Oil Apocalypse . . . . Putin said, "Nyet" to Mohammed bin Salman

[El Nikko + 2,145]

9 hours ago, BLA said:

Saudi King Salman arrests members of Royal Family for treason.  

Fight for the oil revenue and thus the Kingdom, as the oil price crashes.

https://www.newsweek.com/saudi-crown-prince-detains-kings-brother-other-royals-tightening-grip-power-oil-revenues-slide-1491035

It's very interesting timing isn't it

[wrs + 893]

Well this may just be the opening salvo.  I think it's very likely that we see attacks against oil infrastructure again if these low prices persist.  

[El Nikko + 2,145]

8 minutes ago, wrs said:

Well this may just be the opening salvo.  I think it's very likely that we see attacks against oil infrastructure again if these low prices persist.  

You won't get any complaints from me if that does happen 😂🤣

[wrs + 893]

Check this out, in the Moscow Times last fall an analysis done by KSA on the cost of Russian production, apparently these prices are a money loser for Russia.

https://www.themoscowtimes.com/2019/11/12/russian-oil-production-most-expensive-world-saudi-aramco-ipo-a68132

 

[surrept33 + 609]

10 hours ago, 0R0 said:

Russia's Ruble is essentially an oil unit, its' exchange rate perfectly matching the oil price.

 

This hasn't been nearly as true since 2017 because of Russia's budget rule meant to reduce volatility in the ruble: https://www.reuters.com/article/us-russia-economy-budget-analysis/russia-wary-of-us-sanctions-puts-saving-before-growth-idUSKCN1N51B9

https://www.ft.com/content/d841992a-021c-11e9-9d01-cd4d49afbbe3

The weak ruble also helped the fiscal health of Rosneft, Gazprom, and Lukoil and let them go on an exploration + infastructure building binge, which they have not fully brought online because of the OPEC+ deal. I think they are relatively well positioned compared to most other countries for a market share/price war, which is why they've been hinting for a while that they wouldn't agree to more cuts.

 

Brent spot price vs USD/RUB chart below.

Edited March 7, 2020 by surrept33

[BLA + 1,666]

1 hour ago, wrs said:

Check this out, in the Moscow Times last fall an analysis done by KSA on the cost of Russian production, apparently these prices are a money loser for Russia.

https://www.themoscowtimes.com/2019/11/12/russian-oil-production-most-expensive-world-saudi-aramco-ipo-a68132

 

Look who wrote the report. No bias ? 

https://www.thesun.co.uk/news/9935530/saudi-arabia-executions-increase-134-crucified-beheaded/

[wrs + 893]

2 hours ago, BLA said:

Look who wrote the report. No bias ? 

https://www.thesun.co.uk/news/9935530/saudi-arabia-executions-increase-134-crucified-beheaded/

Yes certainly, I get that, I pointed out it was written by KSA but key point in my mind is that it was written last fall.  So it was positioning for the Aramco IPO but it probably shaped their thinking about how Russia would feel about the current prices.  To me, Russia has some other agenda that they think gives them greater benefit.  I suppose they don't mind losing money on oil they are giving to China but I don't really understand that either.  Why help the idiots that caused the oil price collapse.  Anyone selling to the Chinese right now is stupid.

[El Nikko + 2,145]

58 minutes ago, wrs said:

Yes certainly, I get that, I pointed out it was written by KSA but key point in my mind is that it was written last fall.  So it was positioning for the Aramco IPO but it probably shaped their thinking about how Russia would feel about the current prices.  To me, Russia has some other agenda that they think gives them greater benefit.  I suppose they don't mind losing money on oil they are giving to China but I don't really understand that either.  Why help the idiots that caused the oil price collapse.  Anyone selling to the Chinese right now is stupid.

I'm quite sure of that, maybe they see the US and allies as being in a weak position due to our massive budget defecits/national debt and they think the time is ripe for them to expand their sphere of influences in key regions.

They were extremely p*ssed off about what they percieve as Western meddling in Ukraine whether it's true or not and since then have had to endure various sanctions as well. The Ukraine situation did appear to me to be our payback for their support of Assad at the time and if it wasn't they certainly believe it. In a way because of the sanctions they've been forced into a strange partnership with China. But the Chinese aren't going to treat the Russians much better than the US or anyone else, any military (or other) technology sold to them is going to be stolen or reverse engineered.

[Tomasz + 1,608]

To be honest, as a big fan of Russia, I don't quite understand their position. Shale oil in the coming years would significantly slow down its production growth even at a price of 60-65 dollars, and there is probably consensus of experts.

The investments started before 2014 are slowly coming to an end and from around next year these investments with a period of implementation of about 7 years will be radically less due to the fact that investments in the oil sector in the last 5 years have fallen by about 50%.

You don't need to kill the shale producers , because the 3rd shale revolution will not threaten us in the near future.

The thesis on the sanctions on Rosneft is also misguided that these are not the sanctions on Rosneft, the largest oil producer in the world, but on the company Rosneft Trading created to trade Venezuelan oil, and one could immediately imagine that sanctions will be imposed on it.

Certainly, lower oil prices,  also promote Trump in the presidential campaign, but I think he will win the presidential election because the Democrats are in total disarray.

I do not understand frankly breaking this agreement because shale in the perspective of a few years no longer threaten that they will flood the market with oil to a greater extent than the increase in global demand for oil.

But, it is true that shale oil producers are now in quite difficult position because neither investors nor banks want to grant them loans and in April there is another round of investment planning for the second half of 2020.

At the same time, Russia has the lowest levels of oil prices needed to balance the budget under the OPEC + agreement but this  take place at the expense of the population.

Therefore, it really seems to me that this is too radical move because we have 2020 in the oil market now and not 2014 and I would like to explain to everyone that this is a radical difference in that we have a 5-year fall in investment in the oil extraction sector behind us not 5 years of the largest investments in the oil sector as in 2014, and definitely in the following years when the hysteria with coronavirus runs out it will be felt on the oil market.

Edited March 7, 2020 by Tomasz

[Gerry Maddoux + 3,627]

We're in an all-out oil price war now . . . . . . . . and one that won't end well for either the Saudis or the Russians. This will result in the shakeout that we've all needed. In the process, I would imagine that the TRRC looks at the carnage and asks what the hell they're doing, allowing guys to vent and flare for months at a time. I sure hope so.

Whoopee! This is going to be fun to watch. I make my living selling oil and gas but I've hated this damn artificial pricing by the friggin' OPEC bunch for fifty years. Let market forces set the price of oil. I'd like to live to see the House of Saud lose its ass and all its fixtures.

And if the Saudis would like to fake another shoot-up of their H2S separators, I'd advise them to get some help from Hollywood to stage this one--the last one was a bit like watching a cheap movie. Actually take a month or two off the grid this time, okay, MbS?

[Gerry Maddoux + 3,627]

7 minutes ago, Tomasz said:

At the same time, Russia has the lowest levels of oil prices needed to balance the budget under the OPEC + agreement but this  take place at the expense of the population.

No, no, I don't think so. But this is the measurement of male appendages, pure and simple. I love this! Damn, how good can it get--we're going to just drink and piss, drink and piss, until someone runs out of money. I may be full of it but I think we can outlast the House of Saud, and Rosneft, and damn near anyone else. In the process, we're going to separate the wheat from the chaff, something the TRRC could have done, oh, about three years ago, if they'd only reinforced Statewide Rule 32 on venting and flaring. But better this way, maybe. And you think the solar and windmill boys can compete with $25 oil and $1.50 NG? I doubt it. No, this is the way to die, right here, with our boots on, laughing at the moon.

[Tomasz + 1,608]

This is all the more strange due to the fact that Russia has significantly less oil reserves than Saudi Arabia in the order of 80-100 billion barrels and the US has estimated half of this.

IMHO both of these countries should care about not producing more and more oil like crazy but achieving the greatest economics of production

. And the US in particular, with relatively small oil reserves should absolutely not be a net exporter of oil as it has been recently. Of course, it's good for the US that it doesn't have to import 10 million barrels a day like 15 years ago, but export oil with so little US resources should not, in my opinion.

And to be honest, the most high oil prices taking China-to-GDP ratio per capita would hurt China. And probably everyone agrees that the main rival of the USA in the 21st century is China and not Russia or Saudi Arabia.

[Gerry Maddoux + 3,627]

And how the hell can you say you're a "big fan of Russia," Tomasz? 

Who the hell are you, Dr. No?

Who in their right mind could come onto a capitalistic website, sign in, think to receive the good graces of gentlemen, and then make such an inane statement? Are you impaired? Hell, I'll help pay for your psychiatric care if you declare incompetence, and I don't even know you!

I mean, I have actually read some of your mental meanderings, which seemed to have normal fluidity of thought until now. A big fan of Russia. Really? Are you serious?

Next you'll say you're a big fan of Osama bin Salmon!

[El Nikko + 2,145]

13 minutes ago, Gerry Maddoux said:

we're going to just drink and piss, drink and piss, until someone runs out of money

At the moment that looks to be exactly what is going to happen.

[Tomasz + 1,608]

6 minutes ago, Gerry Maddoux said:

And how the hell can you say you're a "big fan of Russia," Tomasz? 

Who the hell are you, Dr. No?

Who in their right mind could come onto a capitalistic website, sign in, think to receive the good graces of gentlemen, and then make such an inane statement? Are you impaired? Hell, I'll help pay for your psychiatric care if you declare incompetence, and I don't even know you!

I mean, I have actually read some of your mental meanderings, which seemed to have normal fluidity of thought until now. A big fan of Russia. Really? Are you serious?

Next you'll say you're a big fan of Osama bin Salmon!

My mother is Russian so I'm half Russian. If you have a problem with it, I can't help you. 

It's hard for me to be anti-Russian in this connection, though I know that the West loves anti-Russian Russians in the style of Yeltsin Kasparov, Khodorkovsky Nemtsov or some other people acting to the detriment of Russia. The West loves such Russians, but the citizens of Russia themselves, who in the 90s found out what the intentions of the West were not necessarily.

Edited March 7, 2020 by Tomasz

[Gerry Maddoux + 3,627]

3 minutes ago, Tomasz said:

My mother is Russian so I'm half Russian. If you have a problem with it, I can't help you. 

If you're a "big fan of Russia," believe me, son, I don't want your help.

[0R0 + 6,251]

15 minutes ago, Tomasz said:

This is all the more strange due to the fact that Russia has significantly less oil reserves than Saudi Arabia in the order of 80-100 billion barrels and the US has estimated half of this.

IMHO both of these countries should care about not producing more and more oil like crazy but achieving the greatest economics of production

. And the US in particular, with relatively small oil reserves should absolutely not be a net exporter of oil as it has been recently. Of course, it's good for the US that it doesn't have to import 10 million barrels a day like 15 years ago, but export oil with so little US resources should not, in my opinion.

And to be honest, the most high oil prices taking China-to-GDP ratio per capita would hurt China. And probably everyone agrees that the main rival of the USA in the 21st century is China and not Russia or Saudi Arabia.

You need to look to resource estimates rather than defined reserves. Shale has only been around for a short while so the resource body has not been extensively quantified and reserve numbers are a small fraction of extractable quantities. Conventional Oil has been explored for over a century and has a well defined resource that has been converted into verified reserves over the decades. 

Russia and the US have larger estimated resources than Saudi. 

China is sensitive to oil prices because (1) all its exports are shipped and so are its food and energy imports. (2) it is the world's garbage can of NIMBY manufacturing of energy intensive products.  

[0R0 + 6,251]

1 hour ago, El Nikko said:

I'm quite sure of that, maybe they see the US and allies as being in a weak position due to our massive budget defecits/national debt and they think the time is ripe for them to expand their sphere of influences in key regions.

They were extremely p*ssed off about what they percieve as Western meddling in Ukraine whether it's true or not and since then have had to endure various sanctions as well. The Ukraine situation did appear to me to be our payback for their support of Assad at the time and if it wasn't they certainly believe it. In a way because of the sanctions they've been forced into a strange partnership with China. But the Chinese aren't going to treat the Russians much better than the US or anyone else, any military (or other) technology sold to them is going to be stolen or reverse engineered.

Chinese now work with Russians on armaments. but they have to order a full lifetime production run in order to get any devices at all. Russia doesn't even let them take photos during demos. No samples. No trial orders. Russia is happy to co-produce cheaply in China. But though that brought together Russian and Chinese designs like their anti air missile batteries with Russian missiles and Chinese control section. 

There is good reason to suspect Turkey is going to continue pounding the Syrian forces till there are no more of them to bring to the front. At that point we will find out how stable Assad's regime is and whether Russian support is meaningful. Could very well end up with the Russians losing another client state in the ME, leaving only Iran.

[El Nikko + 2,145]

33 minutes ago, 0R0 said:

Chinese now work with Russians on armaments. but they have to order a full lifetime production run in order to get any devices at all. Russia doesn't even let them take photos during demos. No samples. No trial orders. Russia is happy to co-produce cheaply in China. But though that brought together Russian and Chinese designs like their anti air missile batteries with Russian missiles and Chinese control section. 

There is good reason to suspect Turkey is going to continue pounding the Syrian forces till there are no more of them to bring to the front. At that point we will find out how stable Assad's regime is and whether Russian support is meaningful. Could very well end up with the Russians losing another client state in the ME, leaving only Iran.

I can totally believe the first point

I don't think I agree with the second point though, I think Putin has Erdogan under his thumb right now. Putin has done a good job working with the Turks on the Syria situation, he's not an idiot though and probably couldn't care less about Assad regardless of the rhetoric. I think Syria is important to Russia and Putin because it's the only Russian naval base they have *in the med*, it's a matter of Russian pride to not allow another one of their client states to get destroyed (Libya) and also because the stability of the ME is probably more important to Russia that it is to the US because of how close it is to Russian borders especially the federation states. If Syria fails then the Russians are going to look really really bad and that is probably not a good thing. I would add that Russia walking away from cuts and damaging US shale might (and this is really total speculation) be related to Syria and negotiations going on behind the scenes.

My feeling is Assad and Syria will stay, there will be a Kurdish autonomous region with the US support (Turks hate it!) but still part of Syria and Turkey probably wants out right about now. There is a ceasefire which means more ground is lost by the Idlib 'rebels'.

Israel wants Iran out of Syrian however and they're not going to stay quiet about it..which means it has to happen one way or another

 

Edited March 7, 2020 by El Nikko

[El Nikko + 2,145]

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[El Nikko + 2,145]

44 minutes ago, Tomasz said:

My mother is Russian so I'm half Russian. If you have a problem with it, I can't help you. 

It's hard for me to be anti-Russian in this connection, though I know that the West loves anti-Russian Russians in the style of Yeltsin Kasparov, Khodorkovsky Nemtsov or some other people acting to the detriment of Russia. The West loves such Russians, but the citizens of Russia themselves, who in the 90s found out what the intentions of the West were not necessarily.

I don't think normal people in the West hate Russia or Putin depending on what media they read.

Most likely most people in the West do no understand is what happened after the fall of the Soviet Union and are probably unaware of the fact that Russia was promised that NATO would not move to the East...which is has done and the Ukraine coup/conflict is a good example of how pushing things too far can end in disaster. They are also probably not aware of what happened during the Yeltsin era where he pretty much sold out Russia to the highest bidder. If only they could imagine how they would feel if things were in the reverse.

I try to be pragmatic and see things from both sides.

[0R0 + 6,251]

12 minutes ago, El Nikko said:

I can totally believe the first point

I don't think I agree with the second point though, I think Putin has Erdogan under his thumb right now. Putin has done a good job working with the Turks on the Syria situation, he's not an idiot though and probably couldn't care less about Assad regardless of the rhetoric. I think Syria is important to Russia and Putin because it's the only Russian naval base they have, it's a matter of Russian pride to not allow another one of their client states to get destroyed (Libya) and also because the stability of the ME is probably more important to Russia that it is to the US because of how close it is to Russian borders especially the federation states. If Syria fails then the Russians are going to look really really bad and that is probably not a good thing. I would add that Russia walking away from cuts and damaging US shale might (and this is really total speculation) be related to Syria and negotiations going on behind the scenes.

My feeling is Assad and Syria will stay, there will be a Kurdish autonomous region with the US support (Turks hate it!) but still part of Syria and Turkey probably wants out right about now. There is a ceasefire which means more ground is lost by the Idlib 'rebels'.

Israel wants Iran out of Syrian however and they're not going to stay quiet about it..which means it has to happen one way or another

 

There is a real terminal tension between Russia and Turkey because of Russia's terminal demographic problem. It is becoming a Turkomen nation. Russia may turn majority Turk in just a few decades. 

I don't think Turkey is in a position to let go of Idlib and let Syria drive all those refugees into the Country. Greece has blocked the border and Turkey would have to bear the burden of the refugee wave on its own as EU has failed to live up to its funding obligations. It was a PR campaign to send the Afghan and Iranian refugees to the Greek border to climb the fences. The Syrian refugees have settled well in Turkey and don't need to go to Europe. 

Israel will continue bombing supply convoys to Hezbollah in Lebanon. A weak Syrian government just makes it easier to do so uninterrupted. 

Everyone would like Russia to lose its only Mediterranean port. Nobody more so than Turkey. If they feel up to the task they will do their best to make Syria an expensive proposition for Russia and a dangerous existence for Assad.

[El Nikko + 2,145]

6 minutes ago, 0R0 said:

There is a real terminal tension between Russia and Turkey because of Russia's terminal demographic problem. It is becoming a Turkomen nation. Russia may turn majority Turk in just a few decades. 

I don't think Turkey is in a position to let go of Idlib and let Syria drive all those refugees into the Country. Greece has blocked the border and Turkey would have to bear the burden of the refugee wave on its own as EU has failed to live up to its funding obligations. It was a PR campaign to send the Afghan and Iranian refugees to the Greek border to climb the fences. The Syrian refugees have settled well in Turkey and don't need to go to Europe. 

Israel will continue bombing supply convoys to Hezbollah in Lebanon. A weak Syrian government just makes it easier to do so uninterrupted. 

Everyone would like Russia to lose its only Mediterranean port. Nobody more so than Turkey. If they feel up to the task they will do their best to make Syria an expensive proposition for Russia and a dangerous existence for Assad.

That demographic problem is also happening to many nations and continents including the US and EU, it's something that will be increasingly be reported about in years to come.

I'm not so sure there are that many 'refugees' left to get displaced into Turkey at this point, the main battle for Idlib seems to be over the M4 and M5 highways and the recent cease fire seems to have reopened both of them which means anything south of the M4 is now going into Syrian hands.

I have to say I don't really understand what Turkey wants from this territory, I worked not too far from Gaziantep a few years back, it's totally Kurdish and the Turks don't need any more Kurds and they are their own demographic problem.

It's going to be interesting to see what happens next. Also don't forget to keep an eye on Yemen as well the proxy war has many fronts

 

[Tomasz + 1,608]

I just want to emphasize that over the past five years investments in the oil extraction sector have fallen by more than 50%. This is a fundamental difference compared to 2014

And as for Russia, I will only point out that Ukraine and Syria were in the Russian sphere of influence back in 2013

 With all due respect, Russia has nowhere to go back - Kharkov is 400 kilometers from Moscow.

NATO forces in Estonia are about 150 km from Petersburg.

Tartus Port is the only Russian port on the Mediterranean Sea.

Russia has about 2-3 military bases outside its territory.

You don't give Russia really any choice because of NATO's constant expansion - it must focus on China.

 

[El Nikko + 2,145]

10 minutes ago, Tomasz said:

I just want to emphasize that over the past five years investments in the oil extraction sector have fallen by more than 50%. This is a fundamental difference compared to 2014

And as for Russia, I will only point out that Ukraine and Syria were in the Russian sphere of influence back in 2013

 With all due respect, Russia has nowhere to go back - Kharkov is 400 kilometers from Moscow.

NATO forces in Estonia are about 150 km from Petersburg.

Tartus Port is the only Russian port on the Mediterranean Sea.

Russia has about 2-3 military bases outside its territory.

You don't give Russia really any choice because of NATO's constant expansion - it must focus on China.

 

I don't think many people on here will get this mate...maybe if people did a bit of research they would see how the constant expansion of an oranisation which was designed to hold back the Communist Soviet Union is still funded just as much (if not more) to combat the threat of Russia which has a much smaller GDP and military spending than NATO has. I think the real problem is while the west has huge military spending it's military isn't in a good shape and therefore feels vulnerable...so maybe the cause of the sabre rattling