US-Saudi Oil Competition Leverages Pressure on OPEC, Russia

[Meriv90]

There three competing theories:

1. US and the Saudis colluded to bring oil prices down to hurt Russia.
2. Russia and the Saudis colluded to kill US fracking business.
3. The oil prices naturally came down due to additional supply from US fracking industry that is hurting US, Russia, the Saudis, Venezuela, etc., and there is no conspiracy.

Believe in what you want, the beneficiaries are the net oil importing countries. As long as India can buy out a lot of crude and fill up its underground strategic reserves, I am happy.

i wouldn't call them theories but factors, since probably all three of them got applied, after the net oil importers the bigger winner is the US since differentelly from the other oil producers it has an industry sector that benefits from the reduction of the oil price (see for example US car sector in november).

You forgot to mention the other benefits for the US and for the Saudi: both of them are harming Iran too and for the US it gets Venezuela too.

P.S. I think the term conspiracy is wrong, since it isn't "secret" it is just a political economic choice.

 

[asianobserve]

Correction to #3:

[*]The oil prices naturally came down due to oversupply (mainly due to additional supply from US fracking industry) and weak global demand hurting US, Russia, the Saudis, Venezuela, etc., and there is no conspiracy.
[/LIST]

:thumb:
Believe in what you want, the beneficiaries are the net oil importing countries. As long as India can buy out a lot of crude and fill up its underground strategic reserves, I am happy.

 

[asianobserve]

Ready for $20 Oil?

What matters are marginal costs -- the expense of retrieving oil once the holes have been drilled and pipelines laid. That number is more like $10 to $20 a barrel in the Persian Gulf, and about the same for U.S. shale-oil producers. The estimated $50 to $69 a barrel break-even point for most new U.S. shale-oil production is less relevant.

Ready for $20 Oil? - Bloomberg View

 

[amoy]

Aside from all those factors or theories the most FUNDAMENTAL is still the world economic slowdown that results in rebalancing in supply-&-demand . More commodities than oil r plunging -

and the denominating currency - USD fluctuation

Those commodity exporters surely get hurt most.

 

[asianobserve]

Saudi and UAE Oil Ministers Defend OPEC Response to Falling Prices

The oil ministers of Saudi Arabia and the United Arab Emirates have defended Opec's decision not to cut production despite a glut, and blamed speculators and producers outside the cartel for the slump in prices.

Both stuck to their stance of keeping production at current levels, expressing hope that the market would stabilise on its own. Oil prices have nearly halved in the past six months, with the international benchmark Brent crude falling below $60 a barrel last week, the lowest in more than five years.

http://www.theguardian.com/business...ministers-defend-opec-response-falling-prices

 

[Ky Loung]

Ready for $20 Oil? - Bloomberg View

It might, will go below $50. US oil companies want to break OPEC and is more protected from the hurt due to their hedging in the market. It doesn't matter how far the oil goes down the oil companies are insured.

 

[Ky Loung]

Saudi and UAE oil ministers defend Opec response to falling prices | Business | The Guardian

Whatever they do they already lost. If they cut oil production, the price must shot up too $XXX before they break even. So cutting oil production might even hurt them more. It's a catch 22. They can't win.

Any counties live by the black gold die by the black gold.

States such as North Dakota and Texas will stop the Federal Government from interfering or passing laws against fracking and fracking companies. It is a lot of money coming into these states from oil sales.

Also there are talks to lift the Federal crude oil export ban. If this actually pass US Congress the USA will have total domination on crude oil prices.

The only thing left is building new oil refinery. That will be hard because most citizens do not want oil refinery in their backyard. Going to be a lot of lawsuits by everybody. If it get approve lots of money going to be paid to the citizens in the affected area. It is to compensate them for the drop in restate prices.

The last oil refinery built was a few years ago. Took the company over 20 years and countless lawsuits to get it approved. I believe it is the first new oil refinery in over 40 years.

 

[pmaitra]

Correction to #3:

Agreed.

i wouldn't call them theories but factors, since probably all three of them got applied, after the net oil importers the bigger winner is the US since differentelly from the other oil producers it has an industry sector that benefits from the reduction of the oil price (see for example US car sector in november).

You forgot to mention the other benefits for the US and for the Saudi: both of them are harming Iran too and for the US it gets Venezuela too.

P.S. I think the term conspiracy is wrong, since it isn't "secret" it is just a political economic choice.

Valid argument.

In many cases, multiple factors contribute to the phenomenon.

 

[amoy]

Crude Tankers Bound For China Surge Amid Stockpiling Signals
26 Apr 2016

China, the world’s second-biggest crude consumer, may be poised for another increase in imports after the number of supertankers bound for the Asian country’s ports rose to a 16-month high amid signs it’s stockpiling.

There were 83 headed to China, the most since December 2014, according to a ship-tracking snapshot compiled by Bloomberg on Friday. Assuming standard cargo sizes, they would be able to deliver about 166 million barrels.

China is hoarding crude at the fastest pace in at least a decade, filling inventories at a time when oil futures remain about 60 percent below where they were just two years ago. The nation added 787,000 barrels a day to stockpiles in the first quarter, the most for the period since at least 2004 when Bloomberg started calculations based on customs data. Its imports climbed in March from countries including Iran, Venezuela and Brazil.

“We’ve seen crude buying in recent months coming from a very broad range of sources, more coming from Latin America and more from Europe,” said Richard Mallinson, an analyst at Energy Aspects Ltd. in London. Shipments are being boosted by so-called teapot refineries and may also be advancing in preparation for the end of refinery maintenance programs in China, he said.

Operating rates at teapot refineries in eastern Shandong province rose to about 52 percent in the week to April 22 as two plants completed maintenance and restarted production, according to industry website Oil.chem.net, which surveys 32 of the refineries.

Brent crude, the global benchmark, rose 4.7 percent last week and was trading at $44.62 a barrel at 11:16 a.m. in London. It plunged to as low as $27.10 in January, before rallying amid signs that oil output growth is being curbed and as producer nations touted the possibility of freezing their output.

The vessels en route to China will deliver about 4 million barrels a day based on standard cargo sizes of 2 million each and the range of dates when they’re due to arrive. Its total imports in March jumped to 32.6 million metric tons, or about 7.7 million barrels a day. The ships monitored are called very large crude carriers, the industry’s biggest. China also receives supplies by pipeline and on smaller tankers.

http://www.shippingherald.com/crude-tankers-bound-for-china-surge-amid-stockpiling-signals/

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