Oil price collapse=anti-Russian/Iran plot?

There are suggestions that Saudi Arabia is refusing to cut production of oil because they are trying to screw Iran and Russia for siding with Assad in the civil war, and because the EU/USA wants to screw Russia over their invasion of Ukraine.

any way of knowing this is true?

how would Saudi Arabia profit from a 30% drop in the cost of oil?

its down to $78.32 today....from $110 just a while ago.

 

They are trying to punish Iran and Russia, but their primary motivation is to undercut the shale revolution in North America. Their plan is to drive the PPB below the production cost for shale, essentially cutting the profit margin to zero. They've calculated that Saudi Arabia can withstand these low prices for approximately two years before they start to see losses.

 

Good for them...and for US.

 

how low can the price of oil go before SA starts to see loses?

 

Yes, I think its true. Saudi production costs are low,, and they can afford to do it.. Plus, they don't want any shortages in delivery.

As I understand it.. the US and Canada have the highest production costs in the world, but with the Ruble in trouble already and Iran under severe sanctions already their production cost break even are $100 bpd and $140 respectively.

 

at what cost of crude oil does Saudi Arabia stop making a profit?

 

No, the Saudi aren't trying to hurt US shale producers.

 

but they know they are.

everyone who produces oil is hurt by their refusal to cut production.

 

Somewhere around $17 per barrel: How much does it cost to produce crude oil and natural gas?

But their fiscal break even point is around $95 per barrel: These countries are getting killed by cheap oil

 

Of course they are. They stand to lose a great deal of their market share to the shale revolution.

It's good for us, though.

 

Probably at a number less than $70 a barrel... They have huge financial commitments.

 

KSA won't lose squat from shale production.. The market continues to expand particularly in Asia.. and they don't have any problem selling their oil..

With Libya and Yemen limping along and Syria practically producing nothing for several years.. and Iran and Iraq producing way below potential OPEC is only producing 200,000 bpd less than.

You are very quick to put sinister motives on KSA, but frankly you just don't know what you are talking about.

 

There's nothing sinister about trying to protect your market share from competitors. Your pro-Saudi bias blinds you as usual.

 

It sure is, and our hamstrung economy can use all the help it can get.

I suspect that Exxon, et al, will find a way to scrape by , and if this hurts Vlad the Invader and the fascists in Tehran, so much the better...

 

I had just logged on and got ready to start a thread on this when I saw Ron's post. My take is that there are a whole lot more moving parts to this than may even have been discussed here. As for motives, I'm sure that the Saudi's have no love for Iran at all, so seeing them squirm over low oil prices is just icing on the cake. No, I do believe that their primary motivation is not to lose market share and if they don't make a much of a profit as they have recently, well - it's no big deal because they've been cleaning up for a long time. Yes, some oil producers in this country get hurt if the price of oil drops as it has recently, but all they do is cap their wells and wait because they know it will go back up. That does hurt the people who've been working there, but there are tens of millions, individuals and businesses, more than happy to see prices go down.

I see two very good things coming out of this that could work for the benefit of us and a whole lot of other people in the world. And that is, Russia, and specifically Mr. Putin, just got crotch-kicked with the falling prices because oil profits are a very large part of their economy. Granted, they have enough in cash reserved to ride it out for some time, but it is already having an effect on the ruble falling and inflation rising. And that's gotta hurt. So, perhaps, if this keeps up for a while longer, Mr. Putin may want to start playing a bit nicer.

Iran, on the other hand, is already in a pickle growing out of the sanctions that have been imposed and then tightened in an effort to get them to agree to some reasonable rules about their nukes and inspections. A drop in oil prices like this could hasten the time when they either fish or cut bait, and I doubt the Saudis give a rat's patoot whether or not Iran is hurting over this. Shucks, they may even have continue their output levels and cut prices to the U.S. for the specific reason of getting Iran to totally give up their ideas of having atomic weapons.

 

what about SA trying to put the breaks on the North American oil boom?

 

It was certainly meant as further pressure against Russia. But now Saudi Arabia is worried about declining US demand for imported oil (since US production is rising) and needs to compete for that demand so they're dropping prices through inflated production. They're playing a tough game, producing oil at lower profit levels just to maintain market share.

 

what percent of the world market is SA responsible for?

can't the rest of the world reduce output?

 

SA holds 16% of the world's oil reserves but I'm not sure what their market share is based on output.

The rest of the world (OPEC) could reduce oil output but the general agreement is anything around $80 per barrel is profitable, even if to a lower degree than normal market prices. But if it falls much further I'd bet on an output cut by nations to get the price to float back up to around $80, where it still produces some profit but harms Russia by being that low economically. And if the rest of the world cuts oil production without a commitment by us or SA to do the same, they risk SA and the US taking market share with our increased output.

 

So somebody's crafting another energy crisis for profit again?

 

i was told that Russia's federal budget, 50% of which comes from oil and gas profits, is set at $105 a barrel.

 

Don't reason in terms of capitalist economy when you think to SA, the richness of that country is so concentrated that the conception of profit is relative [remember that in the kingdom there are jobless persons who receive oil checks]. Among other data, we should note that the unemployment in 2014 in SA has increased to 11.8% [!]. The unemployment benefit today is around 370€ [about 462$] per month.

Which is the limit? It depends also on the demand ... if Russia increases the price of natural gas, EU countries could decide to increase the production of energy by means of traditional electrical plants [which consume literally fuel ... that is to say oil, in Italy this is the main way we produce energy today].

So the EU demand could meet the increase of oil production of SA ...

 

Saudi Arabia reinvests 87% of its oil revenue in infrastructure and improvements in clean water and desal, recharge dams, healthcare, housing, agriculture, and education.. to include 250,000 graduate level scholarships abroad, high speed mass transit, and the creation of 500,000 news jobs in the manufacturing sector and 100,000 new jobs for women in food processing and packaging.

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Saudi Arabia reinvests 87% of its oil revenue in infrastructure and improvements in clean water and desal, recharge dams, healthcare, housing, agriculture, and education.. to include 250,000 graduate level scholarships abroad, high speed mass transit, and the creation of 500,000 news jobs in the manufacturing sector and 100,000 new jobs for women in food processing and packaging.

 

Including camel milk? I saw it in Doha and I'm still looking for an Italian society which imports it to Italy ...

A part this personal thought, this doesn't change the core of what I was saying, in SA unemployment increases [this means that SA kingdom is not creating enough new jobs ...], slowly may be. And this doesn't change the reasoning about how to "spend" any excess of oil production.

Then, if you can suggest me a way to get camel milk ... I would appreciate it!

 

I spent a great deal of time in Arabia and I know more than average about ARAMCO and the oil business.. The SAG isn't trying to screw the shale oil producers (Read SUSRIS) .. they are trying to curb Iran, ISIL and the Russian.........

Saudi Arabia turned towards Asia in 2002. They aren't worried about Western market share in the least.

When was the last time you talked to any senior mgmt. in Arabia?