Saudi: $90 to $321 a barrel in 15 years?

Abu Sina · Apr 24, 2013

JAW-DROPPING BREAK EVEN PRICE

Based on Saudi Arabias current spending patterns and its trajectory and changes in the global and domestic energy markets, Saudi Arabias breakeven price will rise from a manageable $90.7 a barrel to an astronomical $175.1 a barrel 175.1 and an incredulous $321.7 by 2030, according to Jadwa forecasts.

With $562-billion in net foreign asset, the second largest oil reserves in the world after Venezuela (according to the latest Opec bulletin), and the second largest oil output in the world after Russia Saudi Arabias future looks rosy and solid.

Indeed, Saudi Arabia has been able to soothe internal tensions and even manage external ones by tapping into its vast reserves thanks to a copious flow of funds streaming through its coffers as oil prices remain in triple figures.

Fast forward into the future and Saudi Arabia may not have the same luxury.

Key challenges facing the Saudi economy could derail its progress, or certainly alter its economic fundamentals, according to Brad Bourland, veteran chief economist at Riyadh-based Jadwa Investment and Paul Gamble, head of research.

Jadwa argues that once the current benign decade is over, the Saudi government faces a very different environment unless the current spending and oil trends are changed.
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http://www.economonitor.com/blog/2011/07/saudi-arabia’s-other-major-crisis/

USA probably sees this coming and that is why they have sucked up as much cheap Saudi oil as it could and is now focusing on it's own reserves.

If USA doesn't need Saudi oil and they supply Europe with Russians who will be Saudi Arabia's friend in the world? They don't have many and certainly not in the region.

What Allah gives Allah can take away

Marlowe · Apr 24, 2013

Abu - due to my already advanced years - I very much doubt or even concerned what'll happen in 15 years time. I'm steadily more concerned to enjoy the present - here and now - than bother about what might or mightnot happen in 15-20-30 years time.

Every day I die a little , especialy when I hear abt conditions in Syria and not able to contact - anyof my Syrian friends .

....
Its all in the laps of the gods. as they say " Fiaman -Illah" (wink)

waltky · Dec 16, 2015

A rise in rates is typically negative for oil prices...

Crude prices dip after recent gains as Fed decision looms
Tue Dec 15, 2015 - Crude oil fell in Asian trade on Wednesday, snapping gains that pulled prices back from testing 11-year lows, as investors awaited the outcome of a Federal Reserve meeting, where interest rates are likely to be raised.

West Texas Intermediate CLc1 fell 55 cents to $36.91 a barrel by 0219 GMT after rising more than $1 on Tuesday. It fell to $34.53 on Monday, the lowest since it financial crisis bottom of $32.40, before ending the day higher. Brent LCOc1 was down 33 cents at $38.12. The contract settled up 53 cents at $38.45 a barrel on Tuesday, closing higher for the first in eight days.

On Monday, the global oil benchmark came within 14 cents of a December 2008 bottom of $36.20, unleashing a surge of buying support. "The drop in prices is not surprising after the rally the previous session as the market girds itself for the decision on rates and official figures on inventory levels in the U.S., said Michael McCarthy, chief market strategist at CMC Markets in Sydney. "There haven't been any great shifts in the fundamentals and clearly ahead of, not only the Fed rate decision, but the inventory read that we will receive, it wouldn't surprise me if we maintain a holding pattern until then," he said. The Federal Reserve on Tuesday started a two-day meeting where it is expected to raise rates eight years after a devastating recession opened an era of loose U.S. monetary policy.

A rise in rates is typically negative for oil prices because a hike is likely to prop up the greenback, making crude contracts more expensive as they are denominated in dollars. Markets are already prepared for a 25 basis point increase but will be closely watching the Fed's policy statement for indications of where rates will go next year. In a further sign of oversupply in the market, data released late on Tuesday by the industry group, American Petroleum Institute, showed a surprise build of 2.3 million barrels in U.S. crude stockpiles last week. A Reuters poll of analysts had forecast a 1.4 million-barrel draw instead. Official inventory data is due on Wednesday from the U.S. Energy Information Administration.

http://www.reuters.com/article/us-global-oil-idUSKBN0TZ03P20151216
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See also:

Asia surges as Wall Street gains lifts sentiment before Fed decision
Wed Dec 16, 2015 Asian stocks rose briskly on Wednesday, with sentiment lifting as Wall Street rose before a likely hike in U.S. interest rates, while the dollar held to large gains made as Treasury yields picked up.

Spreadbetters saw the upbeat momentum in equities being retained in Europe and forecast a higher open for Britain's FTSE .FTSE, Germany's DAX .GDAXI and France's CAC .FCHI. The Federal Reserve is expected to announce a hike in interest rates when its two-day policy setting meeting ends later in the day. It would be the first U.S. rate hike in nearly a decade, signaling the beginning of an end to an expansionary monetary policy that has supplied a tidal wave of liquidity to risk asset markets globally. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 2 percent. Shanghai stocks .SSEC edged up 0.8 percent and Australian shares rallied 2.2 percent. Crude oil prices bouncing from multi-year lows buoyed energy-related shares.

Japan's Nikkei .N225 surged 2.5 percent, rebounding from a two-month low struck the previous day as risk sentiment has blown hot and cold ahead of one of the most-anticipated market events this year. "A lot of capital will be looking for a temporary home outside of the U.S. so as to avoid the likely increase in volatility after the hammer falls. And in the context of our current world markets, for many Japan looks like a credible home," said Martin King, co-managing director at Tyton Capital Advisors. On Wall Street Tuesday, the Dow .DJI added 0.9 percent and the S&P 500 .SPX advanced 1.1 percent. Bank stocks, which will likely benefit from higher rates, were among the market leaders.

With a hike seen as a mostly done deal after more than a year of anticipation, investor focus is fixed on how the Fed might opt to pace its tightening cycle next year. The central bank has hinted that it intends to hike rates gradually. "(Fed chair) Yellen should stress data-dependence in following up with further tightening next year and will surely not drop any heavy hints about the timing of the next move. No one can be confident how the dollar will emerge from all this but volatility seems assured," wrote Sean Callow, a senior strategist at Westpac. The dollar index .DXY last stood at 98.126, having gained 0.6 percent on Tuesday.

The dollar gained 0.2 percent to 121.835 yen JPY=, pulling further away from a six-week trough of 120.35 struck Monday. The euro traded near $1.0900 EUR= after recoiling from a seven-week peak of $1.1060. Supporting the greenback, Treasury yields rose overnight as gains on Wall Street reduced the appeal of safe-haven bonds and stable U.S. consumer price data reinforced the case for a Fed rate hike. In commodities, crude oil dipped after gaining for two successive days. U.S. crude CLc1 was down 0.7 percent at $37.08 a barrel. Concerns of global oversupply had sent crude to a seven-year low of $34.53 earlier this week.

MORE
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Margot2 · Dec 16, 2015

In yesterday's news Saudi Arabia will supply Egypt with oil for the next five years.

Saudi investments in Egypt exceed 8 billion.

http://english.alarabiya.net/en/bus...orders-investments-in-Egypt-exceed-8-bln.html

waltky · Dec 29, 2015

Slowing demand adds to high output to keep revenue streams up for OPEC...

Oil prices remain weak as slowing demand adds to high output
Mon Dec 28, 2015 - Crude oil prices remained under pressure on Tuesday as fears of slowing demand added to worries over near-record global production levels that have slashed prices by two-thirds since the middle of last year.

Front-month U.S. West Texas Intermediate (WTI) futures CLc1 were trading at $36.83 per barrel at 0334 GMT, similar to Monday's close after a more than 3 percent fall. The international benchmark Brent LCOc1 was at $36.67 per barrel, virtually unchanged from its last settlement but less than a dollar away from an 11-year low hit earlier in December. Both contracts are down by two-thirds since prices started tumbling in June 2014. While global output has been at or near record highs, demand has so far held up, preventing oil prices from falling even lower, but that may be about to change.

Oil analysts JBC Energy said that oil product demand growth in Europe turned negative in October - a loss of 170,000 barrels per day (bpd) year-on-year - for the first time in 10 months and that diesel and gasoline demand growth in China, one of the strongest price supporters of the past year, was also slowing. "The demand situation does not support a return to a higher price environment," said derivatives exchange operator CME Group. "China is still decelerating. Growth in emerging markets is slow. Europe may grow 1 percent to 2 percent in real GDP terms, the U.S. a little better, and Japan a little less. No major demand surges here," it said.

A worker checks steel pipes at an oil field preparing for oil and gas exploitation in Yilong, Sichuan province

One change in oil trading has been that WTI flipped to a premium versus Brent CL-LCO1=R this month after the United States lifted a decades-old ban on exporting U.S. crude oil. Analysts expect this price structure to stay in place, especially should global markets suffer from slowing demand and a continuing oil surplus while domestic supplies in the United States tighten. "We expect (the) WTI-Brent spread to reach about $1, which was where spreads were before (the) U.S. ramped up its production," Singapore-based brokerage Phillip Futures said.

U.S. shale oil drilling soared from around 2010, but many producers have piled up huge amounts of debt and are now struggling to stay in business. "The ongoing low oil-price environment points furiously towards a rough 2016 for U.S. producers," oil analysis firm ClipperData said, with some estimates pointing to a 500,000 bpd fall in U.S. production in 2016. However, with most analysts estimating global output to exceed demand by that amount to perhaps more than 2 million bpd, even such a U.S. cut would not be enough to rebalance markets.

http://www.reuters.com/article/us-global-oil-idUSKBN0UC02S20151229
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waltky · Jan 3, 2016

1 Qtr. 2016 oil prices may go lower...

BP CEO Bob Dudley predicts further slump in oil prices
Sunday 3rd January, 2016 - BP Chief Executive Officer Bob Dudley has predicted a further slump in the already record-low oil prices, pointing out that the first quarter in specific could be a low point.

Dudley explained in a BBC radio interview broadcast, "The first quarter would be a low point but 2016's third and fourth quarters could witness a more natural balance between supply and demand after which stock levels could start to wear off."

He added that the prices were going to stay lower for a couple of years, pointing out that this is a boom-and-bust cycle.

Reports further stated that oil prices fell by 34 percent last year after shedding 48 percent in 2014. The plunge in global oil prices has pushed inflation close to or below zero in many countries, helping consumers but wrong-footing central banks. Dudley admitted that the Deepwater spill disaster nearly crippled the oil giant.

http://www.bignewsnetwork.com/news/239929867/bp-ceo-bob-dudley-predicts-further-slump-in-oil-prices
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Deckel · Jan 3, 2016

Margot2 said: ↑

In yesterday's news Saudi Arabia will supply Egypt with oil for the next five years.

Saudi investments in Egypt exceed 8 billion.

http://english.alarabiya.net/en/bus...orders-investments-in-Egypt-exceed-8-bln.html
Click to expand...

Makes me wonder if they are hedging against pegging riyals too closely with the US dollar.

waltky · Feb 8, 2016

API against Obama's barrel tax...

American Petroleum Institute: Obama Thinks Americans Dont Pay Enough for Gas
February 8, 2016 -- President Obamas proposal to impose a $10 per barrel tax on oil increases the hostile campaign the administration is waging against the American consumer, Jack Gerard, president and CEO of the American Petroleum Institute (API), told reporters during a conference call on Monday.

Its almost as though the administration doesnt think the American people pay enough for gasoline, he said. During a press briefing on Friday, Obama admitted that low gasoline prices can be a good thing for the economy.

However, the president went on to say that the estimated $300 billion raised by his proposal is needed to pay for transportation infrastructure and the development of green energy sources. The basic proposition is that right now, gas is $1.80, Obama told reporters. And gas prices are expected to be low for a while, for the foreseeable future. That overall can be a good thing for the economy," the president said. "But what is also important is that we use this period when gas prices are low to accelerate a transition to a cleaner energy economy because we know thats not gonna last. Then 10 years from now, 20 years from now were going to be in a much stronger position when oil starts getting tight again and prices start going up again. We will have further weaned our economy off of dirty fuels.

But Gerard countered that the proposed per-barrel tax would destroy jobs, reduce revenue, make the U.S. more dependent on outside sources of energy, and prevent America from reaching its potential. The energy resurgence has created jobs, cut fuel imports and delivered tangible benefits to American families and businesses with average savings of $1,200 per year per household. he told reporters.

Without the energy renaissance made possible by high-tech techniques such as fracking, the economy under this administrationwould be in considerably worse shape," he said. If you are pursuing a true energy policy objective, why would you choke off Americas energy renaissance? Gerard asked, adding that the presidents ideological head in the sand strategy will drag America back to energy dependency. Its counterproductive, he said. This will make us weak. Why would we do that? If we want energy security as a nation, we should be doing everything we can to make us competitive, not raise our costs 30 percent, Gerard said, pointing out that even the administrations own experts agree that oil and gas will continue to be the major sources of energy in the U.S. until at least 2040.

I dont think they thought this through before they rolled it out, he told reporters. Domestic oil and gas companies have already invested some $90 billion in zero-carbon emission technologies, Gerard continued. Emissions are at a 20-year low due to the ability of the industry to extract clean-burning natural gas, he pointed out, noting that its produced right here at home in rich abundance. API, a national trade association representing more than 650 oil and gas companies, estimates that the proposed $10 per barrel tax would harm consumers by raising the cost of gasoline by 25 cents a gallon and make U.S. energy producers less competitive worldwide.

http://www.cnsnews.com/news/article...eum-institute-obama-thinks-americans-dont-pay
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MGB ROADSTER · Jun 17, 2020

Abu Sina said: ↑

JAW-DROPPING BREAK EVEN PRICE
Based on Saudi Arabias current spending patterns and its trajectory and changes in the global and domestic energy markets, Saudi Arabias breakeven price will rise from a manageable $90.7 a barrel to an astronomical $175.1 a barrel 175.1 and an incredulous $321.7 by 2030, according to Jadwa forecasts.
Click to expand...

And how much is it today ?? 36$ ...

Poohbear · Jun 21, 2020

Abu Sina said: ↑

JAW-DROPPING BREAK EVEN PRICE

Based on Saudi Arabias current spending patterns and its trajectory and changes in the global and domestic energy markets, Saudi Arabias breakeven price will rise from a manageable $90.7 a barrel to an astronomical $175.1 a barrel 175.1 and an incredulous $321.7 by 2030, according to Jadwa forecasts.
http://www.economonitor.com/blog/2011/07/saudi-arabia’s-other-major-crisis/

USA probably sees this coming and that is why they have sucked up as much cheap Saudi oil as it could and is now focusing on it's own reserves.

If USA doesn't need Saudi oil and they supply Europe with Russians who will be Saudi Arabia's friend in the world? They don't have many and certainly not in the region.

What Allah gives Allah can take away
Click to expand...

Old saying, "The Arabs have oil and religion. Tomorrow they only have religion."
If we aren't at "peak demand" for oil yet, we soon will be.
By 2030 the electric car will be mainstream, and long before then investment in
oil will become problematic. Like investing in coal power stations today.
If Saudi Arabia fails to diversify or tighten its belt it will go the way of Iran - and
descend into Jihadi Hell.

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Saudi: $90 to $321 a barrel in 15 years?

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