Saudi claims oil price strategy success

Discussion in 'International Politics' started by Rowdy, May 16, 2015.

  1. Rowdy

    Rowdy Co ja kurwa czytam! Senior Member

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    Saudi claims oil price strategy success
    Anjli Raval in Riyadh
    [​IMG]©PA
    Saudi Arabia says its strategy of squeezing high-cost rivals such as US shale producers is succeeding, as the world’s largest crude exporter seeks to reassert itself as the dominant force in the global oil market.

    The kingdom’s production rose to a record high of 10.3m barrels a day in April and there is no sign that it plans to reverse its policy at next month’s meeting of Opec, the producers’ cartel, in Vienna.
    There is no doubt about it, the price fall of the last several months has deterred investors away from expensive oil including US shale, deep offshore and heavy oils,” a Saudi official told the Financial Times in Riyadh, giving a rare insight into the kingdom’s thinking on oil strategy.
    The International Energy Agency, the world’s leading energy forecaster, on Wednesday released data backing up the Saudi position. The agency said that with the number of rigs running in the US plunging by 60 per cent in response to lower oil prices, US shale oil production had “buckled” in April, “bringing a multiyear winning streak to an apparent close”.
    But the IEA also cautioned that it would be “premature” to suggest that Opec had “won the battle for market share”. It said global crude supply was growing, even from high-cost areas such as Brazil, as well as from other Opec member states such as Iran and Iraq.
    However, the Saudi official said he expected the kingdom to maintain its dominance of global energy, despite the growth of alternatives to fossil fuels and competition from rival oil producers within Opec and beyond. “Saudi Arabia wants to extend the age of oil,” he said. “We want oil to continue to be used as a major source of energy and we want to be the major producer of that energy.”

    The official was speaking nearly six months after Opec, which is led by Saudi Arabia, took its landmark decision to keep output steady in the face of rising supply from rivals, rather than play its traditional role of cutting production to support prices.
    The decision triggered a fresh fall in the oil price, throwing the budgets of the poorest exporter countries into disarray and forcing international energy companies to slash spending, drilling and jobs.
    Saudi officials later explained that the policy was designed to put pressure on producers that require a higher oil price to be economic such as US shale drillers and companies operating in Brazil’s offshore fields. These they believed would be the first to collapse in a survival of the fittest as prices plunged.

    Expectations are already rising that the market could soon start to tighten by midyear. The IEA said on Wednesday that was one of the reasons for the recent rally in the oil price: having crashed from $115 a barrel last June to almost $45 in January, Brent, the international crude benchmark, is now back up at around $68.
    Saudi-oil-chart
    The Saudi official said the price of oil had now “reached a bottom” and it “doesn’t look like it is going back”.
    But experts say it is too soon to say whether Saudi Arabia is succeeding in increasing its market share. Data from 2011-14 show that while its share of imports to India and Japan has grown, in China it has lost out to Opec peers Iran and Iraq.

    US shale producers would also disagree that Saudi Arabia has succeeded in squeezing them. The US oil industry has slowed down: but EOG Resources, the country’s largest shale oil producer, has forecast a return to “double-digit” production growth if the US benchmark, West Texas Intermediate, rises to $65 per barrel or higher. It is currently trading at around $61.
    The Saudi official admitted “increased efficiencies” were likely as US shale and other producers adjusted to lower prices. He also said the impact of the price rebound was still “unknown” and “there is not yet any clarity on the US supply curve and drivers”.
    The comments from Riyadh come with the Saudi oil sector facing deep uncertainty in the wake of sweeping changes to the governance of the oil ministry and the state energy company Saudi Aramco by King Salman, who ascended to the throne in January.
    Some oil sector observers in Saudi Arabia say that King Salman’s accession increased pressure on veteran oil minister Ali Al Naimi and the advocates of his oil production strategy to reaffirm their position.
    Meanwhile Investment Funds react
    http://www.bloomberg.com/news/artic...ifts-energy-strategy-toward-performing-assets
    Damn Obama ... lol ....

    upload_2015-5-15_18-44-16.png
    (Non Photoshopped pic, Source here)

    @Mad Indian @Rashna @maomao @Khagesh @Tshering22 @Sakal Gharelu Ustad @roma @abingdonboy @Screambowl @VivekShah @Blackwater @Yusuf
     
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  3. Yusuf

    Yusuf GUARDIAN Administrator

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    Saudi move to cut prices was analyzed from the beginning as to a move to push others (read US shale) out of business & to prevent new investments in oil exploration and production. Secondary target was Iran to throw its budget off.

    War in Yemen will be a factor. Saudis are not committing to a ground war yet but if they do, they will be stuck for a very long time and will start to feel the pinch as war drains its economy.

    So far it appears Saudi strategy is winning. US support for Saudi war in Yemen could be seen in this light. Get them stuck in a quicksand and give them a Vietnam so that Saudis bleed money :)
     
  4. pmaitra

    pmaitra Moderator Moderator

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    But the American press has been feeding us tall tales of how this was an American strategy to squeeze Russia out of Ukraine. So, it was the US shale companies that were eventually squeezed?
     
  5. asianobserve

    asianobserve Elite Member Elite Member

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    The problem with some people is that they only tune in to poisoned "media" and then make lofty generalizations. Case in point is this post again, since the start major media companies, especially in the US, have been reporting that Saudi's insistence on not cutting oil production is primarily aimed at defeating US shale boom:

    Bloomberg article from Nov. 2014:


    So I do not understand how one can claim that "the American press has been feeding us tall tales of how this was an American strategy to squeeze Russia out of Ukraine. So, it was the US shale companies that were eventually squeezed?"
     
  6. asianobserve

    asianobserve Elite Member Elite Member

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    Sorry for font I don't know how to change it to normal.
     
  7. SADAKHUSH

    SADAKHUSH Senior Member Senior Member

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    It is the human resources potential of developed economies that will win at the end of the day. The shale technology is still evolving and as per several insiders of the oil industry the cost of production will most likely be $14.50 per barrel with in few years and it can go lower from there on.

    http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=5&ved=0CDgQFjAE&url=http://www.bloomberg.com/news/articles/2014-10-14/u-s-shale-oil-output-growing-even-as-prices-drop-eia&ei=DLtWVdDZDMuZyATxi4DYCg&usg=AFQjCNHKNAAAVExBGexJNxW7NZpHBVWDvg&bvm=bv.93564037,d.aWw

    http://w.info.com/ClickHandler.ashx?ld=20150516&app=1&c=infoaylf&s=infoaylf&rc=&dc=&euip=174.93.64.4&pvaid=a08212c71df048b2b93bcdaa73cd9559&dt=Desktop&fct.uid=f50c774799164d29b8295a6461013442&en=jXn64oyeSg3j6IjqTwgN/9U7mO6vE+C+3GRd8tcjcRU=&du=seekingalpha.com/article/3056226&ru=http://seekingalpha.com/article/3056226-how-much-does-it-cost-to-produce-one-barrel-of-oil-from-shale-41-companies-in-2014&ap=2&coi=771&cop=main-title&npp=2&p=0&pp=0&ep=2&mid=9&hash=9D49773A3D0F0024F9AF9D6705B5345C

    The OPEC cartel has lost South Korean market share as well. South American countries such as Ecuador, and Brazil have been able to increase their market share in South Korea.

    http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=5&cad=rja&uact=8&ved=0CDkQFjAE&url=http://www.platts.com/latest-news/oil/seoul/s-korea-to-offer-refiners-incentives-to-diversify-26832228&ei=J71WVZmjDsaMyATTuoBw&usg=AFQjCNG3YIQDqebUJ2HOoDXnzMO3bQtgTg

    Even India has started importing from Ecuador for its refineries. The Essar Group is the importer.
     
    Last edited: May 16, 2015
    pmaitra likes this.
  8. pmaitra

    pmaitra Moderator Moderator

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    Our beloved conspiracy theory peddling fairy tale website, New York Trash: http://www.nytimes.com/2015/02/04/w...-lure-russia-away-from-syrias-assad.html?_r=0

    With love, from Chicago: http://www.chicagotribune.com/news/...onspiracy-perspec-1121-jm-20141120-story.html

    And the newest kid in the block of journalism based on assumptions presented with pompous confidence: http://www.theguardian.com/business/economics-blog/2014/nov/09/us-iran-russia-oil-prices-shale
     
  9. Screambowl

    Screambowl Senior Member Senior Member

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    This whole Yemen issue was to increase the oil price only.
     
  10. Hari Sud

    Hari Sud Senior Member Senior Member

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    I believe the Saudis wished to push the shale producers in US, out of business. But US had is own axe to grind. They wished to cut the oil prices to a level to hurt Russia and make it very expensive to continue war in Ukraine.

    Both failed.

    Saudis lost a huge amount of money, especially during civil war in Yemen and Iraq/Syria and now wishing oil prices to rise. US failed, although financial setback to Russia was temporary yet it did not push Russian military assistance out.

    There were gainers, the rest of the world saved some money, which is good.
     
  11. SADAKHUSH

    SADAKHUSH Senior Member Senior Member

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    The never ending state sponsored conflicts are evolving and at the end of the day in my opinion West is waiting for the day when Iran and KSA led coalition get pushed into full scale war. The benefit for USA will be in three ways. First will be sale of satellite based intelligence, the second is defense equipment and third will be to make sure they keep Dollar as their currency for EXIMP transactions.
     

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