This Ain’t Going to be Pretty

[Douglas Buckland + 6,308]

Okay kids, the gloves are off and Russia and Saudi Arabia are now engaged in a full-on price war (aka pissing contest). The price of oil has collapsed roughly 20% since last Friday.

Many ‘shale haters’ will likely be applauding since there is little hope that the shale operators can remain viable with oil in the $30/bbl range.

Saudi ‘haters’ will also be jumping up and down with joy simply because this pissing contest will hurt those in power there.

But let us step back from the abyss and take a closer look at this.

ANY country whose economy is significantly based on oil, besides Russia and Saudi Arabia (that is, all of the other OPEC and non-OPEC countries), who do not have any spare capacity and the ability to ramp up production to offset the oil price collapse, will be in danger of total economical collapse in a matter of months, if not weeks. Global security and the global economy is at risk. This is on top of the Corona virus scare.

Demand decreases even more.

The global oil surplus grows substantially as demand is down and everyone is pumping like crazy to fill their coffers....if they can find a buyer!

Both Russia and Saudi Arabia will sacrifice any goodwill or political collateral they have built up, in weeks.

The low oil price will ensure that no serious exploration or drilling will take place in the foreseeable future. When and if this pissing contest is resolved, the surplus is addressed and demand improves - the price will spike again.

There is no way this is going to turn out well - for anyone.

[Zhong Lu + 845]

People aren't even complaining much on UWT (3x long crude) Stocktwits.  They're just dead.  

[El Nikko + 2,145]

10 hours ago, Douglas Buckland said:

ANY country whose economy is significantly based on oil, besides Russia and Saudi Arabia (that is, all of the other OPEC and non-OPEC countries), who do not have any spare capacity and the ability to ramp up production to offset the oil price collapse, will be in danger of total economical collapse in a matter of months, if not weeks. Global security and the global economy is at risk. This is on top of the Corona virus scare.

Yes exactly and it's already been happening to quite a few countries last year and it's only going to get much much worse.

No idea who these people are, maybe a company similar to Strafor?

https://www.maplecroft.com/insights/analysis/47-countries-witness-surge-in-civil-unrest/

There could be civil wars or mass social unrest springing up in many more oil/gas producing countries soon, maybe Algiera and Nigera who seem to have survived so far. Chile is having a lot of protests as well.