"Saudi Armada heading to U.S.", "Dumping" is a WTO VIOLATION.

[BLA + 1,666]

https://www.bloomberg.com/news/articles/2020-04-08/saudi-crude-oil-armada-heads-for-u-s-after-opec-collapse

Price fixing Cartels are illegal also. Just ban OPEC+ oil shipments to U.S.  . . .  or Trump can ban all imports for 90 days as Sec Perry requested. USMCA trading partners would be exempt fo obvious reasons.

Trump, MBS is your "good friend" ?  REALLY ?

Rick Perry won't let Trump and his "good friend"  Mohamed bin Salman destroy the U.S. oil industry. 

Link to yesterday's post below. Must Read.

 

 

Edited April 27, 2020 by BLA

[James Regan + 1,776]

[BLA + 1,666]

4 hours ago, James Regan said:

James

Glad you get a chuckle about all this. 

How about a wager ?  I bet your precious monarchy in Saudi Arabia is toppled within 1 1/2 years.  Bet for $1000 U.S.

You pay double if MBS is beheaded before he can escape to Switzerland. 

Well ?

 

Imagine you're a US solider that has been deployed to Saudi Arabia , WTF do you tell your family you're putting your life on the line for? 

So Saudis can destroy your U.S. shale industry unencumbered ?  

Trump better wise up if he wants reelection.  He needs to  stop this abuse by Saudi Arabia.  

 

Edited April 8, 2020 by BLA

[Jan van Eck + 7,558]

Readers might note that "Dumping" is a specific set of events in which surplus product is sold at prices below that commanded in the home country for the same product.   Occasionally, Dumping is taken to mean selling at below the cost of production.  There is no hard evidence - yet - that the KSA is selling that crude for less than equal-quality crude is internally sold.  It is a bit of an abstract, as I assume that the production of petroleum goods inside KSA is all controlled by the State, and thus pricing ladders are artificial.  That said, is there evidence that the oil itself has not already been sold to oil traders?  Can traders "dump"?  Probably not.

I do not see any plausible way for anti-dumping laws to apply to the sale of Saudi oil at fire-sale pricing.  Yo9u have this cheap oil everywhere, the world is awash in it.  I would not put much stock into anything that Rick Perry says, he is a notorious dimwit.  Can the Trump Administration impose import quotas?  Yes, it can, and there is precedent for this.  Readers are invited to review the combination of tariffs and quotas on construction lumber from Canada into the USA  (a perennial sore point, for many decades, between them).  Will Trump do that?  My guess: no. 

The US economy benefits immensely from ultra-cheap oil.  The users of oil  products pay less, thus having more funds to spend on "something else."  Or, as in the case of the air carriers, they can offer lower fares, once the hedging contracts run out.  All that, cumulatively, puts more cash into individual pockets, be that corporations or individuals.  More cash ultimately results in more spending, and greater levels of economic activity.  OK, that is not so pleasant for the domestic oil industry, but it is what it is. 

[Douglas Buckland + 6,308]

31 minutes ago, James Regan said:

Dammit! First it was those damn Limey’s, now the camel jockeys! When will this nonsense end!

Ma, you’d better break out the shootin’ irons again...

[Jan van Eck + 7,558]

6 minutes ago, Douglas Buckland said:

Dammit! First it was those damn Limey’s, now the camel jockeys! When will this nonsense end!

Or, as the crusty grave-digger Englishman said when Herr Hauptmann Kurt Steiner's Polish-army-dressed  commandos were revealed to be German paratroopers, of the 11th parachute brigade, in "The Eagle has Landed":    "More bloody furriners!"   {"furriners" equals "foreigners," for those of you not English...)

Edited April 8, 2020 by Jan van Eck

[Houston Process Dude + 13]

hell yeah.  I am so done with the Saudis.  I hope they get their asses handed to them when Saudi Aramco has a complete meltdown.  Saudis bullied us in the 70's.   Time to answer the call.

[BLA + 1,666]

2 hours ago, Jan van Eck said:

Or, as the crusty grave-digger Englishman said when Herr Hauptmann Kurt Steiner's Polish-army-dressed  commandos were revealed to be German paratroopers, of the 11th parachute brigade, in "The Eagle has Landed":    "More bloody furriners!"   {"furriners" equals "foreigners," for those of you not English...)

"Two senators from U.S. oil states will hold talks with Saudi officials this Saturday to discuss the oil price situation, Reuters reports, citing unnamed sources.

The same senators have also proposed a bill that, if passed, would see U.S. troops pull out of Saudi Arabia along with U.S.-supplied defense systems, Reuters noted."

"James Inhofe, a senior Republican from oil-producing Oklahoma, has said he prefers to pressure Saudi Arabia and Russia by pushing the Department of Commerce to investigate whether they are excessively dumping oil onto global markets."

 

Edited April 8, 2020 by BLA

[Houston Process Dude + 13]

1 hour ago, BLA said:

 

 I bet your precious monarchy in Saudi Arabia is toppled within 1 1/2

 

The Saudi royal family put all their equity in the Saudi Aramco IPO to establish the market cap needed to trade. Their position is so exposed. Dead man walking. The Saudis know $30 oil isn't sustainable.  We will have a V shape recovery.  

Edited April 8, 2020 by Houston Process Dude

[BLA + 1,666]

1 hour ago, Houston Process Dude said:

The Saudi royal family put all their equity in the Saudi Aramco to establish the market cap needed to trade. Their position is so exposed. Dead man walking. The Saudis know $30 oil isn't sustainable.  We will have a V shape recovery.  

No

Saudi royal family has personal wealth invested in international real estate, businesses and $Billions stashed in Swiss Banks.  They will be whole given they get out in time given some attempted coup.

 

A V recovery to what ? To $50 oil ?

The Saudi Sovereign Wealth fund has been buying back Aramco stock to maintain a price near the offering price.  I'm told when the lock up comes off in June they will buy all stock offered so the avg Saudi does not get hurt.  Cost them about $25 Billion. Think of it as a refund. 

The Wealth Fund offered the stock to begin with and looks like will buy it all back in the end.  Pretty funny.  Full circle. 

Edited April 8, 2020 by BLA

[BLA + 1,666]

8 hours ago, Jan van Eck said:

Readers might note that "Dumping" is a specific set of events in which surplus product is sold at prices below that commanded in the home country for the same product.   Occasionally, Dumping is taken to mean selling at below the cost of production.  There is no hard evidence - yet - that the KSA is selling that crude for less than equal-quality crude 

 

You can argue the definition of dumping all day long.

I don't know the legal definition of dumping.  Doesn't matter.  The Saudi action is a deliberate attempt to put U.S. shale out of business.  

Trump can impose Rick Perry's request to put a 90 day ban on Oil Imports.

The Shale industry will make a point of Trump's inaction if he fails to protect U.S. industry. The industry will scream dumping, harassment, predatory pricing, deliberate attempt to destroy U.S. industry.  AND THEY WILL HAVE THE BACKING OF MANY CITIZENS. 

It will have ramifications for Trump far beyond Texas.  

Trump should take notice.  

This would hurt his reelection chances.

It's in Trump's court now. Trump's move.

Edited April 8, 2020 by BLA

[Houston Process Dude + 13]

18 minutes ago, BLA said:

No

Saudi royal family has personal wealth invested in international real estate, businesses and $Billions stashed in Swiss Banks. 

A V recovery to what ? To $50 oil ?

Still won't be enough to provide a full hedge.  Talking macro economic V shape recovery.  Energy won't be in a V shaped recovery.  This will take some serious divestment strategy.  

[BLA + 1,666]

7 minutes ago, Houston Process Dude said:

Still won't be enough to provide a full hedge.  Talking macro economic V shape recovery.  Energy won't be in a V shaped recovery.  This will take some serious divestment strategy.  

Whatever 

I guess I don't get your point.

[Houston Process Dude + 13]

5 minutes ago, BLA said:

Whatever 

I guess I don't get your point.

I consult in the energy space. You just want to hear what you want to hear to appease your narrative. 

[Eyes Wide Open + 3,555]

One phrase I used to absolutely cringe at...Change is inevitable. So much speculation as to who can survive this over supply crisis when in fact it is a demand crisis. 

Until it is known just how badly the US economy has been damaged which in turn will damage the Chinese economy there is no basis to project or speculate on such matters.

Personally I am quite sure Trump will nationalize US oil, use it as a tool to rebuild the US economy....the WTO is on its own until this world stabilizes itself again. 

[Jan van Eck + 7,558]

57 minutes ago, Houston Process Dude said:

The Saudis know $30 oil isn't sustainable.

$30 oil is entirely sustainable.  It becomes an issue of what else the seller of that oil has to forego. In the case of the Saudis, it is apparently the vast set of payments made to the extended princes and underlings who have developed these tastes for very fancy, and very expensive, automobiles, women, personal jets, villas, whatever.  So the real issue becomes:  how to tone down the welfare payments?  

I remind readers that, at one time, crude oil traded at around $3.10 a barrel.  In today's money  (after the grind of inflation), that might translate to about $15.  Texas made plenty of money back in the day at three bucks.  Today at $30 it can still make money.  So can all the other suppliers.  Don't kid yourself about the cries for "more money;"  everyone does that.  

I once had a man complain to me that he was underpaid, implying that he was worth much more.  So I asked him, "Has it ever occurred to you that you are being overpaid?"   He had no response to that. 

Are the Saudis being overpaid?  I would suggest, Yes. 

[James Regan + 1,776]

2 hours ago, BLA said:

How about a wager ?  I bet your precious monarchy in Saudi Arabia is toppled within 1 1/2 years.  Bet for $1000 U.S.

You pay double if MBS is beheaded before he can escape to Switzerland. 

Well ?

 

Imagine you're a US solider being deployed to Saudi Arabia tonight, WTF do you tell your family you're putting your life on the life for? So Saudis can destroy your shale industry ?

Ok you're on ill have some of that.

I can tell you that any US soldier in KSA is a safe as houses, relax son don't get so hopped up, I get your national pride, I have only worked with Americans my whole career I know you guys better than yourselves. Your good people and well meaning and you know that we DO have a special relationship. I went to American schools all over the middle east, how would I know about Paul Revere I studied the wars of Independence and even pledged allegiance to the flag at school every morning.

Im heading in to a war situation also right now, about to drive into a Corona Virus infected drillship to carry out emergency work, risk analysis and mitigation is part of our daily lives, and if you decide to take a career which has a high risk, when the whistle blows we leave the trenches.

Try to not be so thin skinned, I mean no harm.

 

But I'll take your bet all the same..... Need some new parts for my bike

[Jan van Eck + 7,558]

2 minutes ago, James Regan said:

But I'll take your bet all the same..... Need some new parts for my bike

Superb!  😃

[Gerry Maddoux + 3,627]

6 minutes ago, Jan van Eck said:

Texas made plenty of money back in the day at three bucks.  Today at $30 it can still make money. 

I know you to be a thoughtful guy, but I'm doubtful of that comment, Jan. 

In 1991, we had $10 oil, but it cost $12.50 to lift. Today it cost about $35 in the sweetest of sweet spots, $40 in most parts of the shale. And the strippers are no better--they all require maintenance at this point. 

About the only company that might qualify would be Ring Energy, which holds only the San Andrus layer and they specifically target that using penny-pinching measures. It's a rich formation. And even they are having a hard time making ends meet. 

Now maybe you mean this with the same intent as the prince learning how to live closer to the bone, or your hired hand being overpaid, but as you know a lot of the work is still hard on the body, and those people deserve a living wage. 

[Jan van Eck + 7,558]

3 minutes ago, James Regan said:

I studied the wars of Independence and even pledged allegiance to the flag at school every morning.

Well, do remember that the "war of independence" was orchestrated and run by hotheads, they did NOT represent the majority of the colonists here.  The fighters and coat-tailers were only about 30% of the population.  A big chunk of the rest were "Loyalists," and after the defeat of Cornwallis at Yorktown, Virginia,  those families were ethnically cleansed, pushed out with force over the Canadian Border into what is today "Lower Canada," and to Nova Scotia, specifically the Halifax area.  This was not very nice. 

As far as pledging "allegiance" to the flag, etc, Americans should know that that little exercise started as a sales scam.  There was this publisher of boy's magazine that was financially strapped, and looking around for new revenue, he saw that the schools typically did not have an American flag anywhere.  So he started this campaign for the classmates to buy the schoolrooms a flag, and to promote that, he hired a Communist to write up "the Pledge."

The Pledge of Allegiance was straight out of the Bolshevik playbook, something Trotsky would have approved of, and was delivered by a straight-arm "salute" identical to what Hitler developed for his Sturmabteilung troopers.  That Nazi Salute stuff got a little uncomfortable for the bureaucrats, so the schools went to the hand-over-heart salute instead.  But it does not alter the raw truth that the Pledge of Allegiance was a totalitarian invention, written by a true-blue Communist, and adopted by the Fascists.  Just lovely. 

[Jan van Eck + 7,558]

3 minutes ago, Gerry Maddoux said:

and those people deserve a living wage

There is no dispute about the truth of that observation.  

Actually, they deserve quite a bit more than a living wage.  They should be compensated in accordance with the serious risks that go with working on an inherently dangerous oil rig.  Nuff said. 

[Jan van Eck + 7,558]

6 minutes ago, Gerry Maddoux said:

In 1991, we had $10 oil

Gerry, 1991 is like only yesterday.  When I spoke of $3.20 oil, I was referring to 1963.   Cheers.

[butasha + 123]

Someone sure thinks the price of oil will rebound. I own a few thousand acres of minerals leased to 5 different companies here in  South Texas. We get quite a few inquiries throughout the year looking to outright purchase our interest. But for some reason this week I have received a much higher than normal number of calls looking to purchase our minerals interest.

[Gerry Maddoux + 3,627]

1 minute ago, Jan van Eck said:

Gerry, 1991 is like only yesterday.  When I spoke of $3.20 oil, I was referring to 1963.   Cheers.

I knew that. I simply chose 1991 because the price/breakeven stuck in my mind . . . and it's on the way up from like 1963. 

I bought a nearly new 1962 Chevrolet in 1963 for $2,000. A new car of that caliber would now go for $50,000.

If you plug those numbers into the ratio, you come up with $87.50 for a barrel of oil, which I think is fair value. 

[Jan van Eck + 7,558]

1 minute ago, Gerry Maddoux said:

I bought a nearly new 1962 Chevrolet in 1963 for $2,000. A new car of that caliber would now go for $50,000.

"Fair value"?   Those Chevy guys must love you!!!!