Saudi Arabia's Oil & The Leverage It Affords KSA

hunck

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#1
Don't know if this is a conspiracy - feel free to move somewhere else, but what's going on with the price of oil which has plummeted in the past year?

I can appreciate that global demand has reduced what with global slow down, China's growth at a 25 year low & USA's domestic production with oil tar sand extraction & fracking reducing their imports, but the oil producers, Saudi Arabia being the main one, still producing at a level resulting in a glut. There's also the recent agreement with Iran which will allow them to increase their output which had been subject to sanctions, adding to the excess.

What I'm wondering is why the oil producers - chiefly Saudi - are still pumping as much as they are. Surely they would keep the price somewhat higher by reducing their output to match a reduced demand.

I was talking about this to a friend who reckons it's a ploy by the Saudis to fuck the US oil tar & fracking industry which has sprung up in recent years, the current price being below the cost of other extraction & making it uneconomic. Once they've put them out of business the price per barrel will re-adjust.

Is it purely market forces or is there more to it?...
 

kamalktk

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#2
Driving the fracking companies out of business doesn't hurt fracking per se. New fracking companies would spring up when oil prices rose to the point where fracking produces price competitive oil. On the other hand, low oil prices hurt Iran, one of Saudi's rivals in the region.
 

Krepostnoi

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#3
Driving the fracking companies out of business doesn't hurt fracking per se. New fracking companies would spring up when oil prices rose to the point where fracking produces price competitive oil. On the other hand, low oil prices hurt Iran, one of Saudi's rivals in the region.
One analysis I read suggested that the Saudis are indeed planning to kill off fracking as a means of production: by tolerating low oil prices now, in order to bankrupt the existing companies, they hope also to dissuade the banks from offering credit to any future operations for fear the Saudis will repeat the exercise.

But yes, the fact that Iran is also hurting as a consequence can't upset them.
 

Xanatic*

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#4
The one I heard is that the US got Saudi Arabia to lower their oil prices to hurt Russia.
 

Mythopoeika

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#5
My suggestion is that the Saudis are working with the global elites to force an artificial downturn in world markets and economies. During a downturn, the wealthiest people on the planet are able to acquire more stock, more gold etc. and extract money from the pockets of all the other people.
 

hunck

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#6
Now below $28 per barrel which is reportedly less than the actual cost of the barrel itself.
 

Xanatic*

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#7
Considering all the wars we are supposed to have waged to get oil, it bloody well should get cheaper.
 

Xanatic*

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#9
That's what the oil was supposed to do. Wage war to get cheap oil.
 

hunck

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#12
U.S. oil industry bankruptcy wave nears size of telecom bust

If the oil price crash is a [mainly Saudi] scheme to fuck the US oil industry it all seems to be going to plan.

From a Reuters article:

The rout in crude prices is snowballing into one of the biggest avalanches in the history of corporate America, with 59 oil and gas companies now bankrupt after this week's filings for creditor protection by Midstates Petroleum and Ultra Petroleum.

Charles Gibbs, a restructuring partner at Akin Gump in Texas, said the U.S. oil industry is not even halfway through its wave of bankruptcies.

A 60 percent slide in oil prices since mid-2014 erased as much as $1.02 trillion from the valuations of U.S. energy companies, according to the Dow Jones U.S. Oil and Gas Index, which tracks about 80 stocks. This has already surpassed the $882.5 billion peak-to-trough loss in market capitalization from the Dow Jones U.S. Telecommunications Sector Index in the early 2000s.
 

hunck

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#14
Yes really. The article says the 60% drop in oil prices since mid 2014 has resulted in mass bankruptcies.

What makes you think it's down to financial mismanagement? The current oil price is simply less than cost price of extraction. Hard to make a profit on that basis.

I also haven't read too much about Saudis panicking - got any sources for that? From what I've read they're also making a loss but it seems they can afford to for a while..
 

blessmycottonsocks

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#17
"why not invade the (sic) Saudi Arabia for the removal of that vile regime"

Looks like your wish may come true, Ramon.
The USA and UK seem to have decided that KSA will be the next Islamic state to be destabilised and crippled through sanctions, in retaliation for the disappearance of journalist Jamal Khashoggi.

https://www.theguardian.com/busines...op-on-fallout-journalists-disappearance-trump
Seeing as Trump won't cancel the arms contracts it's likely little will happen in the short term. But KSA hubris, if they over-respond to limited sanctions, could have unpredictable results.
 

Mythopoeika

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#18
"why not invade the (sic) Saudi Arabia for the removal of that vile regime"

Looks like your wish may come true, Ramon.
The USA and UK seem to have decided that KSA will be the next Islamic state to be destabilised and crippled through sanctions, in retaliation for the disappearance of journalist Jamal Khashoggi.

https://www.theguardian.com/busines...op-on-fallout-journalists-disappearance-trump
KSA will be a tougher nut to crack than any of the other regimes. Picking a fight would be a bad idea.
 
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#19
KSA will be a tougher nut to crack than any of the other regimes. Picking a fight would be a bad idea.
All of their weapons systems are supplied by Western countries who are aware of their strengths and weaknesses. There are also backdoors likely planted within operational systems if not in individual aircraft, ships and tanks.

The regime also has no popular support. A surgical strike to take out the leadership would be possible.
 

Cavynaut

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#20
Seeing as Trump won't cancel the arms contracts it's likely little will happen in the short term. But KSA hubris, if they over-respond to limited sanctions, could have unpredictable results.
Yeah. Putin missed a trick there. All he needed to do was sign a few arms deals and then he would be able to assassinate his dissidents with relative impunity.
 

blessmycottonsocks

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#24
What happens after then?
It's not as if there's a shortage of royals to fill the gap. I would like to see the entire regime go but that would require boots on the ground, large scale invasion. Not a good idea.

A selective surgical strike on the SA leadership is long overdue, not just for killing the journalist but also for their at least nod and a wink attitude to the arming and bankrolling of AQ and other militias. Disruption of their armed forces through cyber means would also send a message.
 

blessmycottonsocks

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#25
It's not as if there's a shortage of royals to fill the gap. I would like to see the entire regime go but that would require boots on the ground, large scale invasion. Not a good idea.

A selective surgical strike on the SA leadership is long overdue, not just for killing the journalist but also for their at least nod and a wink attitude to the arming and bankrolling of AQ and other militias. Disruption of their armed forces through cyber means would also send a message.
But don't you reckon the timing of this big anti-KSA flap is a bit odd?
Crown prince Mohammed Bin Salman is a generation younger than most Saudi leaders and has clearly been influential in introducing some quite spectacular (by Saudi standards) liberal initiatives, including driving licences for women and encouraging women into politics. The time to pressurise KSA was surely years ago. Could Trump's belligerance now be a distraction from other matters?
 
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#28
But don't you reckon the timing of this big anti-KSA flap is a bit odd?
Crown prince Mohammed Bin Salman is a generation younger than most Saudi leaders and has clearly been influential in introducing some quite spectacular (by Saudi standards) liberal initiatives, including driving licences for women and encouraging women into politics. The time to pressurise KSA was surely years ago.
Could Trump's belligerance now be a distraction from other matters?
Possibly. You can never tell with Trump.

The Prince has a strong authoritarian streak though.
 

blessmycottonsocks

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#29
Possibly. You can never tell with Trump.

The Prince has a strong authoritarian streak though.
Interesting report on BBC Radio 5's Wake up to Money programme just now. Fracking has been so successful in the USA that it has effectively eliminated America's reliance on Saudi oil. Not sure if there is the makings of a conspiracy here, but it sure looks as if the USA no longer needs to feign any sort of friendly relationship with KSA for economic purposes.
 
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EnolaGaia

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#30
This thread is being initiated to house discussion of Saudi Arabia's international clout deriving from their historical and contemporary prominence as a petroleum source.
 
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