The GREAT OPEC+ Agreement

[Wombat + 1,028]

7 hours ago, 0R0 said:

I don't think the business is going. Just that it will be on a mid term hiatus. Bankruptcy or pre bankruptcy reorganization and lease renegotiation will help the industry far more than the temporary relief of tariffs or even a substantial cut from OPEC+.

The US will need less Saudi and more LTO to supply the new driving economy. We are doing much less flying and far less public transport going forward. The US is not going to become a substantial net importer again. The Brent grade gulf crude is more expensive since it produces a greater cut of diesel. For the return to the driving economy, it will be more gasoline that we need, thus more LTO. 

What I am wondering is where Saudi has suddenly gotten all this cash to splash around. Someone speculated they had taken a large short position. That would have been prudent. Possibly their short covering provided the underlying bid in the market after the Russian explosion. 

I am still wondering what fields Russia will shut down. 

The US will have an industrial and infrastructure investment boom because

1. the labor is suddenly free to staff it.

2. labor is now looking to move out of "death trap" cities 

3. there is an enormous imperative for business to replace China as a source. First of all for medical materials and equipment, but most everything else has to be regionalized and supply chains must build redundancy. 

Since the Eurozone looks to be unstable with the growing rift between the South and the North, not aided by the German shutdown of exports of medical supplies to Italy and Spain; then the US/NAFTA will be the first target for investment in regional supply chains, ahead of Europe. 

Sounds like a pipe dream to me. If Mexico could compete with China or any other Asian nation, would have already happened and you would have massive trade deficit with Mexico by now. There may be some small shift of supply chains out of China into even cheaper Asian countries, which had already started before Wuhan Virus, but that's about it. Trump's trade war with China turned out to be a minor spat that didn't achieve much, a waste of time really.

[wrs + 893]

12 hours ago, BLA said:

Did Trump cut a deal with Saudis ? No tariffs if OPEC cuts 10mm ? 

Saudis only really cut 1.5 mm not 4mm and that's only if the Saudis  comply.

You know Russia won't. 

The rest of OPEC+  are supposed to divi up the other 5 mm.  That's a joke too. 

Did Trump really promise Saudis no tariffs ? Tell me it ain't so. 

Looks like Trump is protecting Majors and Saudis or just plain stupid. 

The Saudis must have some dirt on the Donald. 

Looks like Mexico is crapping on the OPEC cuts anyway so no deal.  We need to stop the imports.

[Douglas Buckland + 6,308]

“Trump's trade war with China turned out to be a minor spat that didn't achieve much, a waste of time really.”

The trade war was ‘overtaken by events’, you have not seen the end of it yet.

But heck, who give a fig what I think, you’re the geopolitical and economics wizard...

[Gerry Maddoux + 3,627]

9 hours ago, James Regan said:

Gerry- well written I love it when there is no doubt of the message being delivered, I understand where you are coming from. You sure you never worked on rigs?

Its all so fkd up now, I'm just biting the bullet and really have no idea of what will happen, I should be worried about the business but I just have this optimistic little voice in my head saying to me that things will get worked out.

One thing we can take to the bank, we still require the commodity for the next 30 years minimum, something will give.

Thanks for the reply, nicely written.... 

Thanks--I didn't mean to get so "het up."

The Saudis pull this crap over and over--just enough to trick you into not thinking it's a rerun. 

Worked on a rig as a kid. Great experience. 

Edited April 10, 2020 by Gerry Maddoux

[WaytoPeace + 62]

For some of us, the agreement is not such a bad thing.  True, it is not going to raise the price much above $25/b over the next couple of months, but that will be very good for consumers at this time.  Secondly, it should lead to consolidation.  Third, it should make it possible for the government to substantially raise the gas tax to help fund transportation related infrastructure, including light rail and a national network of electrical charging stations so we can be better prepared to move away from reliance on fossil fuels over the next decade.

[surrept33 + 609]

3 hours ago, Wombat said:

Sounds like a pipe dream to me. If Mexico could compete with China or any other Asian nation, would have already happened and you would have massive trade deficit with Mexico by now. There may be some small shift of supply chains out of China into even cheaper Asian countries, which had already started before Wuhan Virus, but that's about it. Trump's trade war with China turned out to be a minor spat that didn't achieve much, a waste of time really.

 

I think what you'll more likely see is simply more diversification to reduce supply chain risk, not wholesale replacement of China in supply chains. This fits in longer term trends of near sourcing, a natural result of the reduction in the large cost advantages to moving a large concentration of production to China as it became more expensive due to higher labor costs.

Still China has huge advantages because of sheer economies of scale and access to the supply chains of Australiasia.

China's export tree map (bigger boxes = larger net dollars):

 

Most off the blue stuff is "high tech", which requires importing a lot of goods from elsewhere in Asia, or are components for export to other places in Asia.

Meanwhile, what we export:

 

[0R0 + 6,251]

5 hours ago, Wombat said:

Sounds like a pipe dream to me. If Mexico could compete with China or any other Asian nation, would have already happened and you would have massive trade deficit with Mexico by now. There may be some small shift of supply chains out of China into even cheaper Asian countries, which had already started before Wuhan Virus, but that's about it. Trump's trade war with China turned out to be a minor spat that didn't achieve much, a waste of time really.

While I agree in general that the advantage is not in Mexico, the situation before tariffs and the CV19 and the one after it, are not the same and the priority on cost minimization is shifted to maintaining function of the supply chain. So the key is geographical redundancy. 

The trade war was not minor. But it is nowhere near complete either. And the US in general, and Trump in particular is very likely to send China a very steep bill. The US will be far from being alone in this. 

[Stephenk + 28]

Well maybe I'm missing something on here I've been reading some of the post and from what I'm seeing most agree with the oil cuts for the USA. I also seen that Russia will not go along with decline in production of west Texas well that they want a cross the board cut. But if anyone not understanding what they are doing needs to wake up. Production has already drop over 2 Million  BBLS already and the less drilling go on the more it will fall which means we will have to import more oil once things get back to rolling and no matter what not much going to save Shell wells as they are to high in cost and the return are slow about coming back for the investors and that why your seeing so many investors getting away from Shell wells and oil also, But anyone who believe cutting oil production is going to help is wrong all they are doing is the same thing they have done in the past buy up oil wells here and import more oil along with it so it a win win for them and I know some of you are going to say I'm wrong and that ok but before you do look at the past and see what they done and you will see they are using the same play book they have in the past. Thanks everyone hope your all safe and well God bless.

[Wombat + 1,028]

21 hours ago, Tom Kirkman said:

I think it is the opposite, actually.  Al-Waleed was a black hat who got busted.

Tell me Mr. Moderate, how many "naughty points" can I rack up before I get booted of this site? I need to know coz there some real a**holes here that I would like to abuse

[Tom Kirkman + 8,860]

3 minutes ago, Wombat said:

Tell me Mr. Moderate, how many "naughty points" can I rack up before I get booted of this site? I need to know coz there some real a**holes here that I would like to abuse

Please don't cause a ruckus with the intent of getting banned.

Forum guidelines

[Wombat + 1,028]

7 minutes ago, Tom Kirkman said:

Please don't cause a ruckus with the intent of getting banned.

Forum guidelines

Can't we have a vote on Frankfurter?

[Wombat + 1,028]

15 hours ago, Wombat said:

Sounds like a pipe dream to me. If Mexico could compete with China or any other Asian nation, would have already happened and you would have massive trade deficit with Mexico by now. There may be some small shift of supply chains out of China into even cheaper Asian countries, which had already started before Wuhan Virus, but that's about it. Trump's trade war with China turned out to be a minor spat that didn't achieve much, a waste of time really.

I agree that the shale business is here to stay, but if you read my replies to "dummy Doug" concerning the competitive trap that the Western world finds itself in, you will see why our only option is to cleave the world in half when it comes to trade policy. Doug doesn't understand the simple math, but I hope you do.

[Wombat + 1,028]

4 minutes ago, Wombat said:

I agree that the shale business is here to stay, but if you read my replies to "dummy Doug" concerning the competitive trap that the Western world finds itself in, you will see why our only option is to cleave the world in half when it comes to trade policy. Doug doesn't understand the simple math, but I hope you do.

I hope that "Mr. Moderate" don't gimme 3rd and final for that. After all, Doug has been quite offensive towards me and Jan Van Eck called me dopey but I bet neither got a point against them?!?

[Wombat + 1,028]

Just now, Wombat said:

I hope that "Mr. Moderate" don't gimme 3rd and final for that. After all, Doug has been quite offensive towards me and Jan Van Eck called me dopey but I bet neither got a point against them?!?

I reckon that Frankfurter the troll needs to go and Mr. Moderator should remove one warning for reacting to it? Anybody agree?

[Rasmus Jorgensen + 1,169]

21 hours ago, Douglas Buckland said:

Production will decrease at whose expense? The poorer nations whose economies are heavily dependent on oil? Is that the correct price to pay to be able to claim that the free market theory works?

Since when do you care about poorer nations? 

BTW - I just pointed out my understanding of capitalism / free market theory. I didn't state an opinion on what should be done. I do however laugh when capitalist crusaders want bail outs... 

[Rasmus Jorgensen + 1,169]

23 hours ago, Douglas Buckland said:

Okay, let’s ALL protect our market shares, fill up all available storage, drive the price per barrel into cents not dollars, crash the economies of many nations while adhering to the ‘free market/capitalist playbook’!

well, that's the nature of free market - fun on the way up as you can charge a fortune for your product or skills when you are consultant... sucks in a downturn 

[Rasmus Jorgensen + 1,169]

23 hours ago, Douglas Buckland said:

Not quite that simple. You have nations acting as companies working against privately owned corporations. It is not a level playing field.

I am not sure I understand what you are getting at? Generally speaking privately owned corporations are better run than NOCs..

[Douglas Buckland + 6,308]

3 hours ago, Wombat said:

Can't we have a vote on Frankfurter?

Dummy Doug says that although I apparently can’t perform simple math (maths to you Brits and Scots), I realize that a forum such as this is not a democracy and we don’t vote out people who happen to ‘ruffle our feathers’.

[Douglas Buckland + 6,308]

23 minutes ago, Rasmus Jorgensen said:

I am not sure I understand what you are getting at? Generally speaking privately owned corporations are better run than NOCs..

True! What I am saying is that they play under different rules and constraints.

[Tom Kirkman + 8,860]

4 hours ago, Wombat said:

Can't we have a vote on Frankfurter?

Nope.  So long as Frankfurter behaves like everyone else, he is free to continue his comments here.

I have already previously publicly advised Frankfurter that he would likely get a better response from others by commenting with a bit of honey rather than commenting with vinegar, but consistently being abrasive is his choice.

Clearly, I am very proudly and openly biased as pro - oil & gas, pro - U.S. and pro - Trump.

Others seem to be pretty proud of being pro - CCP and anti - U.S.  And that's perfectly ok.

and reading TDS is an amusing distraction for me, it makes me chuckle.  

As a moderator, I see no issue with people being vocal about their views.  All I ask is don't be an abusive jerk about it.

[Dan Warnick + 6,100]

1 hour ago, Douglas Buckland said:

Dummy Doug says that although I apparently can’t perform simple math (maths to you Brits and Scots), I realize that a forum such as this is not a democracy and we don’t vote out people who happen to ‘ruffle our feathers’.

It's not fair.  🤐

[Dan Warnick + 6,100]

8 minutes ago, Tom Kirkman said:

Nope.  So long as Frankfurter behaves like everyone else, he is free to continue his comments here.

I have already previously publicly advised Frankfurter that he would likely get a better response from others by commenting with a bit of honey rather than commenting with vinegar, but consistently being abrasive is his choice.

Clearly, I am very proudly and openly biased as pro - oil & gas, pro - U.S. and pro - Trump.

Others seem to be pretty proud of being pro - CCP and anti - U.S.  And that's perfectly ok.

and reading TDS is an amusing distraction for me, it makes me chuckle.  

As a moderator, I see no issue with people being vocal about their views.  All I ask is don't be an abusive jerk about it.

And don't forget the block feature.  It works on frankfurter quite well.

[Douglas Buckland + 6,308]

10 minutes ago, Dan Warnick said:

It's not fair.  🤐

Time for a group hug...

[Douglas Buckland + 6,308]

21 minutes ago, Tom Kirkman said:

Nope.  So long as Frankfurter behaves like everyone else, he is free to continue his comments here.

I have already previously publicly advised Frankfurter that he would likely get a better response from others by commenting with a bit of honey rather than commenting with vinegar, but consistently being abrasive is his choice.

Clearly, I am very proudly and openly biased as pro - oil & gas, pro - U.S. and pro - Trump.

Others seem to be pretty proud of being pro - CCP and anti - U.S.  And that's perfectly ok.

and reading TDS is an amusing distraction for me, it makes me chuckle.  

As a moderator, I see no issue with people being vocal about their views.  All I ask is don't be an abusive jerk about it.

Who you be talkin’ bout?😂

[Dan Warnick + 6,100]

5 minutes ago, Douglas Buckland said:

Time for a group hug...

Now I feel better.  I just knew I was entitled to a group hug!  🤗