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Saudis Planning For A War Of Attrition In Europe With Russia's Oil Industry
Submitted by Nick Cunningham via OilPrice.com,
Russia’s central bank recently warned about the growing financial risks to the Russian economy from Saudi Arabia encroaching upon its traditional export market for crude oil. Russia sends 70 percent of its oil to Europe, but Saudi Arabia has been making inroads in the European market amid the oil price downturn.
The result is a heavier discount for Russia’s crude oil, the so-called Urals blend. Bloomberg reported that the Urals typically lands in Rotterdam, a major European destination, at a discount to Brent of around $2 or less. But the discount has widened to $3.50 lately due to increased competition from Saudi Arabia. “Oil supplies to Europe from Saudi Arabia are probably adversely affecting Urals prices,” the Russian central bank warned in a recent report.
Russian officials have accused Saudi Arabia of “dumping” its oil in Europe, a move that Rosneft chief Igor Sechin said would “backfire.”
Russia’s economy has been battered by the collapse in crude prices, compounded by the screws of western sanctions. The Russian economy could shrink by 3.2 percent this year.
Oil exports account for around half of the revenue taken in by the Russian government. And for an economy so dependent on oil, it is no surprise that the plummeting crude oil price has led to a dramatic depreciation of the ruble, although over the past month the currency regained some lost ground. The weakening currency has pushed up inflation, which creates a conundrum for the Russian central bank.
To stop the ruble from plunging further and to keep inflation from spiraling ever upwards, the Russian central bank took aggressive action by hiking interest rates to as high as 17 percent at the beginning of 2015. However, that has negatively impacted the economy. As the ruble stabilized, the bank dialed the interest rate back to 11 percent, where it stands today.
In response to the tough financial circumstances that Russia has found itself in, it sees no choice but to squeeze as much oil out of its aging fields as it can. So far, it has succeeded to some extent. Russian oil production is expected to rise by a modest 70,000 barrels per day in 2015, averaging 10.75 million barrels per day (mb/d) over the course of this year. Output hit a post-Soviet record of 10.78 mb/d in October, according to OPEC’s latest monthly report.
However, the upside to Russia’s oil production is limited. The Russian government needs revenue, so is not keen to cut taxes. The government is mulling a delay in the planned cut in export taxes, which, according to OPEC, could result in oil companies paying an additional $2 to $3 billion more in taxes. That could modestly cut into overall Russian oil production, perhaps pushing output down by 0.1 to 0.2 mb/d. In any case, Russia probably can’t boost output any further. OPEC predicts Russia’s oil production will remain flat through next year.
Globally, the competition between oil exporters won’t ease in the near term. There are still too many barrels of crude floating around. OPEC predicts that non-OPEC supply will contract by just 0.13 mb/d in 2016, a rather trivial amount considering the extreme cut backs in investment and drilling activity.
Despite the fact that OPEC officials have consistently put on a brave face in public, insisting that markets will balance relatively quickly, OPEC’s numbers tell a different story. The cartel sees U.S. shale contracting by just 100,000 barrels per day in 2016 from 2015, a volume that is nearly offset by several new projects beginning operations in the Gulf of Mexico.
Which brings us back to Europe. Saudi Arabia could be playing a longer game, intensifying its market share strategy by encroaching on Russia’s traditional market in Europe. An increase in Saudi oil flowing to Europe threatens to undermine Russia’s principle market. In its November report, OPEC reported that the Urals discount to Brent “almost tripled in October amid plentiful supplies, sagging refinery margins and wide availability of alternative grades from the Middle East.”
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Fuck the cruel, corrupt, criminal cabal that rules Saudi Arabia. The free and fair Western press has ignored Saudi Arabia's war crimes in Yemen.
Hope they go bankrupt soon. Or Putin sends a few missiles their way.
How much longer can the Saudi regime really hope to hold on to power? Take a look at how fast things are changing out there!
Newspaper accuses pro-France Facebook users of ‘white supremacy’http://tinyurl.com/pcy35ml
All it takes is one attack on a major Saudi or Qatari oil facility to accomplish two things: (1) send a message to the Wahhabist scum to watch themselves and stop supporting ISIS; and (b) spiking crude prices.
Russia will be fingered for it, but it will be well deserved by those backwards fundamentalist scum that our administration likes to refer to as our allies.
The Russians are butt blasting the Saudi Butt Blasters. Just wait, until the Yemeni give the Saudi Pedophiles a real lesson on how wars are fought, with a little help from some friend.
The Yemeni are tough people. They love their guns as much as Americans, I believe they have the highest per capita gun ownership after the states. Out side of the cities they are mostly backwards, tribal bedouins, who kill and kidnap as a matter of course, but united against the hated Saudis, they will wreck havoc on the corrupt kingdom. Hopefully sooner rather than later.
Looks like Putin is going to need to order some increased fire be poured on CIA positions across the Middle East. Maybe give his proxy troops some missiles that will down a coupla US aircraft.
Saudi Arabia as it currently exists, gone in (5) years, or (2) years...?
That is still 20 years too late
Yemen hospitals ‘deliberately’ targeted in 100 attacks since March – ICRC
https://www.rt.com/news/321522-yemen-hospitals-deliberately-targeted/ …
The UN Human Rights commission chaired* by Saudi Arabia said 'no biggie' - so that's all right then.
* - maybe just a veto member?
mabbee a parting gift
before saudi arabia vanishes into oblivion
'with freinds like these...'
Saudi strategy? this is despot capitalism (Putin/Saudi king) in a knife fight to the death for market share.
add NG pipelines to euroland via IRAN vs. QATAR/KSA and you got a real fight on your hands
Message to Neo-cons: stop manipulating the sheeple w/ more fear/war mongering to further
your AIPAC agenda. It is the CAUSE of this tragedy than solution.
This "backfire" vaguely resembles the "Russia will pay a price" for its intervention in Syria.
I sincerely hope that some Shia Saudi insurgent group will be endowed with the proper tools to blow some key Saudi oil infrastructure... problem solved!
Ahh, you mean the "there will be costs"" bollocks spouted by the Talking Haircut...
How real is an attack on Washington?
next WEEK?
latest:
http://tersee.com/#!q=paris&t=text
Not too sure I would want to piss Putin off to the point where he reacted.
There's something a bit unsettling about his eyes.
It might be that "Do you really want to fuck with me?" look.
How to achieve impossible investment goals https://www.youtube.com/watch?v=SFx3fhFpaKk
Russia will not have to increase output as the US Shale Producers have and are continuing to do that, iwth US Taxpayer monies funneled thru said US Equities Mkts thru the usual chain of TBTF WS Bankster Portfolio Cos adn Iran and Iraq will finish off any Saudi remaining spare capacity with their very low F&D Cost Reserves coming to market.
Why has This taken so many years to sink in???
It has been going on since 2006!!!!!
Neever never never take official bobble heads pronouncements at face value. Not in the east. Not in the West. Not anywhere!
The fact that they say it on TV should make the info suspicious!
All the more reason for Russia to end their oil export dependence, and rapidly invest their capital reserves into import replacement industries. Russia sells oil to gian foreign reserves, i.e. Dollars. These dollars they use to buy imports to support a Russian consumer economy.
This model is bad, and should be broken, even at the expense of a deep recession in order to sahke out the economy and invest heavily in future profits from industry and technology. Russia can and will have unlimited cheap domestic oil to fuel their economy.
Their chase after Dollars by oil exporting is was easy money, but no more! The sooner they re-engineer the very basis of their economy onto domestic production and slashing EU imports, the better. Oil is a trap, and don't think the ISIS camel fuckers in Saudi aren't going broke! Russia has the vastest lands and resources of all others, they have unlimited minerals, fresh water, oil and gas. Now, can you say the same for Saudi!
And Russia has a viable Nuclear force to ensure their borders are safe. Saudi is a weak bunch of Syphilis infected camel fuckers.
A former Girl Friend who worked in exclusive London hospitals told me the Saudis come in drives to UK hospitals to get their sexually transmitted diseases treated. They are indeed, Syphilis infested fucks.
They sell oil in Yuan also .
Syphilis infected camel fuckers? Really Sir? Can you be more clear, preceise, pedantic even? Because far to few people know that those "Syphilis infected camel fuckers", to whom the Bush family and friends sucked up like they were god's children on earth, were/are the source of the money to support almost all -90%- of the Sunni violence in the world, i.e., everywhere you look. And still we call them allies. In fact we should try to be allies with the Russians, of all the fucks over there, they - the people - are most like us - excluding Wash. D.C. of course. Remember you cannot defeat an idea - ISIS, Salafists- they will destroy Europe from within over time, and we will be left with Mex-America versus the Chinese. Birth rates control over the long term; such cannot be escaped by petty little wars as promoted in Korea, Vietnam, Afganistan, Irag, Syria, etc. The few -us whitefolk from European ancestors better get smarter and make friends with the Russians, or the "Syphilis infected camel fuckers" will destroy the world. There were not 3 great Crusades for nothing you know.
Two dogs fighting over a rotting carcass...
Hilarious.
More like a bear fighting with snakes over a terminal patient. And the snakes are still breeding. Time for the bear to up the ante.
Oilprice is always pessimistic . Yawn
Both Russia and SA are selling into a market that's due for a fall, if the retail numbers are right.
If those bastards were behind this plane bombing then they'd better watch the skies.
This is an EASY problem for Russia to solve. Create a SHOOTING WAR with real bullets and bombs. A good crisis always drives up oil prices. And by the way, the Russians can also shoot some Saudi jihadists as well.
Ohhh wait ... Putin already did this. It's underway.
The oil dumping was always about bankrupting Russia and overthrowing Vladimir Putin, who had gotten harder to control with each passing year as his countrymen's living standards came within striking distance of those of much of the EU. It's a battle for survival. A free and prosperous Eurasia under Russian leadership won't have any place in it for the House of Saud---or Islamic states of any kind.
Even the centrally-planned basket case that was the Soviet Union took years to collapse after suffering both the oil shock and Gorbachev's incompetence. If Riyadh really thinks they can stay solvent for as long as it takes to bring down a freer, richer and far more united Russia, they are dreaming in Technicolor.
This article seems to be very incomplete (another doomsday anti-Russia propaganda? Or just ignorance.) It forgets to mention very important things: Russia is pushing Saudi Arabia out of Asia! While Saudis are fighting Russia in Europe, Russia is taking them on in Asia. Russia has become the largest oil supplier to China, overtaking Saudis. And more than that. Russian oil supplies to Japan have grown 20% in 2015! It is not just China in Asia. Russia is planning to sell more oil and gas also to Japan and South Korea. On the other hand, the oil share of Saudis and Quatar in the Asian market has been decreasing!
seems like a lotta friends of ussa are sketchy...
Whadyamean? The US has the best friends fiat money can buy.
The one that has to ship oils from midle east by tankers,/wants to fights the producer that send its oils through pipelines.
Geez... I like to see how long that tankers ships country able to sustains that low oils discount that it gives.
Remember again that pipelines country oils? Cost 2.8-4$ to extract 1 barrel of oil.
Wanna bet who's winning?
Q. What's the difference between "blowback" and "backfire"?
A. Iskander.
A good time for some 'terrorist attacks' on oil.
KSA can't destroy RUS.
There're NatGas and other Natural Resources RUS exports, in addition to Tech.
KSA are in it for themselves. As long as they remain standing at the end of the Global-Recession/OilGlut/Producer-Purge-Buyouts, that's all they care about.
What's the Over/Under on Russia nuking Saudi Arabia?
The dead shall arise (oil)
and deliver Judgement Day (nuclear war due to oil)
And Russia stealing the China market from Saudi Arabia, a market in the long term has a lot of growth in it.
Europe a mature economy growth prospects much lower, after economic equilibrium regained (again, one day).
Also Saudi Arabia economy getting killed over low oil prices, the Saudi's in bigger trouble than Russia through lower oil revenues - Saudi regeim becomes at risk of living if economy crashes.