KSA taking Missiles from ?

[0R0 + 6,251]

17 minutes ago, ronwagn said:

I really don't understand the value of the petrodollar to the USA. Just my ignorance in that area. You seem to be saying it is not quite as important as others think. What would actually happen if some other currency was used. I like a silver standard because it is more available for actual currency than gold is. Another thought is a basket of foodstuffs.

It has an economic cost to the US. Not a benefit. The benefit is for the US government for strategic purposes and control both at home and abroad. The current rush to cash and the movement to treasuries during the crisis response shows what the purpose of the dollar system is - it allows the US to go into total war footing while foreign countries scramble for dollars and treasuries that fund it. The foreign dollar debtors and even just traders running through the dollar system go into hock and dump assets while US government can pick its domestic winners and losers to fight the problem at hand and save some of the economy from liquidation and mass unemployment. Obviously, the Dems picked some industries to be losers, like airlines and energy. 

The point of gold is that if you sequester it for monetary use you don't damage the economy. Its uses are limited and substitutable . If you do so with silver then you do industrial damage. 

The drawback to gold is that it can't support an empire or a total war effort since it is always restricting liquidity. The financial flexibility in a gold system does not come from the power of the reserve issuer's privilege but from the willingness of others to support it with release of actual gold to finance a hegemon's war debt. 

[Gerry Maddoux + 3,627]

19 minutes ago, 0R0 said:

Ward is right, and the lack of a currency alternative will not stop them using gold, which is what they wanted to do in the 1970s in the first place. It was what Russia and China have planned for, and the IMF has been accumulating gold for. 

But the dollar system - particularly the Eurodollar portion, has led the entire global growth story of the past 70 years. It is ailing and remains overextended and iliquid due to idiotic regulations, see Dodd Frank and Basel III. However, it has the expertise and asset base to run the world economy, but gold banking is not its forte. Gold banking is not quantitatively flexible and is constantly liquidity constrained. The last place you want to employ it is during the breakdown and deflationary decay or collapse of the flex-money Eurodollar system. You want to employ it AFTERWARDS.   

You made my point for me. This is the worst time in the world for the Saudis to do anything . . . except mumble an apology, sit down and talk with Russia, and come up with a production cut. Anything shy of that spells disaster: the prince is backed into a corner.

The day rates are going up on VLCC's. Soon they're going to have nowhere to go with their product. Saudi refineries won't handle nearly as much as they once did. The Gulf refineries are under immense pressure; underwater, financially speaking, due to compaction of the crack spreads. Oil--unless something is done--is headed to <$10 . . . and very, very quickly; maybe this week. In their reckless effort to run US shale into a ditch, the Saudis are walking on very squishy soil. And Americans are a bit irritated that they persisted in the time of a pandemic.

Not only that but the UK is almost as testy as Americans are right now. They, the Saudis, are going to find themselves without a friend in the world and every enemy in the ME--of whom they have many--tearing at their flesh.

They want to try petrogold in the middle of all this? Well, let them go right ahead--it's not going to work out for them either; $5 oil is still $5 oil even if you get paid in gold bullion; worse if paid in Euro and quite worse if paid in a designer Yuan. There is no good substitute for the petrodollar, and by that, the US dollar. Throughout the eons of time, a scenario like the one we are living has served as a springboard for revolution. Only once did the Renaissance result.

[0R0 + 6,251]

There is plenty of room still with the VLCC rates to go up. They are obviously not yet full up. And there is plenty of contango to fund it at over 60% for a year.

Contract	Last	Change	Open	High	Low	Previous	Volume	Open Int	Time	Links
CLY00 (Cash)	21.84s	-0.76	0.00	21.84	21.84	22.60	0	0	03/27/20
CLK20 (May '20)	21.51s	-1.09	23.29	23.44	20.88	22.60	551,742	564,179	03/27/20
CLM20 (Jun '20)	25.15s	-0.56	26.23	26.43	24.59	25.71	179,934	267,393	03/27/20
CLN20 (Jul '20)	28.13s	-0.14	28.71	28.88	27.53	28.27	96,836	177,256	03/27/20
CLQ20 (Aug '20)	30.05s	+0.20	30.16	30.50	29.43	29.85	50,390	91,458	03/27/20
CLU20 (Sep '20)	31.30s	+0.43	31.32	31.69	30.62	30.87	57,789	121,670	03/27/20
CLV20 (Oct '20)	32.14s	+0.52	31.78	32.50	31.52	31.62	28,522	90,786	03/27/20
CLX20 (Nov '20)	32.85s	+0.59	32.75	33.19	32.19	32.26	17,976	66,345	03/27/20
CLZ20 (Dec '20)	33.45s	+0.66	33.21	33.92	32.77	32.79	85,698	220,317	03/27/20
CLF21 (Jan '21)	33.94s	+0.71	33.38	34.36	33.28	33.23	9,384	61,514	03/27/20
CLG21 (Feb '21)	34.38s	+0.74	34.13	34.50	33.66	33.64	4,378	33,632	03/27/20
CLH21 (Mar '21)	34.80s	+0.76	34.35	34.96	34.08	34.04	11,293	37,265	03/27/20
CLJ21 (Apr '21)	35.19s	+0.77	34.90	35.23	34.54	34.42	1,090	18,852	03/27/20
CLK21 (May '21)	35.56s	+0.75	35.36	35.59	34.66	34.81	1,315	18,373	03/27/20
CLM21 (Jun '21)	35.88s	+0.75	35.55	36.25	35.12	35.13	16,540	84,518	03/27/20

Edited March 29, 2020 by 0R0

[El Nikko + 2,145]

Here's the latest from Yemen for anyone interested. What is interesting is all the movement out in the open with vehicles...makes you wonder if the Saudi Airforce is low on bombs & missiles much of which are supplied by the US and UK. I only watch this to help find out the geopolitical situation over there and not to glorify war but you have to give these guys in sandals credit for doing so much damage to one of the top spenders of arms in the world. *Warning I've not watch the whole thing so there could be graphic content*

 

[0R0 + 6,251]

7 minutes ago, Gerry Maddoux said:

You made my point for me. This is the worst time in the world for the Saudis to do anything . . . except mumble an apology, sit down and talk with Russia, and come up with a production cut. Anything shy of that spells disaster: the prince is backed into a corner.

 

Quite the contrary from their perspective. They always promised the West that if they were paid in gold then they would open up the spigots all the way and produce as much as they can. Meaning that they are doing precisely what they wanted for likely precisely how they wanted to be paid. They may have obtained a source paying in gold, I don't know who that would be, but India China  have plenty of it. 

[0R0 + 6,251]

18 minutes ago, Gerry Maddoux said:

The day rates are going up on VLCC's. Soon they're going to have nowhere to go with their product. Saudi refineries won't handle nearly as much as they once did. The Gulf refineries are under immense pressure; underwater, financially speaking, due to compaction of the crack spreads. Oil--unless something is done--is headed to <$10 . . . and very, very quickly; maybe this week. In their reckless effort to run US shale into a ditch, the Saudis are walking on very squishy soil. And Americans are a bit irritated that they persisted in the time of a pandemic.

 

I think that the target is Russia's production expansion plans. They know that US shale doesn't go away because the companies are bankrupt, it just delays production from growing now to growing later. Nothing that helps them any. The target is to force Russia to halt expansion and shut in production. Assuming the situation is as it was 2 weeks ago with plenty of floating oil and Saudi stuffing Rotterdam etc. Russia has lost not only the price of oil but the volume too. It has likely lost 60% of revenue from the price and 20-30% from the volume unsold. 60% + 30% X 40% = 72% of revenue lost. The physical supply chain will get clogged quickly enough. They will have to turn the spigot off either with a structured agreement with OPEC or on their own. With a structured agreement at least they can recoup some of the price component of their revenue. Shale simply does not matter. Operators will decide what and when to do as it suits them. 

[ronwagn + 6,290]

35 minutes ago, 0R0 said:

It has an economic cost to the US. Not a benefit. The benefit is for the US government for strategic purposes and control both at home and abroad. The current rush to cash and the movement to treasuries during the crisis response shows what the purpose of the dollar system is - it allows the US to go into total war footing while foreign countries scramble for dollars and treasuries that fund it. The foreign dollar debtors and even just traders running through the dollar system go into hock and dump assets while US government can pick its domestic winners and losers to fight the problem at hand and save some of the economy from liquidation and mass unemployment. Obviously, the Dems picked some industries to be losers, like airlines and energy. 

The point of gold is that if you sequester it for monetary use you don't damage the economy. Its uses are limited and substitutable . If you do so with silver then you do industrial damage. 

The drawback to gold is that it can't support an empire or a total war effort since it is always restricting liquidity. The financial flexibility in a gold system does not come from the power of the reserve issuer's privilege but from the willingness of others to support it with release of actual gold to finance a hegemon's war debt. 

Would that explain why Putin is buying so much gold?

[El Nikko + 2,145]

1 hour ago, 0R0 said:

I think that the target is Russia's production expansion plans. They know that US shale doesn't go away because the companies are bankrupt, it just delays production from growing now to growing later. Nothing that helps them any. The target is to force Russia to halt expansion and shut in production. Assuming the situation is as it was 2 weeks ago with plenty of floating oil and Saudi stuffing Rotterdam etc. Russia has lost not only the price of oil but the volume too. It has likely lost 60% of revenue from the price and 20-30% from the volume unsold. 60% + 30% X 40% = 72% of revenue lost. The physical supply chain will get clogged quickly enough. They will have to turn the spigot off either with a structured agreement with OPEC or on their own. With a structured agreement at least they can recoup some of the price component of their revenue. Shale simply does not matter. Operators will decide what and when to do as it suits them. 

I still don't understand why people would be concerned about Russia's production growth, it seems quite small compared to everyone else's. I read then can only increase production by 300,000 bbl/day

[James Regan + 1,776]

1 hour ago, El Nikko said:

I still don't understand why people would be concerned about Russia's production growth, it seems quite small compared to everyone else's. I read then can only increase production by 300,000 bbl/day

Reading above there are plenty worried, most of it coming out of the USA, world oil market share domination back fired, how long have we been discussing the flaws in the USAs beligerant over production based on an Industry without cash, it was a big bet and the US went all in on oil that was still in the ground. 

Its not rocket science you can put all the graphs and rhetoric you want the fundamentals are above.

[Jan van Eck + 7,558]

Saudi Arabia apparently purchases its supplies of dairy products from Denmark.  There is thus nothing to stop KSA from selling crude to Denmark in Danish Kroner, then using the Kroner to purchase dairy supplies  (and whatever else the Danes have to sell).  And the same goes for the other consuming nations..The idea of the Petrodollar is an artificial construct, one that works for the USA but not so much for others. 

[John Foote + 1,135]

KSA actually has the world's most advanced dairy, just north of Al Hasa. Very impressive operation. I forgot who set it up, some European group. Employs a fair bit of females Saudis, as opposed to lots of imported labor from India or Pakistan.

They grow their alfalfa in the California desert on land they bought, watering the crop with practically free water. Part of the odd agra-biz, state of California arrangements set up long ago. 

I have tend to believe that last thing holding the Petrodollar together is a lack of viable alternatives, today. One will emerge, a when, not an if.

[Ward Smith + 6,615]

7 hours ago, James Regan said:

Thats why the USA spent decades over the other side of the Persian Gulf carpet bombing, your going to tell me next that Saudi was behind 9/11

Weren't something like 15 out of 19 hijackers from KSA? Coincidence? 

[John Foote + 1,135]

1 minute ago, Ward Smith said:

Weren't something like 15 out of 19 hijackers from KSA? Coincidence? 

I think the defense is the formal Saudi government wasn't behind it, and I believe that.

Was it Saudi money and bodies? Absolutely.

Turns out Al Qaeda genuinely hates the top elite of the House of Saud as well. The deposed Crown Prince that MBS shunted aside actually personally survived a suicide bomber who smuggled the bomb into a meeting up his bum. 

[James Regan + 1,776]

39 minutes ago, Ward Smith said:

Weren't something like 15 out of 19 hijackers from KSA? Coincidence? 

Ward so was OBL, The Bin Laden family is all over the middle east, the biggest construction company in the ME. OBL was thrown out of KSA years before the incident in New York. Just because he may have recruited radicals from KSA doesn't mean its the view of the general population. Columbia and Thailand is full of American and European Drug dealers, does that make us drug dealers?

Tensions are high and KSA has been USAs enemy and friend at the same time, KSA made a play, ballsy is an understatement but if anyone believes they will give in before some serious damage has been done to US production then they are misguided, we have been down this path before.

These people are different from us in all manners, we shouldn't put our values in them as its a non starter.

Respectfully

[James Regan + 1,776]

1 hour ago, John Foote said:

Was it Saudi money and bodies? Absolutely.

KSA Passports I will accept.

Money please elaborate?

During his time in the Mujahideen fighting the Russians with 40 Billion USD and weapons to fight the Russians, Im sure he managed to bank a little.

Most people in the USA had never heard of him before 9/11, he was constantly on British TV years before the event in USA. He was on the radar a long time, I'm sure the CIA etc also had him on surveillance.

Edited March 30, 2020 by James Regan

[0R0 + 6,251]

5 hours ago, El Nikko said:

I still don't understand why people would be concerned about Russia's production growth, it seems quite small compared to everyone else's. I read then can only increase production by 300,000 bbl/day

Russia has major plans to increase production from developing its more recent fields. Rosneft has been given a dispensation to refrain from issuing 50% of its cash flow to dividends (as required by law) to inesting their entire profit into new production for the next few years, reaching the 50% mark in 2025. So though Rosneft is obviously not having the same cash flow it expected, there is yet to be news of it putting its plans on hold. Nobody knows how much future production was on the books in their plan. But obviously it was going to be a substantial amount that the investment plan implies the expected additional production was in the 1-2 mob/d likely with lots associated gas. Which is why they wanted shale out of the way -because it was so gassy and cratered Russia's gas income. 

 

[James Regan + 1,776]

47 minutes ago, John Foote said:

The deposed Crown Prince that MBS shunted aside actually personally survived a suicide bomber who smuggled the bomb into a meeting up his bum.

😂😂😂 your correct, but this was again an attack from the Yemen - No surprises there.

Im laughing because of your BUM comment and now i Just saw this the "bum Blast"

https://www.theregister.co.uk/2009/09/21/bum_bombing/

Edited March 30, 2020 by James Regan

[Douglas Buckland + 6,308]

It is what it is guys.

Until either Ssudi or Russia blinks, the oil industry is in the toilet. Not much we can do about it...

[0R0 + 6,251]

2 hours ago, Jan van Eck said:

Saudi Arabia apparently purchases its supplies of dairy products from Denmark.  There is thus nothing to stop KSA from selling crude to Denmark in Danish Kroner, then using the Kroner to purchase dairy supplies  (and whatever else the Danes have to sell).  And the same goes for the other consuming nations..The idea of the Petrodollar is an artificial construct, one that works for the USA but not so much for others. 

The centralized dollar market is a law of one price and the law of one money. That is driven by liquidity. Each item acquires a smaller bid ask spread in the monetary unit where other products trade at volume. A network effect if you will. 

The national currency pair trades structure is just not efficient and liquid. It requires a balanced bilateral trade. A very unlikely circumstance. 

The upstream EMU economy is entirely dollarized. Only retail and  taxes are Euro. Everything else has to go through the dollar system because the alternative is paying 5-15% in bid ask spreads to use Euro denominated finance, commodity futures and contracts or worse, every year (the year has roughly 4 turnovers. 

[El Nikko + 2,145]

The Yemen army are claiming that they 'chased off' Saudi warplanes with surface to air missiles which may explain why operations in the open in the video appeared to not be contested by Saudi aircraft. I know they have them most probably have been supplied or modified by the Iranians. Interesting development, it wasn't too long ago a Tornado was shot down in Yemen as have several high altitude drones.

It really does look like the Saudi's are on their own in this conflict. Just them, their money and a load of paid troops from very poor countries like Sudan. I do think the Saudi's opening up the spiggots also has something to do with this conflict, they knew full well this would do massive damage to the US oil industry just as the impact of the CV was being felt. It's certainly not the first time either. They're probably very unhappy that the US & Co aren't obliterating the Iranians and helping in Yemen.

[Jan van Eck + 7,558]

46 minutes ago, 0R0 said:

The national currency pair trades structure is just not efficient and liquid. It requires a balanced bilateral trade. A very unlikely circumstance. 

If the US Dollar is taken out of the exchange pricing then it becomes not relevant if the alternatve structure is "efficient" or not; it will end up adopted.  I don't see it as starkly as you do, as those surplus Kroners can be exchanged into Euros or something else.  That is what the bankers do, all day long, trading currencies against each other.  The liquidity comes from speculators  (OK, call them "traders") bidding against each other in currency trading rooms all around the globe.  Some win, some lose.  But it is undeniable that they provide liquidity. 

[Rasmus Jorgensen + 1,169]

5 hours ago, Jan van Eck said:

Saudi Arabia apparently purchases its supplies of dairy products from Denmark.  There is thus nothing to stop KSA from selling crude to Denmark in Danish Kroner, then using the Kroner to purchase dairy supplies  (and whatever else the Danes have to sell).  And the same goes for the other consuming nations..The idea of the Petrodollar is an artificial construct, one that works for the USA but not so much for others. 

the principle is correct. However, Denmark currently, by a very small margin, a net exporter of oil. Thanks largely to a fairly large renewable electricity generation capabillity. 

[0R0 + 6,251]

2 hours ago, Jan van Eck said:

If the US Dollar is taken out of the exchange pricing then it becomes not relevant if the alternatve structure is "efficient" or not; it will end up adopted.  I don't see it as starkly as you do, as those surplus Kroners can be exchanged into Euros or something else.  That is what the bankers do, all day long, trading currencies against each other.  The liquidity comes from speculators  (OK, call them "traders") bidding against each other in currency trading rooms all around the globe.  Some win, some lose.  But it is undeniable that they provide liquidity. 

The dollar was not involved in my comment of binary trade. Bankers do currencies all the time. The only liquid currency markets with a narrow bid ask are with the dollar. The bid ask spread between any two currencies directly vs. exchanging via dollars is always more expensive. 

[Ward Smith + 6,615]

10 hours ago, Jan van Eck said:

But it is undeniable that they provide liquidity. 

Liquidity yes. Sufficient volume? No. 

[Jan van Eck + 7,558]

1 hour ago, Ward Smith said:

Liquidity yes. Sufficient volume? No. 

I would not be that sanguine about the costs of traders supplying liquidity. Let us assume that the arbitrage cost to trade a curency is 75 basis points.  that would be a vbery generous compensation.  That should work out to (pick a number) thirty cents a barrel. But right now, those big tankers are being fuelled with half-price fuel, so the Buyer can easily afford to cough up the arbitrage on the currency. With a big enough spread, any currency is going to trade for another.  And 3/4 point is plenty.  Food for thought.