OPEC and Oil Market Dynamics

[Tom Kirkman + 8,860]

Lengthy article from Petroleum Economist with oodles of reasonings.

My view on this is pretty simple - OPEC (especially Saudi Arabia) is getting way too greedy again.  Lessons of 2015 forgotten already.  Any triple digit oil prices will likely crash *exceedingly badly* in a short amount of time.

Saudi Arabia is desperately trying to jawbone up the price of oil in order to try to extract a $2 trillion windfall from their tentative Aramco IPO.  

That is, *if* there is an Aramco IPO.  See my next comment for my view on that push for an Aramco IPO.
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"With talk of Saudi Arabia's preferred price range of $80-100/b, the kingdom's front-loaded and over-ambitious goals-especially its flagship Saudi Aramco initial public offering-are distorting Opec's optimal output strategy. 

In one respect, higher oil prices today could help Saudi Arabia's Public Investment Fund invest in its long-term renewable strategy, helping the kingdom transition away from fossil-fuel dependency. 

However, the bigger threat is from higher prices eroding demand growth, especially given the increased sensitivity between prices and demand."

http://www.petroleum-economist.com/articles/politics-economics/middle-east/2018/opec-and-oil-market-dynamics

[Tom Kirkman + 8,860]

 

[Rodent + 1,424]

These ambitious oil prices are going to spur on renewables. Pricey renewables have retarded its own growth, especially during the $30 oil days. But who needs lower renewables prices when oil is trading at $100? No one. The market will choose the lowest cost resource.

[Tom Kirkman + 8,860]

Exceptionally high oil prices are the oil industry's worst enemy.  Footbullet.

Really hoping we are not in for a repeat of the 2014 / 2015 boom bust cycle again.

KSA and OPEC and U.S. Shale Oil are getting too greedy.  If oil prices stay around a reasonable level instead of stupidly high triple digit levels, renewables should pose no significant threat any time soon to the hydrocarbon industries.

[Boat + 1,324]

To get EV's to scale not to mention a large electric base to accommodate the power is a monumental undertaking. Oils high price will damage ecomomies long before electric transportation has it's place as a leading industry.

[TraderTate + 186]

and US shale doesn't need oil prices to be higher, really. 

[energyecon + 5]

Thanks for the Petroleum Economist link, looks like a chewy read.  While the unconventional light, tight oil from the US is a massive structural change in the market that kicked off this latest price cycle, it alone cannot replace all the investment that was pulled from the offshore.  Also, the phenomenal growth rates that have been achieved have been predicated on continually outrunning cash flows.

The story of Angola is that of many if not most of OPEC, accelerating base decline due to a lack of investment.  162% compliance with the production cutback should make one wonder how much of that adherence is entirely voluntary IMNSHO.  The foundation of a price spike was put down over the last three years.