Posted on 05/29/2015 4:35:46 PM PDT by Hojczyk
Seeing Saudi Arabia beat its head against the wall has been so fun that now Iraq’s petro-military apparatus has decided it, too, wishes to flood the world’s oil market with fresh supply and bring U.S. shale producers to their knees.
To put this in terms Iraqis may grasp: Please do. Texans will meet you in the street with yellow roses.
For all the that the Saudis have “won” because Brent has gained about $10 a barrel since January, it’s still as much as $20 cheaper than it was in November 2014 when the Saudi plan became clear. The U.S. production drop hasn’t occurred, and investment is stabilizing. Some win.
At the same time, no OPEC producer has done much to undo their chief cost disadvantage — political instability and lack of individual freedom. It may sound abstract, but buying-off oppressed populations is expensive.
Since Arab states boosted social spending after the 2010 Arab Spring, the effective break-even on oil that props up regimes is extremely high. It costs only a few dollars a barrel to get the stuff out of the ground, but last year Goldman Sachs estimated Iran’s total break-even cost at $133 per barrel. Russia’s is $107, Iraq’s is $101. And so on.
OPEC’s endgame — push oil to $40, freeze U.S. supply, and wait for oil to hit $90 or $100 again — can’t work. There’s no place on that spectrum where OPEC covers its overhead — and it would have to cut capital spending, making OPEC less competitive and relevant, while making local politics even more volatile and unstable. Ask Iraq how smart that seems in Ramadi just now.
(Excerpt) Read more at marketwatch.com ...
With a drill…drill president….maybe the Arabs go back to being camel jockeys
Gosh! I wonder who told them that would happen? Could it have been the know nothing about economics who is present in our White House?
To OPEC: Haha
this story is just made up.
KSA (and Gulf allies)
are at war with Iran(and Russia)
KSA will pump as hard as it can
Miss information from the MSM may have taken its toll. "Stupid Americans will shut in all their wells if we keep pumping..."
Just maybe the believe all the BS our MSM feed them. They are rich you know......
I thought that Haliburton had stolen all of Iraq’s oil.
What say you???
By the end of next year, I’m willing to bet that our oil will be the one fueling the rest of the world. I say this because I expect that most of these Muslim countries will be set aflame by ISIS or some other Muslim terrorist organization. Does any one here believe that ISIS or Al Qaeda or some other Muslim terrorist organization will stop in Syria or Iraq? Once ISIS has taken Syria and Iraq, they will be aiming for Saudi Arabia and Jordan. The only one that is willing and the intestinal fortitude to really fight them will be Israel. Whether we like it or not WW3 has begun.
The “Shale Band” of $45 to $65 a barrel for West Texas Intermediate is pretty much here to stay.
Whenever prices get much higher, improved American drilling technology can ramp up production much quicker than in the past.
Improvements in technology will even push down the breakeven price for a lot of deposits toward the lower end of the band.
There is strong competition outside of OPEC now (America) that pretty much takes away their historical power to keep prices much higher than the shale band on any sustained basis.
It is a new market for oil.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.