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Saudi Arabia's "Oil-Weapon" Hits Europe
We first exposed the "secret" US-Saudi deal in September which led to the inevitable bombing of Syria. We then progressed to explain the quid pro quo of the deal in lower oil prices (benefiting US consumers into an election and crushing Russian revenues). In today's Wall Street Journal we get the final piece of the puzzle as it is clear that what Saudi Arabia loses in 'price' it will make up in 'volume' as The Kingdon is taking the unusual step of asking buyers to commit to maximum shipments if they want to get its crude. Simply put, "they are threatening [European] buyers" to discontinue sales if they don't agree with the full fixed deliveries. The 'oil weapon' grows stronger...
As The Wall Street Journal explains,
Days after slashing prices in Asia, Saudi Arabia is now making an aggressive push in the European oil market, traders say.
The kingdom is taking the unusual step of asking buyers to commit to maximum shipments if they want to get its crude.
“The Saudi push is not just in Asia. It’s a global phenomenon,” one oil trader said. “They are using very aggressive tactics” in Europe too, the trader added.
This month, state-owned Saudi Aramco stunned the rest of the Organization of the Petroleum Exporting Countries by slashing its November prices to defend its market share in Asia’s growing market. The move, setting a price war in the oil-production group, was combined with a boost in the kingdom’s output in September.
But Riyadh is also moving to protect its sales to Europe, a declining market where it is facing rivalry from returning Libyan production.
After cutting its November prices there, Saudi Aramco is also asking refiners to commit to full, fixed deliveries in talks to renew contracts for next year, the traders say. They say the Saudi oil company had previously offered a formula allowing flexibility of more or less 10% of contracted volumes, the most commonly used in the industry.
“They are threatening buyers” to discontinue sales if they don’t agree with the fixed deliveries, another trader said.
* * *
Of course, the more pressure ths US (prxied by Saudi Arabia) puts on Russia (and Iran) and implicitly Europe now (as they are forced to buy 'more' oil than needed, albeit at lower prices - but leaving their budgets bursting still further), the more the rest of the world is forced to consider alternatives to US hegemony and side with those that, for now, have not reached peak totalitarianism.
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losing money, losing control...
unraveling quickly, now...
Bullish. Then bearish.
The timeline of the collapse of the Soviet Union can be traced to September 13, 1985. On this date, Sheikh Ahmed Zaki Yamani, the minister of oil of Saudi Arabia, declared that the monarchy had decided to alter its oil policy radically. The Saudis stopped protecting oil prices, and Saudi Arabia regained is share in the world market. During the next six months, oil production in Saudi Arabia increased fourfold while oil prices in collapsed by approximately the same amount in real terms. As a result, the Soviet Union lost approximately $20 billion per year, money without which the country simply could not survive.
http://www.planbeconomics.com/2014/10/are-falling-oil-prices-a-weapon-to...
Are you getting paid to plug that blog? Not accusing you necessarily, but it sometimes seems as if ZH comments are devolving into a portal for harvesting blog traffic. The most annoying is that 'AngrySinner' guy. It doesn't matter where you go: there he is, spamming away.
So is that guy whose sister gives blowjobs for $75 per hour
Pretty soon I will be lighting my cigars with a barrel of oil
Here's my question? Are we filling the SPR with cheap oil? Me thinks we're draining and will buy it all back later at $140/bbl.
The geniuses of Zero Hedge discover VOLUME DISCOUNTS offered by producers in a slow market.
What will Zero Hedge discover next? The Law of Supply and Demand? The long hidden LAW OF GRAVITY??????
Bend over Putin, you are about to get the Oil Weapon long and hard. And ironically without the benefit of lubrication. Couldn't happen to a more deserving dictator.
Is your "dictator" statement meant to be tongue-in-cheek, or are you so intellectually lazy that you accept whatever media pundits tell you to think?
Wow... she sucks if it takes an hour.
sure the whole show was to destroy the USSR but in the process the entire USA oil industry went down as well - June 20, 1986 - $9.62 /Bbl. - i was in the middle of it at that time - lost almost everything including a company that i had built from scratch to $65 million in sales - was not fun - by the end - 5 years hence even the law firms in Tulsa were going BK.
The breakeven on shale today is higher than in 86' for the plays that were being drilled - there will be massive Bankruptcies - independents and service cos. alike all debt laden if price is sustained below $70 - for 18 months
these guys don't care - who ends up with nothing - they want Russia for Bupkiss!!!!!!! $100 Trillion in undeveloped acreage for everything under the sun - Putin has little debt left compared to USSR at that time and lower overhead - and knew this all was coming - the people of Russia know if they dont chin the bar - it is serfdom and death at the hands of those who control USA and Israel
TTIP and the same in Europe is not going to go thru for control by corporations and end to Sovereign states - so they have to do an extreme move - this is going to be the last roundup
bet the Farm!
omen IV, i too lived through that debacle. you are spot on.
Omen IV,
This 1980’s oil play repetition by US and Saudi Arabia is huge… Very risky…. It shows the need to crash Russia (BRIC’s) financial independency….. And the desperate need for the US to protect the “Global Reserve Currency Monopoly” (dollar).
If (when, because it will eventually happens) the US looses this “financial-monopoly” advantage, US becomes a third world nation in matter of months, by facing shortages of oil, facing all kinds of supplies and product’s shortages, and (very) high inflation.
I lived through that period as well and lost pretty much everything in the aftermath. What amazed me was the degree the average citizen was completely oblvious to the massive destruction wrought in the west by the Saudi's. In my view it was economic warfare carried out by KSA against both USSR and USA. Basically up till around 2004 everyone in the industry lived in fear of KSA's abilty to open the manifolds and destroy businesses and livelihoods.
If ISIS were to make a right turn and head for Riyadh, I wouldn't be too concerned. Time to kick back and watch the pigs squeal.
In whom you would put your money this time around?
The west spun Putin's long term contract with China for Russian oil as bad for him because of the low prices agreed -- now it's not looking so bad at all.
So, why didn't the Ruskies just short oil funds?
It's a commonly repeated myth that KSA was behind the oil price drop, but it was actually due to Alaska's north slope and North sea oil fields reaching their peak output, reducing imports to US and increasing exports out of UK, therefore making more oil available on the world market.
Look here, with graphs:
http://cassandralegacy.blogspot.com/2014/10/unleashing-oil-weapon-agains...
I agree with you. This Saudi conspiracy I cannot take very seriously, nor can I completely dismiss for that matter. But my logic tells me that there is no such thing as a Saudi drive to crush oil prices. First of all, crushing oil prices will not only harm Russia and Iran. It will seriously harm every single player in the oil production business. And that is a hell of a lot of powerful players there.
First of all. Iran has already been seriously harmed by sanctions. Only China, India and Russia are now buying Iranian oil. Which in and of its own has seriously lowered Iranian oil revenues.
Secondly, a low oil price, will be most disastrous for American and western interests in general. The supermajors (BP, Shell, Exxon, Total, ENI, Chevron etc) are already drilling extremely marginal oil fields, be them deep offshore, tar sands, and many other marginal oil fields around the world. The western majors are literally left with the worst oil fields on the planet. Witness their low profitability even with sky-high oil prices. What is even more damning for the "Saudi conspiracy" proposition, is of course the Texas and North Dakota frackers. They were barely braking even with the oil price at over $100. Sure some Eagle Ford sweetspots are much more productive than that, but overall the fracking business is extremely marginal. The western majors and frackers will cry for mercy long before Russia does.
The other thing is that as much as the US-Saudi relation goes deep (and very deep it goes) why would the Saudis be willing to hurt their bottomlines to such a degree just to prolong US hegemony? I believe that the Saudis and their riches will be well served even if US power is significantly curtailed. Russia/China will never attack their fat asses. You know who may well attack KSA one day? Try Israel/USA.
Man, the Saudi's need to be put out of their misery, and quickly. they really cause a lot trouble.
Not losing control. Cutting Crude Prices, prior to the U.S. Elections, to pay off Obama/D.C. We help with ISIS & the Gas Pipeline; they cut prices to give the Dems a break in the Elections...or so it seems. Backroom deal.
I really dont think the saudis give a flying flip about red vs blue
Think bigger
Quid Pro Quo... SA increases production, drives down the price to kill Russian exports in return for the US taking out Assad...
No, they don't care. Obama cut the deal though, probably more for himself. Helps Dems more, so it seems.
Hardest hit? ISIS, Syria, Iran & Russia. I guess anybody that sells, even Egypt & Libya. Anybody who can't ramp production will hurt big time.
It's going to be a dirty fight.
Sound capitalism. I'm sure the savings will be passed along to the consumer, and do wonders for our domestic production boom.
LOL. right. definitely, passed right on to the consumers. LOL.
There is fucking oil everywhere god damnit. Just stick a fucking straw in the ground. Only reason countries have oil dependence is because they have an intellectually ignorant electorate.
It seems like every day there is some new "ocean" of oil that has just been discovered. Pennsylvania has more fucking oil than Saudi Arabia why are we buying oil from them? It's fucking stupid.
It's because Al Gore and Leonardo Dicrapio shoot of their blow holes and stupid fucks actually hang on every word they say as if it were gospil.
.....do the oil companies know??
Man..... you'd think a group of thieving bastards like the Oil Cos would hit that already instead of spending billions drilling in miles deep ocean, shit the drilling companies have to be stone cold stupid to be dropping 1.2 billion building a new drillship if they could just put a land rig on some back road in Pa........ silly rabbits.....
They have to drill so deep in the Ocean because in the US it's practically illegal to drill except on private land and even sometimes that get's shut down.
The US has a SHIT TON of oil and natural gas. Enviromentalists have just made it illegal to acces it. You need permits and all kinds of other shit that is just impossible to get because the government won't allow it.
How ridiculous is that? We could be energy independent and have the price of gas below a dollar a gallon like it is in Kuwait but our fucking government refuses to allow that to happen. We could create jobs and all kinds of other shit.
Look at the Keystone pipeline? Reason it wasn't built was because of a government restriction. That one landed on Obama's shoulders.
One And Only,
Unfortunately, your comment (and many others here) highlights your (their) ignorance about the oil business.
Let me give you “Two” examples:
1) Diminishing Return
If you visit Venango County, Pennsylvania, we will find the birth of the US oil industry. To this day, they still pumping oil out of it.
Can you tell how many barrels of oil it’s pumped?
40 barrels…………A YEAR!
To put into perspective:
2006: US Population = 298 million. Oil consumption = 20.7 million barrels A DAY
2013: US Population = 316 million. Oil consumption = 18.5 million barrels A DAY
http://www.roadsideamerica.com/story/15765
http://www.titusvilleherald.com/articles/2011/08/16/news/doc4e4b452d3c518727905287.txt
2) Costs
Steven Kopits: Between 1984 and 2005 the world had a 25% oil surpluses. Since 2006, global oil production is declining.
From 2005 to 2013, the world spent $4 trillion dollars on upstream [not including pipelines, refinery, transportation, wholesale] exploration and production. And another $3.5 trillion dollars to maintain current legacy [fields]. Result: Oil production has fallen by 1 million barrels per day [mbpd].
For Comparison: Between 1998 and 2005, $1.5 trillion dollars spent added 8.6 mbpd.
To put into perspective: Germany GDP: $3.5 trillion dollars. So if you compare to 1998/2005 period, the world ‘vaporized’ the GDP of Germany on oil production. And the world still came up short 1 million barrels a day.
How challenging is the situation: 2014 Capex [upstream] Expenditures Trend: About $300 billion. Current forecast Capex: $193 billion. Over 30% decline. Shell, 2nd largest oil company in the world, not only cut capex by 20% but, since 2013, it has been borrowing money to pay dividends.
https://www.youtube.com/watch?v=dLCsMRr7hAg
Let me tell you one secret
Keystone pipeline?
If you are an American, you don’t want that, Period!
You use up the other guys first. then you use yours; more wisely and slowly.
One And Only No Keystone pipeline was not built because WARREN BUFFET owns THE BNSF Rail Raod and is making a shit-ton of $$ hauling oil on his RR, there is so much oil on that line that the AMTRAK had to change their schedule because Passenger trains were running late because of the traffic and the BNSF illegally would not give them priority. Federal Law give people right of way ,but Obummer will not enforce that against one of his biggest contributors! I see those trains go through my town all day long 100 plus cars with about 30,000 gals each car I figured that those trains each held about 6 million worth of oil they roll through about every 20 minutes on their way to Seattle.
There is oil in lots of places. You are right on that one. The problem is this however: How much does it cost to get that oil out of the ground? As the guy doing Peak Prosperity said:"If the price of oil went to $1000000 per barrel, they would find a way to turn North Dakota upside down and scrape off the bottom. A falling oil price, automatically means that less and less oil is economically viable for extraction.
I think you're on to something, based on my own reading. Take a look at the historical world map of conventional and unconventional production, and you find that much of the world remains largely unexplored, yet local political agents and celebrity whores rally local sheeple to protest against new exploration and production, ostensibly "to save the planet." I'm convinced that it's another facet of the technocrat-pushed "sustainability" program known as Agenda 21, AKA the agenda to "sustain" western oligarchical collectivism: elite oil magnates need to sequester reserves (and seize them, in the case of foreign policy) to ensure stable long term supply while continuing to extract maximum revenue from the customer base (denominated in the authorized debt-based currency). THESE PEOPLE ARE CONTROL FREAKS, no different than drug traffickers who shut down enemy production to limit supply of that product. So like everything else to do with the petrodollar racket, it's all smoke and mirrors and lies and suppression and sleaze.
I had a friend many years ago who worked with survey crews hired by the Canadian Government to map fields and pools of oil and gas. They never surveyed at depth except in a few cases where the results were startling. He always suspected that deep formations were being 'set aside.'
Same applies to the Australian continent apparently. Some working in the gas industry here claim that we are being restricted to gas only while huge pools of oil deeper down are to be left untouched. It's like De Beers and their diamonds cartel... if they did not control the output they would not fetch one tenth of what they do now.
Thanks for a superior analogy. Everywhere you look, the economy is in some stage of ruin by a cartel.
Lore,
There is a say in the Middle East that goes something like this:
My father rode a camel. I ride a Rolls Royce. My son rides on his private plane. My grandson will ride a camel.
I'm familiar with it. Does my post above have any effect whatsoever on your thinking about the authorized numbers that you paste?
Lore,
I am all in favor to have a conversation about Agenda-21 so we can finally debunk that nonsense.
But for now, I will leave you with this ‘more important’ agenda:
Chris Hedges: We must develop a revolutionary theory that is not reliant on the industrial or agrarian muscle of workers. Our family farms have been destroyed by agro-businesses. Monsanto and its Faustian counterparts on Wall Street rule.
The corporate leviathan, which is global, is freed from the constraints of a single nation-state or government. Corporations are beyond regulation or control. Politicians are too anemic, or more often too corrupt, to stand in the way of the accelerating corporate destruction.
This makes our struggle different from revolutionary struggles in industrial societies in the past. Our revolt will look more like what erupted in the less industrialized Slavic republics, Russia, Spain and China and uprisings led by a disenfranchised rural and urban working class and peasantry in the liberation movements that swept through Africa and Latin America.
The dispossessed working poor, along with unemployed college graduates and students, unemployed journalists, artists, lawyers and teachers, will form our movement. This is why the fight for a higher minimum wage is crucial to uniting service workers with the alienated college-educated sons and daughters of the old middle class.
It is not the poor who make revolutions. It is those who conclude that they will not be able, as they once expected, to rise economically and socially. This consciousness is part of the self-knowledge of service workers and fast-food workers. It is grasped by the swelling population of college graduates caught in a vise of low-paying jobs and obscene amounts of debt. These two groups, once united, will be our primary engines of revolt.
http://www.truthdig.com/report/item/chris_hedges_jan_27_column_transcript_collapse_of_complex_societies_2014012
Will look. Tks
Thank you. I agree with most of what you said and it feels good to have someone to agree with. It doesn't happen much when it comes to this topic.
Hoarding has started .
See http://andreswhy.blogspot.com/2008/06/petroleum-and-population.html
"Prognosis: Not good .
Prices shoot up non-linearly . Then , hiccups develop in the supply-chain and actual physical shortages result . This is the equivalent of inventory build-up . This has disasterous consequences on an economic system optimized on Just-in-Time deliveries . National and Military interests seize the only reserves in the system . The bubble collapses . Markets collapse . The demise of Capitalism and Democracy . (A-la-USSR)
Even huge multi-national oil companies can be bankrupted . They sit on huge inventories of oil-products , but their customers can no longer afford to buy .
Non-food producing nations starve .
Genocidal war and volkewanderung (already happening in Africa) .
Civil wars (a-la-Yugoslavia) in artificial states . Even established states with ethnically diverse populations (US ,China , India , UK,Iraq,etc) can be torn apart by diverse interests as groups battle to eat ."
Damn, the Europeans are getting passed around like a goat at a Taliban bachalor party when it comes to oil and gas.
bahhh..
BBBBBBBBAAAAAAAAAAAHHHHHHHHHHHHHHH!!!!
Sloppy seconds from the Sauds.
It is obscene that the House of Saud controls so much power due to birthright... Had their clan not been born on top of the world's largest oil reserve, they would still be nomads in the desert...
Who installed the House of Saud?
T he British. I think. But it's just a name; if it weren't them it'd be some family of camel fuckers.
No, not the British. They supported the losing Hashimite Emir Faisal of the Hedjaz and only sent Philby to Ibn Saud after he had taken control of most of the Arabian peninsula of his own accord. The old Saud was quite a shrewd strategist and was able to call his conquests (Nadjd, Hejaz, Asir and the Eastern province) "Saudi Arabia".
LOL, "Damn, the Europeans are getting passed around like a goat at a Taliban bachalor party when it comes to oil and gas."
ramp up the anti-EU rethoric, otherwise they might notice?
Dupe - actually make mine a double
Tell them to piss off. Put a tariff on anyone that says yes to keep the playing field level. Let them sink themselves... they fund as many extremists as anyone.
The Saudis have a bigger stake in the strong dollar than we do... Too much of that legacy oil wealth is in financial assets. Unlike SA, we have real innovation, productive capacity and natural resources beyond oil per capita. Time to let the Middle East fix itself. If we help SA on this, it will simply make us more vulnerable as shake and tight oil dies from the predatory pricing. More short term thinking...
I'm just waiting to Vald's reaction to all this... He has been noticeably quiet lately... Hell, he even took time to attend in inaugural Sochi F1 Gran Prix today...
Look Hamster!
The cyber component of WW III (the BIG one) is well underway. Bush stated a cyber attack against the US was an act of war, then admitted the stuxnet virus attack against Iran was by the US. A few years ago the US's most high-tech secret drone was forced to land in Iran, obviously the technology had already been compromised. Recently you have probably read about "Russian" hackers stealing consumer credit card information from Kmart, Home Depot, and Target, and now JP Morgan reported tens of millions or records for its customers were stolen again by "Russian hackcers."
The oil price is just another facet of the war. Since oil is priced in dollars the US is trying to use it in some way, but if Russia, Iran and China are paying in their own currency then the price for them may not change, or will be controlled by the seller instead of the US. The oil suppliers have always had made their own deals at their own price regardless of the paper price is.
I would be interested to know why everyone thinks the US lowered the price, maybe China demanded it as China's economy seems to be slowing and the BRICS + are moving away from the petro dollar.
Or maybe saud is slowing and they are running around looking anywhere to replace...bomb libya, knock egypt for a loop how much were they using before the coupe how much now... what someone is pulling oil out of iraq/syria who could that be? Easiest way to keep it going would be to lower a 3rd world countries usage or knock a 2nd world back to 3rd. I remember reading on lite sweat running really low, as estimated in the early 90's, around 2006 and 30 years of estimated sour after but that was at 90's usage. 20 years later... wondering if all numbers aren't wack at this point.
Won't know what happened until you hear the empty straw sucking sound. Then it's too late.
Economic wars then internet wars then real wars just my 2 cents.
Gee mouse jumps across the screen and hits save and a double for the win.
Bush didn't admit to stuxnet, Obama did. For policial purposes too I might add.
So, the EU gets cut off from Russian gas.
The EU then gets told to do bulk contracts with SA or else.
Notice, how the EU has to cover for all of this???
Oh, and keep in mind the Russians have a rather
large deal in place in none US$ for their stuff;
In case you think they are the target. 'Cuz if
they are someone needs to go back to basic and
learn how to aim, let alone shoot...
The Kingdon is taking the unusual step of asking buyers to commit to maximum shipments if they want to get its crude. Simply put, "they are threatening [European] buyers" to discontinue sales if they don't agree with the full fixed deliveries. The 'oil weapon' grows stronger...
I see disembodied Saudi Royal family heads on sticks if that scenario should play itself out!
Jesus H. Christ I thought the Ashkenazi Jew was fucking out of their skull until these tent dweller long towel headed "fucks" came along!...
But I digress... We know who made the Wahabist' all that they have been in the first place!
The Wahabis have been around a lot longer than the Kingdom of Saudi Arabia has has always been allied with Saud's tribe.
"The alliance between followers of ibn Abd al-Wahhab and Muhammad bin Saud's successors (the House of Saud) proved to be a rather durable alliance. The house of ibn Saud continued to maintain its politico-religious alliance with the Wahhabi sect through the waxing and waning of its own political fortunes over the next 150 years, through to its eventual proclamation of the Kingdom of Saudi Arabia in 1932, and then afterwards, on into modern times. Today Mohammed bin Abd Al-Wahhab's teachings are state-sponsored and are the dominant form of Islam[2][20] in 21st century Saudi Arabia."
Wahabis got all the friends they need.
And there ain't no Europeans gonna put any heads on sticks without there being 20 years of 'discussions'.
Wahabis got all the friends they need.
Except the Russians and a pipeline infrastructure to send it through to China and Europe with Syria and Iran in the way -you mean!
the apes of the house of saud day an mi6 project and fully kosher init
The Iraqi report also makes some astounding claims about the Saud family. It cites Abdul Wahhab Ibrahim al-Shammari’s book, The Wahhabi Movement: The Truth and Roots, which states that King Abdul Aziz Ibn Saud, the first Kingdom of Saudi Arabia monarch, was descended from Mordechai bin Ibrahim bin Moishe, a Jewish merchant also from Basra. In Nejd, Moishe joined the Aniza tribe and changed his name to Markhan bin Ibrahim bin Musa.
http://m.strategic-culture.org/news/2011/10/26/the-doenmeh-the-middle-ea...
actually.. combining this with other stuff we are seeing... almost makes one think.. scorched earth fire sale.. while they still can...
hmmm...
Europe dont want a cheap oil and Saudi demand - take it ALL
What a crazy world...
Remember when I said in May 2013 that QE3 will lead to world halting exports and world trade?
Here you have it.
Still think there will be QE forever?
Yes, if you want to end up using horses again for transport and send 200k soldiers to Middle East rather then 10-20k now to be accompanies by a margin call and destruction of bank lobby
There are no solutions. Best human crowds can choose is the lesser evil
Individuals can choose good over evil, crowds cannot. Crowds can choose only the lesser evil.
And remember:
There is only one alliance that matters:
Pentagon + Saudi
All else secondary.
And please do not give me that excrement called: "But who funds the military"?
Answer: Military doesn't need any funding. It simply goes and gets it by force or via alliances.
Lecture by EKM1:
Funding = Goods, services provided
Money = Representation of the transactions of providing goods and services on a piece of paper or a computer.
Conclusion:
Military doesn't need bank lobby for any funding. It simply goes and gets it.
It needs bank lobby to simply allocate the booty they bring in. It is Military which hires bank lobby, not vice versa.
End of Lecture
Keep this BS for yourself, would you ?!
I happen to like his BS, so but out :)
i am fairly certain you are wrong:
military is the frog dropped in boiling water.
economics is the frog boiled slowly in water, without it noticing.
i at least know for sure that the most important relationship is not house of saud <-> pentagon, it is certainly bank of england <-> federal reserve.
the praetorian guard cares little for rhetoric and logical argument and always side with the master of coin in the end. haven't you heard of the roman empire before?
now please stop imaging your comments to be "lectures".
Yes. Praetorian guard killed emperors who did not fulfil their promises to pay salaries (in gold and silver)
Come on Vladimir, unleash the hounds of hell by using dollars to buy enough gold to bring the paper market and the frauduent western bankers to their knees.
there are many reasons why a tactic used almost half a century ago against soviet union will have different results today against russia. the main difference is that russians today know holiwood propaganda means little and that today they will prefer extintion to being ruled by outsiders telling them about a freedom.
Absolutely right. Putin knew what was coming. He is growing his allie base and waiting for the US led coallition to fracture. The big shark is chomping bites out of his neighboring sharks.
The Russians will scorch the earth before they will be ruled by another nation. Anyone remember Napolean or Hitler.
They have a completely different mindset.
Listen.
So I don't get it. Or more like I don't think this is a big deal right.
Fixed deliveries are the standard in manufacturing execution. Saudi's trying to optimize their supply chain and it's a sign of aggression?
What did I miss?
USA want Europe to buy Oil only from Saudis not from Russia, so they demand Saudi to sell low and Europe must buy all oil from Saudi, even if they don't need to much.
Listen.
Thx.
Winner winner chicken dinner!
Bad Vlad getting spanked.
Let's see if he has a phone book in his pants.
Russia should default on all foreign debt, especially on the one of Western origin, for the kicks...
- Iran: shelves nuke program to lift embargo, but economy utterly ruined, can't pump oil out of the ground fast enough to get much needed cash
- Libya: infrastructure destroyed three years ago, economy utterly ruined, everything is repaired now and they can't pump oil out of the ground fast enough to get much needed cash
- Japan: re-opens all its nuke plants in June 2014, Japanese demand for oil & gas drops like a girl's panties on prom night
- US: fracking boom yields a glut of condensates that can be mixed with Alberta heavy crude to provide necessary blending for cheap stock at US refiners; demand for imported oil (specifically, light crude) in the US drops 50% from 2005 import levels (50... fucking... percent... people)
- Iraq: in non-ISIS areas where the majority of the oil lives, all pumps are on line and they can't pump it out of the ground fast enough to get much needed cash
- Germany / China / Japan: industrial output on the skids, don't need to make shit if no one is buying it, which means they don't need to buy energy to make shit, demand goes *poof*
- Saudi Arabia: certainly the largest producer in OPEC, needs to pump oil and turn it into cash to keep the radical element in its population appeased, has no incentive to drop production and every incentive to pump as much as it can
- Brent: big demand drop in Eurozone (see above) coupled with the end of the ICE shennanigans means that index is going down, hard... the $115 peak will look like a fairy tale once the bear market takes hold
- Russia: what else can be said here, guess who else needs to pump like no tomorrow to get cash... the savior was supposed to be the Chinese market, guess what just went *poof* (see above)
the end result of this is a world awash in oil that is looking for a buyer... aggressive drops in the index prices should come as no surprise... it's a consumer's market now and, if global growth estimates are any indication, probably will be for at least the next couple of years
Listen.
"US drops 50% from 2005 import levels"
I just don't "GET" that. 50%?!
Combination of demand destruction due to people not having money or credit... the high cost of fuel and the addition of tar sands and the tight oil coming on line.....this is not a surprise...
Read stuff by
Ugo B
Steve from Virgina
Gail the Actuary
Euan Mearns
Ron Patterson
and Heading Out...
I think I just listed all of the old Oil Drum folks.... lol
BE
stop saying Listen...it's a scroll down every time i see it scanning.
Excellent summary... now for how long?????
With Brent less than $80 per barrel what is the cash flow going to look like for the oil patch boys????
the better question is what are the margins going to look like for the refiners...
second day in a row Post Turtle Saver! great post.
A bunch of folks are running hard just to stay in the same place.
http://si.wsj.net/public/resources/images/WO-AU057A_OPEC_G_2014101018030...
Making up discount on volume is a shitty way to run a business.
I still smell Uncle Sam's bad breath in the air. Why?
Because he hates free markets as much as he likes to control them.
"Russia will probably require an average Brent oil price of $117.8 a barrel this year to balance its budget, the fifth straight year it's needed crude above $100 and compared with break-even prices of $90.3 for Saudi Arabia and $65 for Kazakhstan, Deutsche Bank AG said in a May 10 report."
Russia and Iran get it in the neck.
Russia's budget for next year requires $96/bbl. Any negative price deviation has laready been offset significantly by a lower ruble, as oil is traded in dollars but produced in rubles. Russia will be strained, but certainly not ruined. It will be the OPEC countries, esp S.A., that will do a lot of the suffering as their revenues drop and their Wahhabi fanatics start sqeezing their balls to support them and their causes around the world in the manner they have become accustomed to.
word on the street is Aramco is looking for about 100 offshore drilling units like now, yards in Singapore and China are cranking out jack ups like crazy some of the deepwater crowd have now turned attention back to shallow water to meet the demand for drilling in the PG for the kingdom..... shithole place to work ....... ya know on account of being an infidel and all that...... Allahu may be akbar but he don't seem to know shit about tripping or throwing tongs....
edit ... sorry forgot the point there - watch the water cut from the ghawar field ...... ya don't go offshore until you have to...
edit ... sorry forgot the point there - watch the water cut from the ghawar field ...... ya don't go offshore until you have to...
^^^^^
This. Saudis are in big trouble as their old fields are really shagged out. I think taking out Syria was their last gasp. They have a shitload of debts. I loathe the WSJ but here are the supposed numbers.
http://online.wsj.com/articles/oil-price-slump-strains-budgets-of-some-o...
Saudis need $93 a barrel to meet their social service and govt spending.
That is the point that people keep missing over. Oil producing countries have rapidly growing populations supported primarilly by oil prices. Those populations are also becoming major oil users as well as exporters, thus decreasing the availability of oil for export. If Saudi Arabia is going for lower prices, they will have to increase exports to match. I don't think they can do that much longer. And I wonder how many of their customers will be able to buy all that oil? Everyone has their limits - threats or no.
Blowback Pending
A sigh of relief from Scotland that they didn't vote for independance.
This is the strongest confirmation of a global slowdown to date, as it has the scent of The House of Saud getting desperate.
Canadian Tar Sands mines and the investors must be pissing themselves over this! You do know cost of production of black tar mixed with sand, the mining and processing, not to mention costs of waste water treatment and containment. Canada has pinned the future of it's economy on mega tar sands production. Saudi Arabia trying to kill Russian oil revenues? Well, can Saudi back up their prices with production in the long term?
America and Saudi Arabia are playing a funny game. America at war with ISIS, while ISIS is funded with Saudi money.
Okay, "A world awash in cheap oil". Let's see, how long are the legs of that little play? Seriously, a glut of oil, when people are mining tar and fracking at huge costs versus output, and you tell me cheap oil is here to stay? Then, how long do you frack and mine tar, when Saudi is pumping oil cheap? Basic oil markets say, "this is not what it seems". I remain sceptical of " cheap oil glut". It does not add up.
no one said cheap oil was here to stay, but it sure as hell is here now and will be for enough time for people to notice it
this should play out over 2 to 4 years, depending on how long it takes demand to recover... right now, the demand simply isn't there
the June peaks in Brent and WTI were just that... peaks... anyone who knew what's what has already unloaded their futures contracts onto the bagholders
y'all need to stop being emotional when it comes to dealing with a fungible commodity whose known reserves can change frequently given how many people are looking for more of it all the time... you may as well try to nail jell-o to a tree
what does it mean for shale plays? we shall see... they were pulling it out of the ground before we saw $100+ WTI and Brent indexes, they'll keep doing it until they can't do it anymore or there's no buyer, or both
I leave this gem for all of you...
what is "peak oil"?
it's a combo of reaching peak extraction during peak demand, with a resulting supply/demand gap... which leads to "peak oil price"
digging deeper, why do prices peak? is it just the gap? no, there's another component that people miss...
price manipulation
so, what has really been "peaking" over the past decade or so? I submit it's been peak bullshit... just because you're manipulating the supply chain that's the main artery of Europe to gouge people, using a production index that only accounts for 10% of world production (*cough* Brent *cough*) doesn't mean that the stuff isn't in the ground to be had... let's not confuse one for the other
This has nothing to do with demand. There are two reasons:
1) Stop Russia
2) The US election
you are wrong
This is an Attack also against Canadian Oil. I say we find other buyers, EUROPE and keep them. Stop the flow of oil to the USA and build our own Refineries. The American Government and their Puppet leaders that control them need to straighten out the focus...and stop screwing freinds. What this cheap oil will do is restock the American the Emergency OIL reserves allowing yet again another round of Manipulations.
This is for Profit not for the Average Mainstreet Person.
Did the CIA blow up Calgary's Utility Infrastructure? Do to the non transperancy I do Not trust the USA at all.
China is happy to step in and buy any and all Canadian oil.
Jesus H. Christ I thought the Ashkenazi Jew was fucking out of their skull until these tent dweller long towel headed "fucks" came along!...
What makes you think they are not the same people. The Saudis were Iraqis hand picked by Mi6 and the City of London. Made famous by Hollywood's Lawrence of Arabia. Methinks they are not real Muslims and Wanhabbi is desgined to make other real Islamics look bad.
Oh well
Check the word "Donmeh"
Story begins from the Spanish Inquisition
Europe should tell them to back off or else Europe supports Assad and buy Russian and Canadian oil.
Makes no difference ,the`re all in the same boat playing the same cards,
what they all need is to get on the more modern economic infrastruture
bandwagon. Goodbye Middle ages!