Oil production cut: Are the US and Saudi Arabia on a damaging collision course?

[hemanthaa@mail.com + 64]

With less than a month to go before the US mid-term elections, the US and its long-term Middle Eastern ally, Saudi Arabia,  appear to be on a damaging collision course over the decision by the OPEC+ to cut the production by a vague figure that can go up to 2 million bpd.

The swift reaction of the Biden administration to the move by the OPEC+ implies that the latter had been caught off-guard completely. It also shows that the recent trip made by the president has not cut much ice in getting the strategic relationship back on track.

As president has clearly noted both Saudi Arabia and the UAE have gravitated towards Russia as a partner that they can rely on when it comes to energy issues; they may have recognized that the position of the US in this regard - by contrast - depends on who occupies the White House at a given time. The diametrically opposite positions taken by President Trump and President Biden, when it comes oil drilling , is a case in point.

Please read here for more on this:

[footeab@yahoo.com + 2,192]

It is rather simple, Saudi Arabia/OPEC do not sell oil to the USA anymore.  They also rightly see that the USA is not interested in sending ships/troops to browbeat compliance currently and neither will their former masters.  And finally, they know the SPR is emptying out, so a short waiting game will quickly achieve big dividends. 

Do not know which way they will jump, but I do not see the USA building another 100-->200 Destroyers/bases to achieve compliance...  How long will the free for all last?  Only competitor on horizon is the Chinese who honestly cannot do anything unless they take over the Malacca straight and would still have the Indian's to deal with....  So in the end?  Nothing happens until India rises and then we will see the next super power take over: INDIA.  But that, is a couple decades or three away at least. 

[Boat + 1,324]

So millions of the poor around the world may starve and the worlds economy fights higher inflation. Footeab describes this as big dividend. I’m sure China, Japan Europe, Africa will all be happy with the Saudi and their self manipulated payday. All the more reason to go electric. Greed will kill transporation market share. In 20 years you will look back and wonder how you screwed it up so bad. 

[footeab@yahoo.com + 2,192]

2 hours ago, Boat said:

So millions of the poor around the world may starve and the worlds economy fights higher inflation. Footeab describes this as big dividend. I’m sure China, Japan Europe, Africa will all be happy with the Saudi and their self manipulated payday. All the more reason to go electric. Greed will kill transporation market share. In 20 years you will look back and wonder how you screwed it up so bad. 

OPEC doesn't give a damn about the world.  Why should they?  They have their own citizens to placate/bribe first and oil has been absurdly low going on a decade now.  Most of them are Muslim or have their axe to grind for other reasons.  USA doesn't really care at this point either as it is tired of babysitting and strong arming and instead tries coercion, but most see through coercion as weak.  In fact, you could argue the USA might actually like high oil prices. 

Everyone will pay the price, because they have NO CHOICE. Pay or starve. 

Why anyone with brains is going nuclear.  At least your country is stable. 

[Starschy + 211]

US and Saudi Arabia are at least since 2008 no on the same path anymore. US Politics is very unstable with Saudi Arabia and that is a huge issue. Obama made huge mistakes - starting the Ghadafi issue or Syria attacks, even those Governments are not Priority one for Saudi Arabia.

The Russian are fare more consistent. Even after 2021 issue. Saudia Arabia is importing large volumes of Russian Oil for a very good price and selling that in Asia even Europe. The advantage for Russia is not to close large Oil wells and production. To have only one Company to deal with. 

US lost few months a large 1.8 Billion contract to South Korea and other states in the weapon business.

Opec is fare more Countries and most of them are not in favor of the USA. All of them need money and therefore higher margins as Russia and Saudi Arabia suggests is by far the better path.

The US Democrats are a huge problem. The have no strategy at all. If Saudia Arabia is withdrawing Billions in the US it become a disaster.

I'm sure that Saudi Arabia will slowly ditch the USD in favor of China, Russia and Europe.

[specinho + 470]

recall a mild humour during Biden latest visit to Saudi........

In response to a request to increase production by OPEC, the answer was " it probably could not be done until 2030 ( or 2050 or so) ........."   

[Buckshot 0]

If you are a company. And you invest billions. To. Maintain or increase. Crude production. A nd president. Biden. Is doing everything he can to put you out of business.    What would you do. ???   Do you know. The. Government. Set price of. Crude. $3 bbl.    What. Happened.  1976.  There was no gas at the pump.  Ha ha.  

[Starschy + 211]

If the US will implement NOPEC Saudi Arabia will retaliate. And that means the Agreement/Contract between Saudia Arabia/USA is over. That means US is loosing access to Saudi Oil. The US Security is not that important to Saudi Arabia as in between 1950-1990.

Saudi Arabia will deinvest in the USA

1. No more US Reserves
2. Withdrawing Money
3. Selling Investments
4. No more NGO money for Universities etc.

We're taking here 100 of Billions

[Jay McKinsey + 1,490]

21 hours ago, Starschy said:

If the US will implement NOPEC Saudi Arabia will retaliate. And that means the Agreement/Contract between Saudia Arabia/USA is over. That means US is loosing access to Saudi Oil. The US Security is not that important to Saudi Arabia as in between 1950-1990.

Saudi Arabia will deinvest in the USA

1. No more US Reserves
2. Withdrawing Money
3. Selling Investments
4. No more NGO money for Universities etc.

We're taking here 100 of Billions

The US doesn't need Saudi oil but Europe does and where exactly is Saudi going to reinvest all that money? Russia? 

[Starschy + 211]

6 hours ago, Jay McKinsey said:

The US doesn't need Saudi oil but Europe does and where exactly is Saudi going to reinvest all that money? Russia? 

The US does need Saudi Oil - they don't have enough for all qualities. The same for Russian Oil.

 

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRIMUSSA2&f=M

Edited October 19, 2022 by Starschy
added US import Table

[Jay McKinsey + 1,490]

13 hours ago, Starschy said:

The US does need Saudi Oil - they don't have enough for all qualities. The same for Russian Oil.

 

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRIMUSSA2&f=M

We replaced Saudi and Russian oil with Canadian long ago:

 The US has imported no Russian oil since April.

The Saudi oil we do get is mainly imported by Saudi for the Port Arthur refinery that they own

America's largest oil refinery is now fully owned by Saudi Arabia.

Saudi Aramco, the kingdom's state-owned oil behemoth, took 100% control of the sprawling Port Arthur refinery in Texas on Monday, completing a deal that was first announced last year.

Port Arthur is considered the crown jewel of the US refinery system. The Gulf Coast facility can process 600,000 barrels of oil per day, making it the largest refinery in North America.

 

The US is a net exporter of Petroleum:

 

 

Edited October 20, 2022 by Jay McKinsey

[Michael Sanches + 187]

We are kind of stuck. The 2019 attack on Saudi oil facilities resulted in a 5 million barrel per day decrease in oil and an instant 20% increase in oil price. We rushed in anti aircraft defenses to protect against the missiles. Now that the ceasefire in Yemen is over, the Houtis have not only missiles, but Iranian drones. Only US can protect them. If the US withdraws air defenses, Saudi oil production could get crippled. 

Oil will jump a lot in price and gas prices will go up $1 to $2 per gallon in the US, while the Saudis will have to suffer with 2 Lamborghinis in each garage, instead of 3.

Which is more painful?

[Michael Sanches + 187]

Even Oilprice understands the danger of abandoning Saudi Arabia. The only way to handle Saudi Arabia is the Trump method: Produce so much energy, including fossil fuels, that their need diminishes.

https://oilprice.com/Energy/Energy-General/The-Houthi-Threat-To-Oil-Markets-Is-Back.html

 

[Michael Sanches + 187]

 "those People have not a clue to save energy and that includes the Government."

What?!?

Kamela is going to blanket our country with electric yellow school buses (with no seat belts.) Sure, our kids may die in a crash, but that just reduces their carbon footprint even further. And, as Stacey Abrams points out, getting kids killed is a great way to reduce expenses in inflationary times. It's a win-win situation brought to us by our great government overlords and overlord wannabees.

[TailingsPond + 1,009]

2 hours ago, Michael Sanches said:

 Produce so much energy, including fossil fuels, that their need diminishes.

 

 

You do not understand the differences between supply, demand, and need.

Reducing consumption is a primary goal for those with a clue.  Simply updating energy efficiency standards has worked many times already.