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Saudi Arabia Raises Asia, Europe Prices; Cuts US Prices
It appears, just as we warned two weeks ago, that the 'dumping strategy' designed to punish Obama's nemesis Putin could have morphed into a Saudi Arabian strategy to keep its foot on the neck of the US Shale Oil industry. In an awkward headline for mainstream media to explain, The Kingdom has raised prices of its Arab Light crude exports to Asia and Europe but cut prices to the USA significantly, potentially pressuring domestic suppliers with foreign 'cheap' imports. While not a primary course of US oil, we suspect the signaling of this move is more worrisome for Shale capex (especially as we noted Saudi Arabia can survive 7.9 years at lower prices) Forget currency wars, meet oil wars...
One of these regions is an up-and-coming marginal oil-producer with the swing-barrel of production
So while we understand if Saudi Arabia is employing a dumping strategy to punish the Kremlin as per the "deal" with Obama's White House, very soon there will be a very vocal, very insolvent and very domestic shale community demanding answers from the Obama administration, as once again the "costs" meant to punish Russia end up crippling the only truly viable industry under the current presidency. As a reminder, the last time Obama threatened Russia with "costs", he sent Europe into a triple-dip recession. It would truly be the crowning achievement of Obama's career if, amazingly, he manages to bankrupt the US shale "miracle" next.
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Saudis pumping salt water.
RIPS
What are they selling?
Iraqi, Syrian and Lybian stolen oil.
Also Crushing other OPEC reserves that arent in the middle east.
RIPS
I thought we didn't buy from them anymore. Maybe a little but not too much. Most goes to China.
Let the Saudi's sell oil below cost to the US. It's cheap oil, take it.
The US domestic oil will still be there after the Saudi's run out of cash (or oil) to do this, and when that happens the US domestic oil industry is more than capable of getting extraction up and running again. I don't care if some domestic companies go bankrupt in the meantime, new ones will appear when it's time. Again, the oil will still physically be there.
Everything he touches turns to shit
It’s a shame that the frackin’ shale drillers are not systemically important to the US.. they might have been able to get free money from the Fed like the banks.
Is a "course" anything like a Source... ???
So if I'm 'a' thinking about this right at this late hour this may be the case at hand: By crushing the US shale/oil/energy markets with targeted low crude prices OPEC and its attached banking interests (OPEC&ABI (maybe that should instead be worded Banking Interests and their proxy/subject OPEC)) will open up the US market for cheap investment options in the survivors of the oil price crash and make start-ups more efficient to fund, with the USA's own USD Petro-Dollar-War-Fiat debt currency, a sort of counter move which exploits Keynesian monetary theories basic failings to allow very efficient seizure of control of capitol then transferring ownership into the corporate international market where banking and energy (OPEC&ABI) have invested most heavily in legislative/regulatory capture from very early on. These are bought with the USD that did not have anything better to do over there than drift around without rational purpose in a life of aimless wanderings until the assistance John McCain arrived with recommendations! In giving support funding to John McCain's terrorrorrorrorrorristismistsjism (the extra "orr"s are for the many terror branches within McCain's main umbrella terror group, and major life focus: e.g. IS, ISSI, ISLI, ISIS, ISELOUDOR, ORSIRUS, The Supoort Black Prisons And A New America Network Telethon Corporation, KBR whose major rivals are Dethklok, and I even heard on TV that The Honorable and The Respected "The McCain's Football Club Baghdad/Man-Pad Team" are in on recent financial development. Additionally, the extra "ists" and "ism"s are for the many religions and the many, many branches of those religions which John McCain has herded into becoming a century manipulating, cohesive and durable, multinational start-up corporate oil venture death squad LLC in its own right (quite similarly to how the the re-founding America's dynastic presidency was accomplished by the Bush family in its rise based in greed and power from humble oil and terror). John MC has herded like only a terror master, pro-turture policy supporting, post-tortured, black prison allowing, rainbow rocket cat herder, can herd, and has succeeded totally in his designs because of these skills. His group has terrorrorrorrorrorristismistsjismified beyond all of the banking/oil world's expectations. It had started as a huge success in the minds at McCain's New America Inc, but his terrorists would seize power that McCain Inc. felt it must have for itself directly and exclusively. Gold. An unexpected catalyst for exponential value expansion was found (beyond the oil) by the football/terror league. It seems from all dis-reputable/reliable reporting that The McCain's Baghdad Football Team/man-pad squad found an international banking cabal gold reserve federalish private bank/hidden money-gold pit presumably owned by "the richest" and it was definitely not empty...I do not watch TV (except for football, you may call is "soccer" in the land of "The Hallowed Whitest Jesus", so don't get confused or touch the balls) but I heard the National TV Clown Make-Up News Man say in the background, and I'm pretty sure of this, that a large caliber American weapon wielding man-pad/football team league had seized "The Nominally Iraq's People's International Branch Bank of Those Most Greedy of Most Secure Secondary Greenzone of Mosul", wait, I mean Reserve Bank....of death. And from what I heard in that bit of background TV I'm forced to draw logical conclusions, terrorrorrorrorrorristismistsjismizing conclusions, and thusly I am then so led by Satan's good will, enjoyment of contrariness, and his wishes for efficiency and proper valuation to look to allow a best look at a new social structure in the region on the other side of Istanbul. Born of the old foreign imposed social structure's failings and oil-barrel-phoenix-fire-rebirths of Predator Drones, young demographics, and pent up need for internationallism are factors that must certainly result, "at this late hour", from this football league of man-pad teams who have, seemingly with little resistance, (people seem to agreed to join with them without much debate being required, the other older teams are being relegated and assimilated, like when the local football team refreshes its squad roster from relegation team players as well as youngsters to good effect: John McCain's terrorists have been reborn from the old Bush-McCain paradigm like the phoenix a burning oil tar barrel, possibly leaving their namesake, John McCain behind as well, he's aged out and is no longer of value. The large amounts of gold they got there I'm seeing as leading to pervasive societal developments concerning the notion sovereignty. And they have won the FIFA cup... ...wait no... ...thats wrong...my bad... They seized a neglected unguarded dumping site for a barbarous relic the massive pile of gold sitting on massive pile of oil equates to more sovereignty than you can shake a nuke at and seem to be trying to use it to build a sovereignty... those dirty barbarians. The current solution in John McCains homeland seems to be still centered on the creation of more terrorrorrorrorrorristismistsjismizing, or maybe MOAR toruturururururing. Lots and lots of it.
Sorry for the bit of algebra/nest thoughts/selection of alternation ideas and vocabulary... ...required to read this... ....wait... ...no I'm not.
I do wish for all of us a good experience with love of some sort, hopefully one that puts ones self, and pain we will all inevitably experience, and fear we can put ourselves in, into a manageable framing paradigm that most efficiently allows us to learn true value(s)...and information distribution through efficient editing...I wish you that too. :)
They did. Read up on Chesapeake.
WTI down $2.00 as we speak.
Broke through the Saudi floor of $80.00
~$78.50 Look out below.
Zap hood, You need to understand the knowledge and effort that goes into safely producing a oilfield. It's not just the Companies going bankrupt, it's a knowledgable labor force who perform all duties throughout the fields life cycle. You can't just replace the caliber of personnel needed once these morons in the WH decide to move to the next disaster.
Just what we all need, Obolo fucking with another industry he knows absolutely nothing about.
Hope and Change!!!
So you think it's like a light switch so you can turn it on and off really easy, don't you?
Another in the long list of folks who think they can make the market do what they want it to.
Markets don't like hubris...
camel turds
This will ultimately kill Canada's MASSIVE (relative to overall GDP) Alberta/Calgary tar sands industry, too.
There's going to be a lot of underwater mortgages and cheap used King Ranch F250 Ford Pickup trucks up in those parts soon, eh?
The asians will by them along with the land. No worries.
If I was a Canadian producer, I would get to work on those west coast pipeline projects for access to Asian and other markets post-haste. Lack of progress is a real black mark on the record of the federal Conservative Party.
Oil sands costs beat those of U.S. tight oil, new studies show (National Post, 20-Feb)
US$44.30/bbl Breakeven for Saskatchewn Bakken
US$63.50/bbl Breakeven for in-situ Alberta Oilsands
US$60-65/bbl Breakeven for integrated Alberta Oilsands Projects
"Some of the best profit investment ratios across North America."
Like I said, the asians will buy it all, regardless.
...And they pay CASH!
Maybe, just maybe somebody has figured out that fracking out the last of the fumes in the USSA will make us all the moar dependent on imported oil.
Either that, or it's a death knell yahoo to encourage retail spending.
Have you seen the pollution those tar sands are creating, huge lakes of tailings full of toxic sludge, maybe this is a good thing. But down the line they will become economically viable again.
When I filled up today, didn't even hit $50 bucks...
Gold Bitchez....I pick up pennies
Check out the SAGD process being used now.
Cosmos is probably influenced by 'green' propaganda about the old open pit mines like Syncrude, slanted diatribes that downplay and attack the incredible cleanup and reclamation protocols (surface vegetation and several feet of earth literally peeled away in squares and put into storage) and neglect to mention SAGD and other new processes. The surface footprint of SAGD is minimal, useless to a vociferous propagandist.
It doesn't occur to most people that oil was originally found in 'pristine' open pools on the surface of the ground. Oilsands seeped into 'pristine' waterways from visible 'pristine' seams on 'pristine' riverbanks for eons before modern man came around. Local indians used the stuff to waterproof canoes. 'Green' mockumentaries are notorious for selective omission of anything that undermines and discredits Agenda 21.
Alberta Oil Sands Land Reclamation
Reclaiming Alberta's Oilsands Mines
One of the more widely disseminated pictures purportedly depicting the environmental horrors of open pit oil sand extraction was actually a decades-old picture of a long-outdated open pit coal mining operation.
..... it's ok .... it's ok .... Canada can fall back on it's manufacturing and industrial base of Ontario once again...
.... sorry I can't even type that with a straight face ..... welcome to the new great white north......... problem with being a NAFTA meat puppet state is you always have somebody elses hand up your ass.....
.... I don't know but I've been told that eskimo .....
You know that Americans got really stupid when you see them worrying more about their neighbor's oil industry, rather than about their own shale fracking scam... As Asimov said it in one of his best books "against human stupidity Gods themselves contend in vain".
they are pumping some oil out but indeed are pumping as much or more oil in.
Either way, so this "anti putin" conspiracy is now and "anti US" conspiracy?
Again, tha Saudis need revenue as much or more as other nations here, since their revenue is used for staving off revolution at home and causing it elsewhere.
I'll take it.
Bankrupt the U.S. shale "miracle", you say?
Go ahead - make my day!
Yes, and "raise rates" while you are at it!
Triple dog dare them!
This article is retarded... like the US can't just halt imports to preserve the "shale miracle" Voila!
But, but, what about free trade and fair markets?
Sometimes the government just has to step in and make people do what's best for them.
Dice or cards?
Unfortunately, we still import a lot of crude for numerous things other than transportation fuels...
Like raising rates or outlawing gravity, the .gov can say a lot of things, but can only do so much...
How do you convince the smart US consumer that you're blocking oil because it's cheap? That's an argument that most people wouldn't understand.
... even though there is a long history across numerous industries regarding 'anti-dumping' practices, I doubt if the demonized petroleum industry would merit any consideration in that light.
That ought to motivate the BRIICS a bit...
Cheap gas on election day will not save the democrats.
How will they get it back up to 4 by Thanksgiving?
If we could just get rid of our allies, we would be all right.....
With friends like that, who needs enema's.
with friends like the Saudies, who needs enemies.
edit: damn, need to be quick on the trigger at this place.
With allies like these...
So when they load the oil on a ship and send it across the high seas, with ownership of that oil changing hands 5 times before it reaches it's destination, just remember that oil is NOT a globally traded commodity.
No doubt GS already has some tankers with rotating flags entering and loading up.
Oil arbitrage, Muppets!!!!
BTW - oil has done an about-face since this was posted and is now green on the day. Did ZH call yet another bottom?
Perception, distraction and confusion. This is how you control a message, and conmen are all about the message. Since they are at war with truth and nature.
May be Putin had given them Saudi some friendly reminder that if they continue the shit, some bombs will find their way to the Saudi oil fields.
saudi arabia is run by a bunch of thieving criminals.
Please name a country which isn't.
No doubt that can't be done.
I did not find any from my list!
Your proof is that the lone down arrow has not taken up the gauntlet you so honorably dropped.
**CRICKETS**
Europe should just get one of its member states (maybe Greece?) to change their name to Louisiana Offshore Oil Port, and go order a bunch at the US price before anyone catches on...
Nice. The oil weapon is evolving. It was a singular weapon, one price, aimed at everyone. Now some pigs are more equal than others.
Shale is one of the most leveraged plays in the energy sphere. We know that up front leases must be negotiated, and owners of rights want good money. Then the buyers have a "drill clause" if they don't drill in a certain time, they lose the lease. It is well known the investment in labor, transport and raw materials to frack. Check it out, they pay chicks 50-80K a year to drive a water truck to the rigs!
Bottom line, heavy investment up front and ongoing. Frackers lever up big time, and they have lived off of record low interest rates. The Fed is their friend! The Fed kept their borrowing costs so low as to be next to free. And end to QE and any move to market interest rates is a knife in the back to frackers.
Saudi is more aware of all this than I am, you can bet on that! So sure, Saudi is going after the frackers at the same time making Obama happy by sticking it to Russian energy concerns. But Russia's oil is still there, and some day soon, that oil will be needed in a world headed towards 10 billion people, and a Chinese and Indian middle class exploding in number. All across the world people are selling their donkey carts and buying Toyota cars and light trucks.
I think, short term pain can be exerted, as a LONG TERM play, Saudi is pissing in the wind. All of earth runs on oil, all agriculture is oil bases, all modern cities are oil based, all the growing war machines of earth are oil based. How long can you manipulate oil down? For awhile, But then markets will push it back to where supply [cost of production] and demand take it.
I was thinking of selling my Toyota and buying a donkey cart.
I have a mule I'll sell you.
I'll sell you my sister Sarah !!!
Why not sell yourself Hulk? What give you right to sell another persons freedom?
First get a donkey. When your girlfriend gets used to it in your apartment, then buy a cart. Just imagine the wild races through city parks..
The Europeans and Asians must be a little pissed off because the Saudis are fucking the frackers and the Russians while they're getting socked with the higher price.
As someone who sees several offers in the mailbox every year, I can safely assure you that there is zilch in upfront lease costs for drillers and, like Hollywood, the option can be rolled over upon expiry at the pleasure of the drillers.
House of Saud Boot on US neck seems to be a variable misconception but can be used for a purpose while convenient however the Saudi foot would soon to be severed by our {CIAS} caliphatarians if our little royal minions get to upity methinks.......
I'll confess to a natural hatred for two nations. I was not born hating them. But over the decades I have watched them manipulate and screw my nation over and over again. We live as virtual slaves to these two little pricks states. Saudi Arabia and Israel! And it just makes sense that Israel and Saudi Arbia are firm allies and friends. All that bullshit about Arabs against Jews? That really is the BIG LIE.
I share your contempt although I hold a psychotic hatred - and I mean that in the purest gouge out their eyes and boot fuck their corpses kind of way - of all of our "Political Leaders" who have in some form or another allowed themselves to be subjugated to the whims of these demonic spawn.
I am convinced that those who've been allowed to become our so called leaders have been so incredibly compromised before running for office they will follow their instructions without questions and will quite readily destroy the world in pursuit of whatever vice drives them and it has been so for a very very long time. The two satanicesque states you mention have enjoyed unchecked criminality on the back of the wests political-sodimistic behaviour for decades, the fact that the vast majority of our leaders willingly swear an oath to Israel should be all that is needed for citizens of good conscience to drag these our political whores to the steps of the capitol building for a good old disembowelment fest........
.......psychotic hatred... or .... reasonable response ........ ??
"It is certain that Riyadh proceeded in such moves, if not with Washington's cooperation, at least under its knowledge. Initially, Obama visited the area and most recently, John Kerry. The basic target of these visits was to restore relationships with Saudi Arabia as the United States postponed their plans for invasion in Syria. It is known that Riyadh was furious for this decision as well as for the approach between Washington and Tehran."
http://failedevolution.blogspot.gr/2014/10/the-weapon-of-oil-that-brings...
This is more desperation .
A major new energy source has been developed .
Oil is last years coal .
See
http://andreswhy.blogspot.com/2013/04/petroleum-price-and-clathrates.html
http://andreswhy.blogspot.com/2014/09/rogue-swan-tech.html
LOL!! Well, if you ignore the Energy Returned on Energy Invested, then yes...
"Black box technology" discredited 30+ years ago making a comeback...
Yes, just send me you bank account infomation, social security number and I "promise" to let you in on the investment of a lifetime...
So you're a Nigerian prince LoP ?
Have u lost ur marbles?
Have to keep the junkie addicted and kill off any thought of self reliance.
Yeah, Shoddy Arabian leader met Putin a week or so ago - afterward, King Abdictollah stated how much Russia was a vital partner and a key player in the Middle East.
How much you wanna bet that Putin told the kinga that he could expect some very unpleasant "developments" from Syria and Iran if he didn't abdicate and stop the U.S.-sponsored anti-Russian scheme?
On the other hand, if he joins the anti-petrodollar axis, he can be assured that Russia will keep Syria and Iran on a shorter leash as respects their effects on Shoddy Arabia?
Then Putin offered King Abdictollah some tea. Tea a la pollonium.
"The Phony Litvinenko Murder" William Dunkerley
Obama: "Ouch! This bloody arrow frisbee!!"
Seems more like Saudi is adopting the SinoRussian thesis of pricing Oil in other currencies than USD. Raising prices for Europe does nothing to hurt Russia.
Smart King!
oils well that ends well.
All the way to $20, so Saudis can take revenge on Iran and bank lobby, in my view
So much for the wealth effect in TX
No, as I explained already in a post below here, shale producers aren't hurting from this $2 drop. We just got a $.40 gain in NG the last week. The wells in Texas produce oil, gas and NGLs and the revenue stream is a blend of the three. The $.40 increase in the dry gas component probably balances the loss of $2/bbl in the oil component.
Look for Oil prices in for the US to rise, let's say... pretty soon after Tuesday, 11/4?
Yep, that's what I am thinking but OCICBW, this is a pretty crazy setup in financial and economic land right now.
I foresee a parking lot of ships with cargos owned by Goldman Sachs, purchased with Saudi money.
A $1 price differential is not that big a deal compared to $80/barrel.
Even if fracking does become unprofitable at $80, frackers will just stop drilling new wells while the price is low and will go right back to drilling if the price goes back up.
I think what the Saudis might be more worried about is the rise of more fuel efficient and electric cars. These are starting to become popular in places like Silicon Valley. Of course, SV has a lot of high-income eco-conscious yuppies, so it probably doesn't represent the US in general. But still, electric cars are starting to establish a beachhead there. And if they could bring the prices down somewhat, ECars might star to become popular in other places too. If I were a Saudi, that is what I would be worried about.
Unlike you, the Saudi's know electric vehicles are bunkum.
You can take that to the bank, I was unfortunate enough to manufacture them.I know.
When Tesla implodes, it will rank with the South Sea bubble as hyped trash.
I hate to bring up the obvious, but trying to eliminate Oil price from the list of election issues is probably paramount to Democrats.
This blatant manipulation of King Oil's price rips off the mask of supply and demand equilibrium and shows what Oligarchy comparative advantage really means in the power balance of politics. Where is that invisible hand now?
So much for the myth of a MARKET ECONOMY since the petrodollar was created in 1973.
In fact that construct was based on the twin pillars of a DOUBLE HEGEMONY of the Pax Americana construct right from inception (It was Barzini all along) :
1° King Oil controlled jointly by Seven Sisters and the swing producer of Ghawar pseudo-monopoly : the Saud clan
2° King global money, collateralised by this black gold, and controlled by FED. The reign of monopoly money (our money your problem mantra), equivalent to Pax Americana's "Allah of O Akbar greenback" our prophet, was a deregulated market controlled by the TBTF US banks located in the City (Oh thank you Ronnie, says Maggie, its our common animal farm).
So....if the money line is a MONOPOLY and if the key commodity is a Oligopoly under Saud rule and under Pax Americana gun, HOW CAN ANYONE PRETEND WE LIVE IN A MARKET ECONOMY ?
It died right there the FDR dream of a world ruled by the FOUR FREEDOMS as proclaimed by his speech in 1941 :
a) Fredoom of speech
b) Freedom of worship
c) Freedom from want (obviously under the magnanimity of king greenback for all to benefit and free, invisible handed markets; yipee!)
d) Freedom from fear, as rights of man gave all the right to not be put on the inquisitorial rack (like in Auschwitz where "work made you free").
Pipe-dream. Yalta did nothing to change that. It replaced the colonialist world by a Dual hegemony.
Once Pax Americana showed its true face ( under the pretence it was ALL Uncle Joe Stalin's fault) of loss of freedom in third world incarnated by the Dulles Brothers and invasion of McCarthyism/Hoover type fear at home.
And now we are 70 years down the road and we have all the chickens coming home to roost, in a world order created by Dear Henry, put on the neo-liberal bubble-o-nomics assets inequality rack by Reagan and Thatcher and then crucified in GWB's world crusade, under the "for us or against us" mantra, of slave labour arbitration run global factory working for the Oligarchy (yes work still makes you free in a Foxconn factory!).
No where to run nowhere to hide, as the Oligarchs now begin to fight in the race to bottom, until the mice turn and begin to roar. Sarajevo moment next?
(Did Orwell predict that inevitably the mice WILL roar, once the house of cards falls?)
The Saudi price increase makes no sense. It is either deceit or gross stupidity like burning down your house to get rid of mice.
European prices up 60c and Asian up 95c. How can this be? The European countries affected are said to be near a triple dip recession as is Japan.
Their currencies are weak compared to the US dollar.
Yet, they now have to buy expensive dollars with their weak currencies (yen, euro) to pay Saudi Arabia for oil whose price was just raised to them.
This is a scenario to push them into a triple dip or send them to buy oil in Russia.
Maybe they are selling gold to buy USD?
Of SA's oil exports only 10% goes to Europe (and UK can print to pay for what it gets), while 68% goes to Asia. Both China and South Korea are flush, while Japan -- and maybe India -- can print.
So, yes, maybe the economically suffering, euro using countries can sell gold every month to buy oil.
But that's a sure fire ticket to the Marshalsea. No?
Don't you think Russia is going to get some business out of the price increase?
At what point on that 7.9 year chart of saudi low oil prices does the declining earnings trend line cross the rising ISIS funding trend line?
You fucking idiots on ZH....
OK and your point is????????
Here is the thing, the $2 drop today was really nothing more than a reaction to the $.40 increase in NG since last week. No one has lost shit this week, you folks who don't get how shale works just don't get how shale works. The oil wells produce NG with liquids and so the revenue stream is a blend of NGL, dry gas and oil. The Marcellus shale is unaffected by the Saudi cuts so no dancing for joy there. What SA is really concerned about is Texas production. Fuck SA, we have good wells producing high quality light sweet with a lot of associated gas. The US refiners don't need their cut rate crap and I can only hope that domestic oil producers begin to get some protection from this kind of crap. That is of course what tariffs are for.
Here is the thing, the $2 drop today was really nothing more than a reaction to the $.40 increase in NG since last week. No one has lost shit this week, you folks who don't get how shale works just don't get how shale works. The oil wells produce NG with liquids and so the revneue stream is a blend of NGL, dry gas and oil. The Marcellus shale is unaffected by the Saudi cuts so no dancing for joy there. What SA is really concerned about is Texas production. Fuck SA, we have good wells producing high quality light sweet with a lot of associated gas. The US refiners don't need their cut rate crap and I can only hope that domestic oil producers begin to get some protection from this kind of crap. That is of course what tariffs are for.
Putin spanking Obama:
http://reason.com/blog/2014/11/03/putin-spanks-obama-in-new-russian-propag
He prolly spanked some oil-rich Sunni princes, too
US prices will increase after the elections tomorrow.
You know that, right?
I hope that is the case. I would rather be getting $90/bbl than $70/bbl.
SHALE OIL
Buy on the rumor
Sell on the story in ZH
It's good to see Putin and Russia feeling the exquisite pressure the US is able to exert in the form of lower oil prices and a going-to-hell-in-a-handbasket ruble.
Vlad just needs to give us another gratuitous display of compliant and passive men being thrown to the mat by the Russian Bear.
http://www.youtube.com/watch?v=dYtDQ_t-_HQ
exquisite pressure
When does Russia feel that pressure?
When the Scandinavian Sissies and Baltic Badbois have to scramble jets to intercept Russian bombers loaded with nukes?