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Who Is Saudi Arabia Really Targeting In Its Price War?
Submitted by Arthur Berman via OilPrice.com,
Saudi Arabia is not trying to crush U.S. shale plays. Its oil-price war is with the investment banks and the stupid money they directed to fund the plays. It is also with the zero-interest rate economic conditions that made this possible.
Saudi Arabia intends to keep oil prices low for as long as possible. Its oil production increased to 10.3 million barrels per day in March 2015. That is 700,000 barrels per day more than in December 2014 and the highest level since the Joint Organizations Data Initiative began compiling production data in 2002 (Figure 1 below). And Saudi Arabia’s rig count has never been higher.

Figure 1. Saudi Arabian crude oil production and Brent crude oil price in 2015 U.S. dollars. Source: U.S. Bureau of Labor Statistics, EIA and Labyrinth Consulting Services, Inc.
Market share is an important part of the motive but Saudi Minister of Petroleum and Mineral Resources Ali al-Naimi recently emphasized that “The challenge is to restore the supply-demand balance and reach price stability.” Saudi Arabia’s need for market share and long-term demand is best met with a growing global economy and lower oil prices.
That means ending the over-production from tight oil and other expensive plays (oil sands and ultra-deep water) and reviving global demand by keeping oil prices low for some extended period of time. Demand has been weak since the run-up in debt and oil prices that culminated in the Financial Collapse of 2008 (Figure 2 below).

Figure 2. World liquids demand (consumption) as a percent of supply (production) and WTI crude oil price adjusted using the consumer price index (CPI) to real February 2015 U.S. dollars, 2003-2015. Source: EIA, U.S. Bureau of Labor Statistics, and Labyrinth Consulting Services, Inc.
(click to enlarge image)
Since 2008, the U.S. Federal Reserve Board and the central banks of other countries have further increased debt, devalued their currencies and kept interest rates at the lowest sustained levels ever (Figure 3 below). These measures have not resulted in economic recovery and have helped produce the highest sustained oil prices in history. They also led to investments that are not particularly productive but promise higher yields that can be found otherwise in a zero-interest rate world.

Figure 3. U.S. Federal Funds rates and WTI oil prices in January 2015 U.S. dollars. Source: U.S. Bureau of Labor Statistics, EIA and Labyrinth Consulting Services, Inc.
(Click image to enlarge)
The quest for yield led investment banks to direct capital to U.S. E&P companies to fund tight oil plays. Capital flowed in unprecedented volumes with no performance expectation other than payment of the coupon attached to that investment.
This is stupid money. These capital providers are indifferent to the fundamentals of the companies they invest in or in the profitability of the plays. All that matters is yield.
The financial performance of most companies involved in tight oil plays has been characterized by chronic negative cash flow and ever-increasing debt. The following table summarizes year-end 2014 financial data for representative tight oil-weighted E&P companies.

Table 1. Summary of 2014-year end financial data for tight oil-weighted U.S. E&P companies. Money values in millions of U.S. dollars. FCF=free cash flow (cash from operations plus capital expenditures); CF=cash flow; CE=capital expenditures. Source: Google Finance and Labyrinth Consulting Services, Inc.
Some rationalize the negative free cash flow as an expansion of capital base that will result in future profits. The following table shows that over the past 4 years, tight oil negative cash flow increased and has reached a cumulative of more than -$21 billion for the representative companies. Almost half of that negative cash flow took place in 2014.

Table 2. Summary table of cash from operations and capital expenditures for tight oil-weighted U.S. E&P companies. Values in millions of U.S. dollars. Source: Google Finance and Labyrinth Consulting Services, Inc.
(Click image to enlarge)
The average U.S. oil price from January 2011 through year-end 2014 was $95 per barrel. First quarter 2015 performance at $48.50 WTI will be a disaster that makes the previous 4 years look good.
How long do the losses continue before the cheerleaders of shale plays admit that the enterprise is not profitable? Only the more diversified integrated companies like ConocoPhillips, Marathon, and OXY show meaningful long-term positive cash flow. If companies could not show positive cash flow at $95 per barrel, what price is necessary and what will that do to the world economy?
Some of my readers dispute the poor economics of these plays based on incorrect notions of break-even profitability–some believe that tight oil plays are profitable at $35 per barrel oil prices (see comments from my last post).
Following are two slides taken from Schlumberger CEO Paal Kibsgaard’s recent presentation at the Scotia Howard Weil 2015 Energy Conference held in New Orleans. These slides present a well-informed and objective view of how tight oil plays compare to other plays.
In my Figure 4, Mr. Kibsgaard shows that the average break-even price for tight oil plays is about $75 per barrel. By comparison, Middle East OPEC break-even prices are less than $10 per barrel. Other conventional oil plays break even at less than $20 per barr
Figure 4. Slide from Schlumberger CEO Paal Kibsgaard’s presentation at the Scotia Howard Weil 2015 Energy Conference.
(Click image to enlarge)
In my Figure 5, Mr. Kibsgaard shows Schlumberger’s assessment of drilling intensity or efficiency. For nearly equal oil-production volumes of about 11 million barrels per day, U.S. oil producers drilled more than 35,000 wells and 297 million feet of hole compared to 399 wells and 3 million feet of hole for Saudi Arabia.

Figure 5. Slide from Schlumberger CEO Paal Kibsgaard’s presentation at the Scotia Howard Weil 2015 Energy Conference.
U.S. companies drilled almost 100 times more wells to reach the same daily production as Saudi Aramco. Strident claims of increased efficiency by tight oil producers sound absurd in this context.
Prolonged low oil prices will prove that tight oil plays need at least $75 per barrel to break even. When oil prices recover to that level, only the best parts of the tight oil core areas will be competitive in the global market. As production declines from expensive tight oil, oil sand and ultra-deep-water plays, inexpensive Saudi oil will gain market share.
Saudi Arabia is not trying to crush tight oil plays, just the stupid money that funded the over-production of tight oil. Too much supply combined with weak demand created the present oil-price collapse. Saudi Arabia hopes to prolong low prices to benefit their long-term needs for market share and higher demand.
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Oil in the bank (as it were)...knock yourselves out wahhabi's ;-)
Saudis are not at war with the big banks, they're in bed with them. This is the beginning of the end of project USA. Watch as the bad news comes fast and furious the rest of 2015 and oonward.
"We will squeeze the juice out of America, then it will dry up and blow away."
Netanyahu
And before all you Jew haters pile on, EVERYBODY knows this is the plan, from Obama to Cameron, and Yellen.
Here's the real root cause of the drop in oil:
http://debtcrash.report/entry/oil-price-drop-root-cause-analysis
Here's a fact: Saudi Arabia can't diversify their economy, and given the increases in both finds of major oil deposits globally, new techniques to extract oil from previously untappable sources, Saudi domestic instability, and geopolitics -
- Saudi Arabia is now in a catch-22 that is not controllable, whereby they will be compelled by necessity to pump and sell as much oil as quickly as possible for a long, long time.
Texas, North Dakota, Louisiana, Pennsylvania, Canada (Alberta/Calgary), Mexico and Venezuela should brace for impact.
Except as the charts above show Saudi oil production is broadly flat over the past 5 years at 9.5 - 10 million barrels a day.
Whereas US production has rocketed from 5.5 million barrels to 10 million barrels during the same period.
Yet the author believes it is the Saudi's who are flooding the market? It is the American shale industry who have flooded the worlds oil markets.
The Saudi's haven't done anything. OPEC voted to keep the status quo, it didn't change it's quota.
"Saudis are not at war with the big banks, they're in bed with them."
Of course they are, that could be their head-in-a-bucket...lol
The House of Saud cast their lot with them for political power & wealth but that didn't stop Abdul-Aziz from putting an ass whipping on them when the time was right.
And so it goes ;-)
Too little too late. There was a time when $100 a barrel was needed to be profitable in oil shale. Actually, the whole oil shale project was more at first a search for natural gas than oil. Natural gas is still a losing proposition, but lots of oil will be profitable at $50.00 a barrel. Oil has become a tech object, and like all tech subject to Moore's law. It gets cheaper over time. Peak oil is an illusion. The U.S. is hardly the only land mass blessed with shale. Russia and China are loaded, and probably South America too.
Natural gas is still a losing proposition (we flare more of it than we use), but starting later this year Cheniere starts exporting the stuff. Then the whole equation changes again.
Yeah, peak oil, peak water, peak food, peak population, peak hot/cold/wet/dry/windy/calm weather...I peaked out a long time ago...lol.
Sorry, but I could give 2 shits why oil is cheap. Let the Rockefellers of the World beat each other senseless.
Cash is what matters, not accounting gimmicks. Show me the cash flow at $50. They will all be dead in a few years at $50
I don't mean to be obtuse or conflate too many subjects when I rebut your post ... but ... you are a fucking idiot.
I also do not like all caps, but IF THEY FUCKING MADE MONEY AT FIFTY FUCKING DOLLARS A BARREL WHY ARE THEY ALL GOING TITS UP AND DESTROYING TENS OF THOUSANDS OF JOBS.
And Moore's "law" isn't a law. Just in case you actually understand or pursue physics (or any science) as a hobby, a "law" is something like gravity, mass-energy, motion, that sort of stuff. You know, "laws" of how stuff always works.
Moore's "law" isn't a law (it was MARKETING) and was never going to hold because transistors can NOT shrink indefinitely. In fact, as they got smaller, quantum (or nano if you will) physics take over and the physical/material properties are just wildly different. So, there is a physical size to a transistor at which it can't get any smaller and it stops reliably being a transistor at less than that size. Hard to engineer a smaller product if your shit doesn't work.
Do you know why no CPU company (intel, amd, etc) talk about mega-giga/hertz clocks any more? Or why they stopped pissing about who's cpu is faster? Or why they started making MORE CORES instead of faster CPUs? Or, for fucks sake, why there is SCALABILITY ISSUES with multi-core CPUs where at some point the added benefit of a new core is less useful than the previous (i.e. marginal utility of an additional core) so the whole meme of adding more cores for more power falls flat on its ass?
Because your a fucking idiot.
Thanks for the therapy session. I feel way better.
https://www.youtube.com/watch?v=RDjCqjzbvJY
Regards,
Cooter
P.S. I hope you lose your ass trying to dump whatever dumbass position you took that led to such a misleading comment.
I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.globe-report.com
Does this shit still work? Seriously?
I can only presume by the fact I keep seeing it that occasionally it does.
Bring back the glorious days of ZH math CAPTCHA!
Regards,
Cooter
FULL DISCLOSURE: I used to fail at some of the ZH math captcha ... but I think it would clean up comments A LOT ...
I must admit captchas usually just piss me off. I mean, why does Ticketmaster need one? And a dinky one, at that. But here it not only worked, but the math captchas keep the dullards (and most gubmint employees) out. Sorry for the redundancy.
I have no choice but to agree.
F*ck you Faisal.
Yeah! Wheres my front running blood for oil bonus bucks!
The only important question - can they hold above 10 mbpd?
No. More than a few people have said that they are producing less that they claim. Ghawar is suppoedly shagged out. It is about 60 years old and they have pumped it to death.
Why is all this sh*t going down with Saudi Arabi and Dr. Jim Willie saying the USSA and UK are stealing their gold in London. The Saudis throwing their praetorian National Guard at Yemen? Because their army, made up of Saudi who have Yemeni tribesmen will not fight? I think things are not going well for the vile Royal House of Shit.
If they are targeting anyone it is Iran and Russia.
Dr. Jim Willie and maybe Pepe Escobar have said the USSA will pivot to Iran and maybe China and the Saudis will hook up.
The only reasons I can see for the pivot is:
1. Saudi oil fields are dying rapidly (US and British oil men will know). Iran's oil reserves are still huge.
2. USSA and UK have stolen most of the Saudis gold in London.
My guess is the Saudis really wanted Syria because all they have left in ample supply is nat gas which is worthless if you cannot move it. LNG cannot compete against GazProm's (almost) global pipelines. Their pipeline network in Eurasia is staggering.
yes and yes
There's a lot of ways to look at this but boiling it down to the Saudis fighting western bankers is a little comic. The Saudis likely know that for a lot of reasons, a lot of oil is going to end up staying in the ground. NOt that there's any trust left among these thieves. They also know their days are numbered as the US global military becomes less relevant and less effective. Then there's their own citizens hatred which grows daily. Like a lot of the bastards running the world, they could care less about any structure that will last beyond their own pathetic lives and they are simply selling as much god damn oil while they can still make money.
not that I'm angry
/\
This is why I started coming to ZH and reading the comments. Haven't seen much like them for a while unfortunately.
If ISIS ... or whatever its name will be in the future successfully penetrates Kazahk, and Turk society...Russia is going to be in a big battle to retain control of their oil fields.
The issue is not kinetic. It is demographics, relative to the location of the Russian oil fields.
This is an old topic and the best answer is here:
http://www.theoildrum.com/node/9263
For more background and depth, go here and read away:
http://www.theoildrum.com/tag/ghawar
Regards,
Cooter
<duplicate>
Regards,
Cooter
Dumb shit even by oil price standards.
Saudi's do not think in terms of secondary and tertiary effects. No one does but the Ivory Tower, drenched in lefty politics crowd.
Way too much of that crap lately.
War bubble 3.0?
the jewish house of saudi
they thought they was part of the chosen.
did not understand or look in the mirror
if they had they would have seen
an oriental not a pink khazar.
panic stations restless princes
the gold in london and washington is gone.
gadaffi sovreign wealth funds and gold gone
saddams 2
not to mention ukrainia.
saudi given israel 16 billion protection monies
cheques cashed.
what can you say
the rabbi done it again even stealing from ugly brown family members.
what can one say saud the british invented you
tavistock shaped you
the sas protected you
the pentagon took 100s of billions from you.
wall street and empire of the city of london analised raped you.
what can one say but
lovely jublee my life already
forward yemeni hootu
lets roll
i off to stake my claim on that knightsbridge flat
nazi kook redux
Elizabeth II -- worse British sovereign ever. (probably because she's jewish, right?)
American banks......don't fuck with other people's money. The camel humpers are going to teach you a lesson but good.
That's a joke right? Cause um... I'm pretty sure the banks will be ok, and I'm also pretty sure the west will just take the fuckin oil if it comes to that.
Interesting how the saudi campaign in Yemen after a call from china and a thank you to russia for its mediation effort. Then the kind sends in the national guard, the Abdullah legacy. All while us escalates with warships and a marine in the saudi capital. And pegs bust is a good thing....
In the future, historically the disconnect between interest rates and oil price will be viewed as the death of the dollar.
The smug saudis will think they got the world by the balls until they get the shit bombed out of them and invaded. It's only a matter of time before somebody gets sick of their shit and chops off their prince heads.
my thoughts exactly. i think they are dumping their oil before they go the way of every other despot.
huh?
Long article and no mention of it being anti Russia? Either as a US pawn or on their own?
Ragheads don't even have to drill for oil, it just bubbles up lol.
Not any more. The Saudis have to inject seawater into their wells. the places around the Caspian Sea have oil bubbling up.
pure utter one dimensional tripe
It was the US gov who used the cartel over seas to once again attack American oil.... But gore will say some shit to hold prices up or EPA approved wars will wage behind Hillary's Muhammad halo to silence free speech in the US accordingly under sharia law as freedom.
With this economy the price should be lower but at one point the US changed their mind when they realized an oil crash would crash everything...
Perhaps Obama will give that low price to those running the oppressive religious gov over Iran who deserve nuclear missiles which jimmy carter Hillary and Kiki put into power back in high school.
Point is as they rob u if u soul warlords need to be ur competition to think u had one in the first place with lover pâténted and passion assassins front running all ambitions 24/7 a day for decade after decade....
Jealous of all one dares to love...
In perfect hell of Kiki's evil voodoo dollhouse.
"Saudi Arabia is not trying to crush tight oil plays, just the stupid money that funded the over-production of tight oil. Too much supply combined with weak demand created the present oil-price collapse. Saudi Arabia hopes to prolong low prices to benefit their long-term needs for market share and higher demand."
This is not news. I could argue that it's "dressed up Plagiarism", since I've made this exact argument a number of times on ZH, i.e. that they will...
Transfer the well ownership from weak hands (US maxxed out entrepreneurs) to strong hands, by buying bankrupted assets for pennies on the Petrodollar, and use Citi (a Prime Dealer, of which they own a huge/controlling share) to do the financing.
And if you want to get really cynical, they'd also scoop up all the water rights possible, to sell drinkable water (that's left after fracking) for a fortune. I'd put nothing past these Wahabbi sociopaths, or their Wall St bumchums.
"Give me a country's HydroCarbons and Water supply, and I care not who makes its laws" -Kirk
Liked the article...
BARK.
How much do we really know about how much oil Russia is sitting on? Remember how they dropped their diamond discovery bomb out of nowhere?
http://phys.org/news/2012-09-popigai-russia-vast-untouched-diamond.html
Diamonds are practically worthless. Ever tried to sell one? If you go into a jeweler and look at a nice diamond that costs, say, $1000, and ask them how much they would pay for it if you needed to sell it back, they will not tell you, or they will lie. This is because they would pay you about $20 for it. Industrial diamonds are more valuable than jewelry diamonds, but they are basically just hard rocks, and the supply is endless.
Diamonds were as common as dust before the russian find, and it dwarfs previous finds. The trillion carats mentioned in the article add up to approximately 220K tons.
Large flawless diamonds are rare and therefore valuable, but the common ones you buy at the jewelry store are nothing but a scam.
Diamonds are a jew monopoly second only to money printing.
One-note nazi kook with nothing else to say.
Ever.
Tired of your blatantly obvious bullshit. Diamonds were (past tense) monopolized by De Beers (Not Jewish).
The company was founded in 1888 by British businessman Cecil Rhodes, who was financed by the South African diamond magnate Alfred Beit and the London-based N M Rothschild & Sons bank. http://en.wikipedia.org/wiki/De_Beers
Will the collapse of the bond market for shale oil be the catalyst for a generalized collapse of the bond market?
I took the liberty to make it a nice read for people with the most important highlights:
Record Saudi Oil
Saudi Arabia is not trying to crush U.S. shale plays. Its oil-price war is with the investment banks and the stupid money they directed to fund the plays. It is also with the zero-interest rate economic conditions that made this possible. Saudi Arabia intends to keep oil prices low for as long as possible. Its oil production increased to 10.3 million barrels per day in March 2015. That is 700,000 barrels per day more than in December 2014 and the highest level since the Joint Organizations Data Initiative began compiling production data in 2002. And Saudi Arabia’s rig count has never been higher.
Market Share
Market share is an important part of the motive but Saudi Minister of Petroleum and Mineral Resources Ali al-Naimi recently emphasized that “The challenge is to restore the supply-demand balance and reach price stability.” Saudi Arabia’s need for market share and long-term demand is best met with a growing global economy and lower oil prices. That means ending the over-production from tight oil and other expensive plays (oil sands and ultra-deep water) and reviving global demand by keeping oil prices low for some extended period of time. Demand has been weak since the run-up in debt and oil prices that culminated in the Financial Collapse of 2008.
Increasing Debt
Since 2008, the U.S. Federal Reserve Board and the central banks of other countries have further increased debt, devalued their currencies and kept interest rates at the lowest sustained levels ever. These measures have not resulted in economic recovery and have helped produce the highest sustained oil prices in history. They also led to investments that are not particularly productive but promise higher yields that can be found otherwise in a zero-interest rate world.
Quest for Yield
The quest for yield led investment banks to direct capital to U.S. E&P companies to fund tight oil plays. Capital flowed in unprecedented volumes with no performance expectation other than payment of the coupon attached to that investment.This is stupid money. These capital providers are indifferent to the fundamentals of the companies they invest in or in the profitability of the plays. All that matters is yield.
Negative Cash Flow
The financial performance of most companies involved in tight oil plays has been characterized by chronic negative cash flow and ever-increasing debt. Some rationalize the negative free cash flow as an expansion of capital base that will result in future profits. Over the past 4 years, tight oil negative cash flow increased and has reached a cumulative of more than -$21 billion for the representative companies. Almost half of that negative cash flow took place in 2014.
Oil Price
The average U.S. oil price from January 2011 through year-end 2014 was $95 per barrel. First quarter 2015 performance at $48.50 WTI will be a disaster that makes the previous 4 years look good. How long do the losses continue before the cheerleaders of shale plays admit that the enterprise is not profitable? Only the more diversified integrated companies like ConocoPhillips, Marathon, and OXY show meaningful long-term positive cash flow.
Break-Even
If companies could not show positive cash flow at $95 per barrel, what price is necessary and what will that do to the world economy? Some of my readers dispute the poor economics of these plays based on incorrect notions of break-even profitability–some believe that tight oil plays are profitable at $35 per barrel oil prices. Mr. Kibsgaard shows that the average break-even price for tight oil plays is about $75 per barrel. By comparison, Middle East OPEC break-even prices are less than $10 per barrel. Other conventional oil plays break even at less than $20 per barrel.
Many Wells
For nearly equal oil-production volumes of about 11 million barrels per day, U.S. oil producers drilled more than 35,000 wells and 297 million feet of hole compared to 399 wells and 3 million feet of hole for Saudi Arabia. U.S. companies drilled almost 100 times more wells to reach the same daily production as Saudi Aramco. Strident claims of increased efficiency by tight oil producers sound absurd in this context.
Bottom Line
Prolonged low oil prices will prove that tight oil plays need at least $75 per barrel to break even. When oil prices recover to that level, only the best parts of the tight oil core areas will be competitive in the global market. As production declines from expensive tight oil, oil sand and ultra-deep-water plays, inexpensive Saudi oil will gain market share. Saudi Arabia is not trying to crush tight oil plays, just the stupid money that funded the over-production of tight oil. Too much supply combined with weak demand created the present oil-price collapse. Saudi Arabia hopes to prolong low prices to benefit their long-term needs for market share and higher demand.
->>>|:-) THE CITY INDIANS (-:|<<<-
Of course Saudi Arabia is at war with other oil producers. That's how capitalism works. You undercut the competition until they go away. Walmart tries to have lower prices than mom and pop stores. Samsung tries to make better and cheaper phones than Apple. Honda tries to make better and cheaper cars than Toyota.
http://en.wikipedia.org/wiki/Price_war
It's liquidity from the ground vs liquidity from the printing press.
Good article by the way
Does dumb money include the Washington DC subsidizies for ethanol? I always thought that was dumb.
Re: "Saudi Arabia is not trying to crush tight oil plays, just the stupid money that funded the over-production of tight oil."
The author has no way of knowing who or what the Saudis are "trying to crush," and neither do I. I do know that the Saudi's actions are crushing marginal oil producers and those who invested in them, but that does not mean that crushing anyone is part of the Saudi strategy.
It could be much simpler than that. It could simply be that the Saudis see a global recession/depression. This is obvious from all common commodities such as oil, iron, copper, and concrete. It's also obvious from looking at the Baltic Dry Index. You don't need to be a great prognosticator to see that the Chinese bubble is running out of hot air.
By keeping their production up, the Saudis are keeping their income as high as it can be with current low prices. They're also protecting their market share. That's what being the biggest producer and a low-cost producer allows them to do.
Right! That saves me from writing the first part of my comment. In addition: One day all resources are going to be exploited. Prior to that prices will be extreme. It is (should be) a pitty to waste valuable ressources at todays prices. Saudi action does not only impact the oil and gas explorers, the energy companies, the governments of oil + gas producing countries and the financiers but also the "green energy" sector. At the current price level many businesses and projects look obsolete and shall deteriorate. This is not yet reflected in the share prices.
You mean Barnanke threw the Saudi's under the bus too?
I think the phrase "distinction without a difference" applies to the laborious logic contained in this article. Whether the Arabs are targeting the drillers or their financiers, the net result is to derail non-Saudi oil production.
I also take issue with the break even point on the price of oil per bbl.
Yes, countries like Saudi and Russia have large gross margins at the wellhead, yet they also carry large social welfare costs and massive military budgets that are financed out of these revenues and these should be calculated into their net return.
Their effective "avoiding revolution" break even point is much higher than the 20 dollar prices cited above.
What a strange argument. Somehow low oil prices are going to raise interest rates and that's what the Saudis want? Er, or, um, what did you say again?
Russia and China should take over Saudi Arabia in retaliation for what they did to the World Trade Centers.
"Who Is Saudi Arabia Really Targeting In Its Price War?"
Israel and Zion want Lebensraum and pipeline routes in Syria --> Start civil war in Syria to oust Syrian regime --> Produce false-flag gas attack to undermine Assad. Fails. --> Threaten to bomb Assad. Russia says, "Nyet!" --> Overthrow regime in the Ukraine and install Zionist backed Nazis (Cookies included.) --> Russia gets Crimea. How does one say "thanks" in Russian? --> Start new boogeyman group, ISIS and send to destroy Syria while complicit-media bemoans their threat to the world. (Really true, but not the way the elites and propagandists want us to think.) --> Have the Saudis drop oil prices in an attempt to undermine Russian economy. Result is that Zion looses a foot. --> Stage false-flag in Paris to try and recapture the French sheeple as they have waned over Gaza, the Ukraine, and MH-17. --> Have your boogeyman take over Yemen while you have complicit-media claim that the elites are doing all they can to prevent it. LOL.
Zion is doing the "targeting," Saudi Arabia is doing the deed for Zion.
Liberty is a demand. Tyranny is submission.
Being that it is all coordinated at a high level, is supranational, reveals Zion's hand.
That oil productivity table speaks volumes :
1% of wells or piping footage in Saudi produces as much flow in Bbl/d as that required for much higher cost oil in USA...
The law of nature is like the invisible hand of God; incomprehensible!
"God moves in funny ways!"
Well back to capturing the sun's rays!
Having said that I don't buy this rationale.
The Sauds want to PUNISH the West (Pax Americana) for having decided to pull the plug on Sunni Saudi hegemony in the region : THAT WAS THE DEAL THAT FDR MADE AND that Dear Henry relayed in petrodollar shuttle diplomacy and that the Bush Brigade cast in stone in their anti-Ayatollah cum anti-Saddam- the-renegade Iraqi/Irani Crusade.
Now Pax Americana is having doubts, given that the Sunnis rabid stance igniting all of Islam (of which Saud is the most articulate fundamentalist proponent in moslem world)-- from Indonesia to Nigeria-- is their Ace in the ME golden Oil patch hole "pardner" of the future.
The times are a changing and Saud is not AMUSED!
The saudis don't have unlimited production capablity, their increase in production is miniscule. Calling it half a Bakken is stupid. Texas has added 2mmbbl/day in 5 years with 28,000 wells and more are being drilled. The US still imports 7mmbbl/day and that week where there was a huge build, the imports were 8.2mmbbl/day. This is a show for morons that read headlines and don't think or calculate.
Who's the moron?
The US imports historically 10- 8 mmbbl/d in the 2000s. How much does Saud IMPORT?
Did you read that article? The factual bit about COST /bbl as per region and number of wells/bbl? The US tight oil is not exactly the cheapest and most productive segment of the oil planet.
Do the math. Also, as the article points out this production in US is not only underproductive in comparison but HUGELY leveraged by the bankster scam of cheap unlimited money.
What the article does not say is in addition FRACKING produces huge side effects like pollution of water table and earthquake propagation potential wherever they pump that toxic soup.
With a depletion span of 5-8 years each frack well dries up faster than a meno paused sweet Sue.
Now tell me whose is moronic on this issue...is it Saud or is it "Frack to drill baby drill exhaustion pains" USA?
QE and Zirp crushed gold,silver,copper,iron,and now oil..For some strange reason,printing and distributing free money to bankers only inflates stock,bond,and real estate end value pricing (the bankers portfolio)..while crushing the value of the raw materials used in building and manufacturing (the upper middle class jobs)..
The saudis export about 8mmbbl/day, the world consumes 9-10 times that much. How much does the rest of the oil consumed cost to produce? This is a stupid article with a stupid premise. If the US oil weren't in the market the price would be $100/bbl the fucking Saudis just want it all for themselves, they can lump it. No one is getting out of the market because anyone with two cents worth of sense can see the saudis are an arrogant and limited power that is in the process of destroying themselves, flying too close to the sun as it were.
Shale was never going to last. If the Saudis really did this to "gain market share" then its pretty late, considering that the prime time would have been when CAPEX was being spent on Shale. Better yet, they could have let shale spend itself. Besides, what's the point of getting market share if your maximum revenue is significantly decreased? If higher prices encouraged others to produce more leading to your market share being reduced, then won't that happen once prices go up, or will you accept lower revenue forever just to keep market share?
Honestly, it makes no sense economically for Saudi Arabia to do this, which is why I think it is either not caused by them, or caused for political reasons.
Western governments and banking cartels(in reality the same)have the power to trash any business or industry.
The motive is always the same. Self interest. Are there ways to exploit them? Technology, RRE,CRE,.
Once upon a time education was a cottage industry that offered excellent value to consumers and society at large. Medicine? What is the real cost of food in the US? Don't forget food stamps, farm subsidies, water subsidies, condoned or encouraged monopolistic practices, world reserve currency.
But hey there are votes, kickbacks, patronage to be had.
And now western governments and banking cartels have gone from partly decoupled from "borrowing" and "leverage" to completely decoupled. It's simply confiscation now.
Fascism 2.0 and western imperialism 2.0 have landed in a seamless oneness. People everywhere are going to be struggling with the consequences.
"Saudi Arabia is not trying to crush tight oil plays, just the stupid money that funded the over-production of tight oil."
Riiight.
Let's restate this sentence precisely, using alternate wording, and see if it makes sense.
Saudi Arabia is not trying to gain market share, just crush financiers who made Saudi Arabia's Oil 100% more profitable at market.
Are you going to try and sell me a bridge in Brooklyn too?
People, it's about hurting Russia and Iran. The whole lets be freinds thing with Iran is a ruse.