Oil prices could plunge to $60 if OPEC does not cut output

[pmaitra]

I say hoard oil, and also hoard gold, as gold price is also dropping.

Links:
http://timesofindia.indiatimes.com/...rmendra-Pradhan-says/articleshow/42376783.cms
ISPRL : Indian Strategic Petroleum Reserves Limited

 

[jamesvaikom]

All raw material prices will rise . Lower supply same demand increases costs.
If few people drilling they will not be drilling to lose money. Fewer petrochemical
Pharmaceuticals etc...

Crude oil is the main raw material for many industries including petrochemical. Cost of extracting oil is less than $5 in Middle East countries. High oil price is helping their citizens get dividends from state oil companies while we are paying tax to Govt. Low oil price means less dividend for them and less tax on us. We should use some profit due to low oil price to increase power generation from renewable sources. Else oil price will increase when shale oil companies reduce production.

 

[sgarg]

But Saudi Arabia is very interested in pressuring Iran into dismantling its nuclear weapons program. Due to the fact that oil prices are the same everywhere, Russia will be directly affected by Saudi actions.

I doubt that even. It is a "glut", pure and simple. The commodity market goes up and down. This is the "down" phase.

The low oil price will actually depress Western economy.

I think it is good for Russians as it will force a much needed change on the Russian State. For other countries - like in middle east- it is bad.

 

[amoy]

I doubt that even. It is a "glut", pure and simple. The commodity market goes up and down. This is the "down" phase.

The low oil price will actually depress Western economy.

How will a plunging oil price hurt Western and other non-resources-based economies ? Oil Prices Fall and the Global Economy Wins - Businessweek

Lower prices reflect weak demand and also have been caused by a surge in the supply regardless of any conspiracy theories (Saudi-US nexus). It's helpful for recovery of manufacturing and service oriented economies. Good timing to up the inventory so that a lower cost base stays against competition even after the price goes up. Tankers - China VLCC has doubled its fleet size in under two months and looks set to become world's largest VLCC operator - Lloyd's List

 

[asianobserve]

I doubt that even. It is a "glut", pure and simple. The commodity market goes up and down. This is the "down" phase.

Well, part of the cause of the glut is the refusal of Saudi Arabia to reduce production volume to negate American additional production. If Saudi Arabia and other oil producers will only scale down their production volumes then prices can be hiked: law on supply and demand.

But as one member here said, lower oil prices is good for the rest of the World, specially India I must say.

 

[sgarg]

How will a plunging oil price hurt Western and other non-resources-based economies ?

Reason-1: Because high priced Western goods are bought by people with petro-dollars. That's why.
Reason-2: The Western oil companies make an obscene amount of profit that sustains the economy.

I can bet low price of oil will NOT cause a turnaround in the European economy.

However it will increase growth in Asia.

 

[amoy]

OPEC Policy Ensures U.S. Shale Crash, Russian Tycoon Says - Bloomberg

So do they lock horns in a game of "mutual destruction"? $75 pb is the break-even point for American shale?

 

[ezsasa]

We have seen only the move and we are yet to see the counter move by Americans.

I don't have much much interest in American side of things. Americans always bounce back, which is their strength.

Any ideas on how this will impact Russia-China pipeline?

 

[pmaitra]

We have seen only the move and we are yet to see the counter move by Americans.

I don't have much much interest in American side of things. Americans always bounce back, which is their strength.

Any ideas on how this will impact Russia-China pipeline?

That is gas, not oil.

 

[jamesvaikom]

US is net importer of oil. US Govt. can help shale oil companies by reducing tax for oil production and increasing tax for oil imports. But the problem is Obama is hell bend towards Saudi. So he may not try to help American shale oil companies. As a net importer of oil US can benefit from low oil price. But instead they are crying that it will affect their shale oil companies.

 

[Nicky G]

Interesting to see how the US reacts. At this stage though I am guessing that the Saudi lobby is more powerful than the Shale lobby.

Anyway, whatever the reason might be, its good news for India and a stroke of luck for Modi.

 

[asianobserve]

U.S. crude down 10 percent post-OPEC, Brent breaks below $70 | Reuters

(Reuters) - U.S. crude tumbled 10 percent in its biggest one-day drop in more than five years on Friday, and benchmark Brent broke below $70 a barrel, as OPEC's decision not to cut output sent oil traders and analysts scurrying to find a new trading floor.

 

[sgarg]

This looks like a commodity downturn which may be engineered to drive marginal producers out of the market. This will affect new projects or may shut down some marginal producers, if the downturn lasts a long time.

Russia may not get affected as much if it can replace oil with increased industrial production. Interesting thing with Russia is that it has the natural resources. Russia has a shortage of people.

We need to watch demographic trends before calling for conclusions.

Please see the below article:

http://nationalinterest.org/blog/the-buzz/russia-the-worlds-second-largest-immigration-haven-11053

Russia's industrial productivity is increasing due to immigrants carrying specialized skills with them.

 

[pmaitra]

@sgarg, according to this analysis, Russia is not the target of the glut in oil production. Russian, Venezuelan, and Arab representatives decided not to cut production of oil. It is necessary to absorb losses so as to kill the US Shale Oil producers, and so as not to lose market share, because, doing so, would be to work in the interest of its competitors, which is US Shale Oil producers.

 

[Singh]

Low Oil Prices will seriously impact Russia, Iran and Venezuela.

 

[sgarg]

@sgarg, according to this analysis, Russia is not the target of the glut in oil production. Russian, Venezuelan, and Arab representatives decided not to cut production of oil. It is necessary to absorb losses so as to kill the US Shale Oil producers, and so as not to lose market share, because, doing so, would be to work in the interest of its competitors, which is US Shale Oil producers.

There are a lot of assumptions made by posters here. People are not looking at data and just jumping to conclusions.

Intelligent people look for data, analyze the data and then draw conclusions.

Indians read Western press which is full of propaganda against Russia.

The fact is Russia is weathering the sanctions very well. The fall in Ruble has actually increased Russian industrial productivity.

People assume on this board that Russia has no factories. This is simply not true. I have spent several hours on Google Earth and every Russian city is full of factories. A cold country has to survive on factories.

Russia has land and minerals. Russia is the ideal place for factories.

 

[sgarg]

The Kremlin can bring a lot of foreign investment from Asia if it decides to change its immigration rules. Just a change in policy can open the floodgates into the Russian economy.

Russia has LAND, a commodity which is in short supply in East Asia.

 

[asianobserve]

@sgarg, according to this analysis, Russia is not the target of the glut in oil production. Russian, Venezuelan, and Arab representatives decided not to cut production of oil. It is necessary to absorb losses so as to kill the US Shale Oil producers, and so as not to lose market share, because, doing so, would be to work in the interest of its competitors, which is US Shale Oil producers.

If Saudi really aims to kill US shale producers then all that they have to do is do what it did in 1986, dramatically increase oil production to flood the market with more oil. A 70% price reduction of oil would no doubt bring down US shale producers. Watch what Saudis will do next, will they shoot up production or maintain current levels. If it does the former then it is really up to killing off American shale oil producers. If it is the latter then Saudi has other intentions.

 

[pmaitra]

If Saudi really aims to kill US shale producers then all that they have to do is do what it did in 1986, dramatically increase oil production to flood the market with more oil. A 70% price reduction of oil would no doubt bring down US shale producers. Watch what Saudis will do next, will they shoot up production or maintain current levels. If it does the former then it is really up to killing off American shale oil producers. If it is the latter then Saudi has other intentions.

What are the chances of the US trying to spread "democracy" (wink wink) in Saudi Arabia?

 

[asianobserve]

The Kremlin can bring a lot of foreign investment from Asia if it decides to change its immigration rules. Just a change in policy can open the floodgates into the Russian economy.

Russia has LAND, a commodity which is in short supply in East Asia.

And freezing weather, organized crime, corruption, and oh that Russian language...