Is Russia's refusal to strike a deal with OPEC a move to cripple US shale?

[jalthoff4 + 6]

Hi Im a newb, so please keep that in mind before trolling.  I was wondering if you oil industry veterans think that it's plausible that Putin is willing to endure short term pain in the form of low oil prices in order to force some insolvency with US shale companies.  He has already expressed his disgust with fracking.   

[Tom Kirkman + 8,860]

Definitely plausible.

[BLA + 1,666]

34 minutes ago, jalthoff4 said:

Hi Im a newb, so please keep that in mind before trolling.  I was wondering if you oil industry veterans think that it's plausible that Putin is willing to endure short term pain in the form of low oil prices in order to force some insolvency with US shale companies.  He has already expressed his disgust with fracking.   

Won't cripple, but get rid of weak producers that have to keep producing.

Will likely show decrease in production as the consolidation works it way through.

[Boat + 1,323]

The Russians and OPEC tried that once with the oil industry as a whole taking 100,000’s of billions in losses. The result? More market share for frackers and tar sands.

Actual wells drilled and fracked are now down 20-35% but production growth has slowed and not dropped yet.

Demand growth which was forecasted around 1.3 mbpd has taken a big hit but nobody really knows where the bottom is. My guess is a wait and see for a few months and see where demand settles.

[Tomasz + 1,608]

Shale oil production slows significantly.

The problem is the short-time destruction of demand by the coronavirus.

I am not a great expert on shale oil, but even according to the EIA, production growth should slow down from year to year and around 2025 we should reach peak production.

Generally, according to most think tanks, from 2020 to around 2030, the price of oil should rise by roughly $ 2-3 per year.

There are also many sources, including the IEA annual reports announcing a significant oil shortage after 2020, particularly visible in the middle of this decade.

In turn, Oxfrod Instutute for Energy Studies predicts an average gas price in Europe of $ 7.33 per mbbtu for pipe gas  and $ 8 for LNG.

EIA is predicting HH price coming close to 4 $ per mbbtu in 2030.

 know that we are currently dealing with a significant decrease in demand for oil and hysteria associated with coronavirus, but the outlook is currently significantly different than in 2014.

Gas and oil prices should rather increase over the next decade and both the EIA, the IEA World Bank and the International Monetary Fund agree.

[BLA + 1,666]

On 3/6/2020 at 12:12 PM, jalthoff4 said:

Hi Im a newb, so please keep that in mind before trolling.  I was wondering if you oil industry veterans think that it's plausible that Putin is willing to endure short term pain in the form of low oil prices in order to force some insolvency with US shale companies.  He has already expressed his disgust with fracking.   

Looks like you were correct.  Good call.

[Tom Kirkman + 8,860]

1 minute ago, BLA said:

Looks like you were correct.  Good call.

Agreed

[Douglas Buckland + 6,308]

On 3/7/2020 at 1:12 AM, jalthoff4 said:

Hi Im a newb, so please keep that in mind before trolling.  I was wondering if you oil industry veterans think that it's plausible that Putin is willing to endure short term pain in the form of low oil prices in order to force some insolvency with US shale companies.  He has already expressed his disgust with fracking.   

Unless Putin has a crystal ball and knows how far down the price of oil will actually go, his ‘short term pain’ could prove fatal to the Russian economy.

Forcing some US shale oil operators into insolvency seems pointless if there will be NO production cuts mandated in either OPEC or non-OPEC countries after 1 April!

[0R0 + 6,251]

Saudi and other OPEC long timers are entirely shocked and intend to take revenge on Russia. Saudi already has a "discount to Russian" offer everywhere that Russian tankers dock. They don't care what price they get. They care that Russia doesn't get a sale. 

Shale plays will hurt. Saudi will hurt, Russia will hurt more. 

There hasn't been any substantial exploration since 2014. Thus the depletion now going on is going to cause an oil spike for a few years in the near future once the Russians are done eating their fur hats. Russia doesn't have the financial wherewithal to withstand this kind of attack on their market share. Both they and Saudi are selling well below Brent, Saudi will land the sales. Russia will be floating their tankers on the ocean without sales. I am sure China will offer so many Yuan for payment and fill up their SPR. 

[Boat + 1,323]

4 hours ago, 0R0 said:

Saudi and other OPEC long timers are entirely shocked and intend to take revenge on Russia. Saudi already has a "discount to Russian" offer everywhere that Russian tankers dock. They don't care what price they get. They care that Russia doesn't get a sale. 

Shale plays will hurt. Saudi will hurt, Russia will hurt more. 

There hasn't been any substantial exploration since 2014. Thus the depletion now going on is going to cause an oil spike for a few years in the near future once the Russians are done eating their fur hats. Russia doesn't have the financial wherewithal to withstand this kind of attack on their market share. Both they and Saudi are selling well below Brent, Saudi will land the sales. Russia will be floating their tankers on the ocean without sales. I am sure China will offer so many Yuan for payment and fill up their SPR. 

If you look at the US import export chart the US is now net exporting over 1 mbpd per week. They don’t seem to have a problem selling oil. Like I said US fracking is just absorbing market share while demand is dropping.                              https://www.eia.gov/dnav/pet/pet_move_wkly_dc_NUS-Z00_mbblpd_w.htm

[Tomasz + 1,608]

Look at this map- maybe its against Trump reelection?

 

[Tom Kirkman + 8,860]

5 hours ago, Tomasz said:

Look at this map- maybe its against Trump reelection?

 

What does the legend for the map on the right side say?

[Tomasz + 1,608]

 

Orange is a deposit of gas. Blue oil deposit.
Total potential resources in green

[Tom Kirkman + 8,860]

Just now, Tomasz said:

 

Orange is a deposit of gas. Blue oil deposit.
Total potential resources in green

Thanks

[0R0 + 6,251]

26 minutes ago, Tomasz said:

Look at this map- maybe its against Trump reelection?

 

I don't know that Putin would prefer someone other than Trump. The alternative to Trump may stop fracking, but would also push renewables to the detriment of demand for Russia's products. And while Biden is a China asset, that does not mean that China's interests would serve Russia, as China would like nothing more than dirt cheap energy.