Posted on 08/05/2015 4:28:08 PM PDT by Bubba_Leroy
It is too late for OPEC to stop the shale revolution. The cartel faces the prospect of surging US output whenever oil prices rise.
If the oil futures market is correct, Saudi Arabia will start running into trouble within two years. It will be in existential crisis by the end of the decade.
The contract price of US crude oil for delivery in December 2020 is currently $62.05, implying a drastic change in the economic landscape for the Middle East and the petro-rentier states.
The Saudis took a huge gamble last November when they stopped supporting prices and opted instead to flood the market and drive out rivals, boosting their own output to 10.6m barrels a day (b/d) into the teeth of the downturn.
Bank of America says OPEC is now "effectively dissolved". The cartel might as well shut down its offices in Vienna to save money.
If the aim was to choke the US shale industry, the Saudis have misjudged badly, just as they misjudged the growing shale threat at every stage for eight years. "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.
(Excerpt) Read more at telegraph.co.uk ...
The US drillers have stopped drilling, but it obviously makes no sense not to produce if the wells are already drilled. The US wells in production will deplete much faster than the wells in Saudi Arabia, probably falling 30% by the end of the year. The Saudis will also be unable to keep up production without stopping for maintenance, so prices are quite likely to tighten a little in the near-term. They might not go high enough to justify new drilling in the US, so the Saudis might just get their wish - stable $70 oil.
Petro Ping.
Saudi Arabia can still make a profit on $30/barrel oil.
Who else can do that?
They got used to living big. I hope they fall flat on their azzes.
Local oil price is $35/bbl. Lots of oilfield workers out of work and more to follow. Independents who expanded when oil was nearing $100 are hurting bad.
Good!
Let the Saudi’s go broke
Couldn’t happen to nicer people.
It is their only real industry, they support their whole population on that money 0 basically supporting them and keep their royal family in power.
A revolution will come before the money is all gone.
Not all of them
Russia is gaining power and wealth while we will be getting our oil form unstable anti west countries. Obama is blocking exporting our oil and gas.
Russia is gaining power and wealth while we will be getting our oil form unstable anti west countries. Obama is blocking exporting our oil and gas.
Somewhere, some Saudi under-Prince named Ibn du Skyhook Shih Ted will have to do without his new top of the line Ferrari and may have to shed a couple of wives.
I could give a rat's ass...I hope they all have to go back to living in tents and eating dates, lizards and camel balls.
That’s for sure! There are many very good reasons why Saudi Arabia will be nuked, most likely by Iran. The book of Revelation (ch. 17) speaks about Mystery Babylon the mother of harlots and how the nations became drunk with the wine (oil) of her fornication was to be destroyed and mourned for the loss of wealth. It sure seems to fit the world conditions we’re seeing.
Is there a downside to OPEC going down the tubes?
A decades long war in the Middle East with the Democrats demanding that we import 20 million Islamic refugees...
Because... It’s Bush’s fault!!! /S
I can! We own the land, the minerals and do all of our own drilling and production. There’s a big difference between US and Saudi oil. Their money goes to a central position and is distributed from there and they have allot of hands in the pot.
The article could also have mentioned that SA has a rapidly growing population. Gov. welfare allows men with no real jobs to have large families. Most people in SA are poor, only a minority live like we think of when they think of Saudis. Without the welfare, people will be starving.
The whole thing could blow up at any moment.
Where at?
OK?
TX?
“How many billions have all the Saudi princes squirreled away into private Swiss bank account and whatnot?
How much property do they have all over the world, bought with our oil money.”
Those are Saudi royal reserves for when the time comes to physically vacate the Arabian Peninsula.
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.