust their prices when they get their own tanks refilled. When the next tanker truck comes and the fuel inside is a lower price, then they will lower their own prices.
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