Something BIG has happened over the weekend.

Yea, so... while we're up to our eyeballs in coronavirus hysteria, something big happened over the weekend.

Saudi Arabia demanded that Russia share in a proposed reduction of a further 1.5 million barrels a day, insisting that OPEC wouldn’t reduce supply without the support of non-members. Russia demurred. Maybe Vladimir Putin just didn't like being told what to do by a 34-year-old prince who's run his country for about as many months and his older brother who's been energy minister for just half a year.

. bold emphasis is mine.

Putin killed OPEC by pulling out. By his own words, Russia can sustain lower oil for longer. OPEC’s Epic Fail Will Hurt All Oil Producers, Even Russia.

Saudi Arabia responded by undercutting everyone . S audi Arabia slashes April crude oil prices after OPEC’s supply pact collapsed.

Saudi Arabia slashed its official selling price (OSP) for April for all its crude grades to all destinations, after OPEC’s oil supply cut pact with Russia fell apart on Friday, sending oil into a tailspin.

Why is that important? Because US Shale. US Shale has become a big player internationally thanks to it's advancements on tech. U.S. shale producers to tap brakes in 2020 after years of rapid growth. From the article we have this note..

Spending cuts and production declines common to shale wells mean U.S. output growth is expected to brake from 2019’s pace that pushed domestic production past 13 million barrels per day (bpd). Some analyst forecasts for next year call for growth to slow, potentially to a rate of just 100,000 new bpd.

Yikes, 13bpd. The World's Top Oil Producers of 2019. US is 1. Saudia Arabia is two. But how much is shale? U.S. shale oil output to rise to record 8.52 million barrels per day in July: EIA

8.52bpd of 13bpd is about 65%! The US Energy Sector: An Overview. Here's what we're looking for

Fossil fuels primarily include coal, natural gas, and crude oil. Among these, natural gas and crude oil account for roughly 80% of the energy production from fossil fuels. It’s not surprising that oil and gas companies primarily dominate the US energy sector.

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Over the weekend, Russia and Saudi Arabia just declared war on our oil markets. It's going to get ugly, as SA has been tossing around numbers like 10-12bpd. Ouch.

To sum it up, Russia deads OPEC(+), SA fires back by going full retard...



I guess Saudi Arabia never heard the expression "you can't beat the Fed". Feds gonna do what's it's gotta do to keep the energy sector from imploding (more bond and junk buying) but it's a question of what can they do?

What IS a little comical is that Saudi Arabia tried this before back in '14.

Yea... it didn't work and that's why oil prices are the way they are now. They tried to cut it back because there is over supply and not that much demand. And they are making it worse. What really sucks is that after Saudi Arabia disintegrates (please tell me you didn't buy that Aramco IPO), those royals that created this mess are just going to bounce (probably somewhere close to Langley) and let their own countrymen fend for themselves as global powers fight over control of what's left..

My expectation for the future is that a trump administration will put a levy on gas below a certain base price (which will be 5% above US production costs, just to lock in profits for mom & pop well-owners).

Then US production will shoot up for a few quarters, as we quit importing any petroleum at all. OPEC will claim victory, as we quit exporting it, and global prices rise.

Their goal will be to have the USA remove itself from the international bourse. Since the USA is exporting oil these days (Europe and SE Asia), the US will be effectively surrendering those markets too OPEC.

But that's NOT their endgame, recapturing 2nd-world oil markets the USA took over FROM opec in the past 5 years; and getting the US to quit participating in the global market.

No, their plan is to whipsaw the American oil sector until the federal government takes over the industry; at least for production and pricing.

All of OPEC and its allies are state-controlled/sovereign corporations. They can make long-term oil policy, and stick to it if the CEO has the cajones for it. But the free-enterprise American oil production is mostly in the hands of mom and pop well-owners, who can turn the faucet off if they don't like today's spot price.

This fact American free enterprise's agility KILLS OPEC's ability to plan. So OPEC will push for a federal takeover of small production. Either EPA or a trade organization either way. Hell maybe even Homeland Security.

The goal is someone that OPEC can sign a deal with.

a reply to: cenpuppie

Crude is down almost 25% without most major markets even open yet. Monday may well see an honest to God global market crash at this point. Effing idiots one and all. This is why we can't have nice things.

a reply to: Graysen

Vitrify the entire Middle East... problem solved.

a reply to: burdman30ott6

Dow futures are down 1,000 plus at the moment. A lot could change from now to open... But with crude plummeting, a bloodbath in the markets looks possible.

Quite the sequence of events over the past year.

Watching it all play has been interesting.

originally posted by: burdman30ott6
a reply to: cenpuppie

Crude is down almost 25% without most major markets even open yet. Monday may well see an honest to God global market crash at this point. Effing idiots one and all. This is why we can't have nice things.

almost like its by design.
Everyone could see the markets were already in major trouble.
So why would Saudi Arabia effectively pull the trigger, being theyre one of the USA's greatest allies.

AUS Shares are open.. down 5%

Lets see how Asia reacts.

I don't normally pay attention to the ASX, but there's a couple of early ''trading halts'' for oil/gas companies that took effect immediately.
is this normal or due to Saudi?

dbl..



.. of scotch plz

just for background. the major oil companies in the US move and process the oil; but they don't generally own wells. They have contracts with a jillion little producers, usually small companies of a family or a group of farmers whose farms all lie over an oil patch. The average small producer in the US owns 5 or fewer wells. And its more than 65% of all production. A bunch of American voters get a check from an oil company, a few thousand bucks a year, because grandpa wouldn't sell the mineral rights.

Likewise, 30 (independent) refineries across America process the bulk of US gasoline. There are 80 or more small refineries. But the big 30 do most of the work. They cannot be bought by the majors, because of the monopoly acts of the 1880s.

The EPA won't let them expand, or even modernize.(!). There are refineries in Texas that are using production units from World War II, and the EPA won't let them convert to new state of the art facilities, because they could PRODUCE MORE without increasing the carbon footprint. And the EPA wants nothing more than to force them to cut production. All part of the EPA's & Obama's "war on Texas".




[as an aside, if you want to make a green new deal, then pay those mom and pops not to produce. Or else give them a share in a green energy farm. Voters won't support killing off oil the way they have coal. Coal was just 3 big corporations. Oil production is like, + 5,000 independents. A lot of liberal college professors are trust-fund babies. And 3 oil wells back in Oklahoma is what keeps the trust flowing.]

I saw this.. I think was actually going on, on Friday. I already talked about the economical fallout back on corona virus update part 1. Yep looks like the economy, is catching up to the reality.

a reply to: Agit8dChop

Bastards. Halt trading at the moment with the MOST volatility.

It's almost like they are a cabal of socialist globalist old-boy networkers, trying to screw day traders--the very people who provide the liquidity they need in a crisis.

Fulminating for a friend.

a reply to: Graysen

The average mineral rights owner in North Dakota is female, over 65 and makes about $600 a month on royalties.

People don't know that, for some reason.

"Killing" oil production isn't really hurting the big companies... they will still sell energy reguardless.

All it will hurt is the little guys.

www.businessinsider.com... &utm_source=facebook.com&fbclid=IwAR1Ud7jPlKopJqB1bHCcQ0qY__sEStPpUtN_a91-USe1CXaJlR_YXKzoBR4 per buisness insider it was the largest drop (31%) since gulf war (one id imagine?)

Oil futures tumbled 31% in a matter of seconds overnight on Sunday, their sharpest decline since the Gulf War in 1991. The losses are being fueled by sinking demand due to coronavirus concerns, which has in turn sparked a series of price cuts. Saudi Arabia slashed its prices by the most in at least 20 years over the weekend. A price-cut free-for-all has broken out globally following the collapse of an OPEC+ alliance last week. Futures on the Dow Jones Industrial Average sank more than 900 points, while S&P 500 futures were hit with a 4% drop at open on Monday. Goldman Sachs analysts have warned that the price of oil could tumble even further, to $20 a barrel.

whats the threshold for most nations to sell oil at per barrel?

a reply to: RalagaNarHallas

Those are closely guarded state secrets.

Except for the US. If the number CAN be known, its on the internet.

5 years ago it was $24/barrel for USA. I think $28/barrel for Saudi. I heard $18 for Russia...

The US # is constantly changing, because of structured debt for fracking

EDIT TO ADD

Those numbers are apples and oranges tho. The US figure was for delivery near Tulsa, OK. so it was the inland price. Coastal price varies by refinery. Big differences between delivery to California, Texas/LA, or New Jersey based on what individual complexes are paying. And the NO and Galveston facilities are the nexus of dozens of pipelines going up to Tulsa, Memphis, and the permian basin out toward El Paso and up to Chicago.

I think the Saudi head is on the east side of the country, within sight of the straights of Hormuz.

Don't even know what Russia's delivery point is. maybe the Ukraine border, or the polish coast???

a reply to: Lumenari

With the timing, it could hurt everyone.

If 2020 has taught me anything, it's not to assume the worst... We've seen situations that looked like inevitable disaster and walked it back within hours.

But between supply chain disruptions at the same time as a threatened petro dollar... I just hope to God this isn't a black swan event.

Saudi can impact the market but they can't do it forever. Regardless, if the price drops that means people have more money to spend on other things so it's a wash and maybe even better long term.

It doesn't matter. Even if we had free oil / energy, people are still going to spend the same amount. The oil industry is going to feel the pain but everyone else won't. They will not be saving. They will be spending more. The same amount of dollars if not more will be bouncing around in the economy which is what you want. Those dollars bouncing around is a lot better than the oil industry getting it.

a reply to: Stupidsecrets

Some countries need a high oil price to sustain their economies.

There's more to this than petrol prices.

boom!

originally posted by: Agit8dChop
a reply to: Stupidsecrets

Some countries need a high oil price to sustain their economies.

There's more to this than petrol prices.

Russia just got kicked in the face.

originally posted by: CriticalStinker
a reply to: Lumenari

With the timing, it could hurt everyone.

But between supply chain disruptions at the same time as a threatened petro dollar... I just hope to God this isn't a black swan event.

Incidentally, this is hurting my business as well.

Shuttered oil wells means no Nat Gas for me either...