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Saudis and Russia want U.S. to join cuts. Production cuts never worked. It's a Saudi con game. If you want to cut supply must cut exports. I have a plan.

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(edited)

In addition to U.S. participation Russia wants the sanctions dropped.  Hopefully Trump doesn't fall for this ploy. 

First let's talk some rough estimates.  Today Russia, Saudis and U.S. each produce about the same amount of oil between 11 to 13 mm bbl/day.

Production cuts are a farce. Nobody complied. Most increased production.  For example: after oil price crash October 2, 2018 the Saudis substantially increased production for October and November anticipating production cuts  at the OPEC meeting December 4, 2018. The much higher production was used as a base to determine new production level. Saudi quota was actually higher than pre October crash production. Really. Production cuts never worked, never will.  

As long as countries like China have spare storage capacity and want to fill it with $20 to $30 oil Saudis will sell it.  

PRODUCTION CUTS ARE A JOKE.

CUT EXPORTS. THE STORAGE IN EXPORT COUNTRIES WILL FILL UP . . . . THEN YOU WILL GET REAL PRODUCTION CUTS.

If you want to seriously reduce supply you must reduce EXPORTS. It only makes sense. The only chance of reducing supply.  

Now the three largest producers export approx 16 million mm bbl/day. (Rough estimates)

Russia exports  5 mm

Saudis exports  8 mm

U..S.  exports.    3 mm

So if the 3 top producing countries and the rest of the world producers agree to reduce exports (aka supply) on the market by 25% it might work.  

The three largest producers 25% export reduction would = 4 million bbls less to new total 12 million bbls/day

Russia new export quota 4mm

Saudis new export quota 4mm

U.S.       new export quota 4mm

Since the 3 produce approx same amount of oil they should export the same amount of crude oil or 4 mm bbls/day. 

It's only fair.

Why does Saudi Arabia get to export more oil than Russia and U.S. ? 

Saudis don't know how to compete in free markets.  They only understand industry blackmail.   Remember OPEC threatened U.S. shale producers at the CERRAWEEK dinner in 2018.  Ask Diamondback  CEO. 

Forget about it.  Won't work. 

Screw Saudi Arabia.  Bring home the troops. Bring home the Patriot missile systems.

Edited by BLA
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(edited)

1 hour ago, Douglas Buckland said:

Why not simply stop buying KSA oil globally?

That too

U.S imports avg 500k bbls/day of Saudi oil.   That goes to Saudi owned motiva refinery in Port Arthur, Tx.

 I agree do that also. 

Actually, OPEC is an unfair monopoly.  It's in violation of antitrust law.  Stop buying from all OPEC countries or it may be easier to put a hefty tariff on imported oil. USMC partners Mexico and Canada would be exempt. 

Edited by BLA
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Granted, people at that refinery will lose jobs, but somebody, somewhere, will have to take a hit.

I lost my job early in this fiasco, fair enough, but to think that there will be no loss of jobs, in some sector, is wishful thinking.

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