RCD : On 18 March, U.S. crude oil prices fell to their lowest level in 18 years. The following day, momentarily distracted from their hype of the coronavirus pandemic, pundits and analysts reminded us again that low oil prices are the result of Saudi Arabia instigating a price war with Russia. And again, the culprit named was Mohammed bin Salman, Crown Prince of Saudi Arabia. Among his motives, they claimed, is hobbling the fracking industry that has ended American dependence on Middle East oil. Now, let’s examine the real backstory.
Weeks before a scheduled meeting of the Organization of the Petroleum Exporting Countries (OPEC), a cartel dedicated to supporting oil prices, the Saudis became concerned that the coronavirus pandemic was causing the oil price to decline. To stop or at least slow that decline, Riyadh worked to get oil-producing countries to agree to counteract falling prices with a production cut of 1.5 million barrels per day.
The Saudis were successful with OPEC and non-OPEC members, with one exception: Russia. On March 7th, it was clear that the Russians would not agree to any cut in their production, despite an existing 3-year old deal with Saudi Arabia. Riyadh then punished the Russians by undercutting prices to all their main customers – like Communist China – by increasing production by 2 million barrels per day.
On 20 March, Brent crude closed at $26.98 per barrel, far below Russia’s cost of production. Even at $40, Russia loses $100 million to $150 million per day. Goldman Sachs predicts the price will continue to drop to $20 per barrel, far below Russia’s budget needs. Analysts say that even if the ruble stays stable, Russia needs $40 per barrel, even with spending cuts and drawing on monetary reserves. With Russia’s main exports being energy and weapons, there are few other options. read more
Note to self: Go buy a 500 gallon storage tank.
I remember when being politically branded an isolationist was the kiss of death. I see that changing
A WIN WIN WIN FOR US…POPCORN FOR ALL!!
HEY SAUDIS AND RUSKIES, WE DON’T GIVE A SHIT…FIGHT IT OUT, WE’RE GOOD!!
ANOTHER FEATHER IN THE 2O20 MAGA HAT!!
ABC, CBS, PBS, NBC/MSNBC, CNN, WAPO, NYT, AND OTHER PUSSIES:
SO SAD TOO BAD MOFOS!!
I filled up today for $1.55 a gallon. But I can’t go anywhere. And ethanol added fuel doesn’t store well even with the so called stabilizer additives.
The only problem I see is that if world prices are significantly below cost for US shale production then some of the shale companies will loose money and possibly go broke.
I read somewhere that Trump was buying up the oil to replenish our depleted stockpile thanks to the Obama regime? Did anyone else hear about it?
Ricky, I heard the same. I forget where.
Yes, Trump commented that he was taking advantage of the opportunity to top off the strategic reserves.
US oil business is run by people who understand the ebb and flow of demand and price, those that have set up shale operations are prepared for periods of low prices. They may not like it, may have to lay off some hands, but it is factored into their finances.
Trump is replenishing the US Strategic Oil Reserve, which was tapped during the Bush Admin. after the 9/11 attack. He mentioned this a couple of weeks ago … if memory serves.
… yeah, the Obama Regime did nothing, as usual
Note to self: check non-ethanol prices (they were $3.65 last month!)
However at the end of the essay, they say the Saudi’s do not care if our fracking industry is thriving. I think there is evidence to the contrary. They bankroll anti-fracking sentiment in NY and PA with money to make movies (propaganda) that tries to prevent fracking and pipelines in PA and other energy productions.
Why do we not use our natural resources to bust OPEC and our enemies again? This is a once in a lifetime opportunity.
They said Pompeo told the towel heads to cut their shit out and they didn’t listen so time to put the squeeze on. The fucking nerve. Ban Saudi imports and ban selling them weapons. Ban Saudi nationals in our colleges and work visas. You have 48 hours to leave the country. Two can play this game.
You know Vlad, there’s an air and armor defense drought in America.