Aramco Slashes Crude Pricing, Starting Oil War as OPEC Flops

Discussion in 'Current Events' started by Woogs, Mar 8, 2020.

  1. Woogs

    Woogs Well-Known Member

    Joined:
    Aug 6, 2011
    Messages:
    8,382
    Likes Received:
    2,556
    Trophy Points:
    113
    Saudi Arabia kick started an all-out oil war on Saturday, slashing official pricing for its crude and making the deepest cuts in at least 20 years on its main grades, in an effort to push as many barrels into the market as possible.

    The cuts in monthly pricing by state producer Saudi Aramco are the first indication of how the Saudis will respond to the break up of the alliance between OPEC and partners like Russia. Talks in Vienna ended in dramatic failure on Friday as Saudi Arabia’s gamble to get Russia to agree to a prolonged and deeper cut failed to pay off.

    In the first major marketing decision since the meeting, the state producer lowered April pricing for crude sales to Asia by $4-$6 a barrel and to the U.S. by $7 a barrel, according to a copy of the announcement seen by Bloomberg.

    “Saudi Arabia is now really going into a full price war,” said Iman Nasseri, managing director for the Middle East at oil consultant FGE.

    https://www.bloomberg.com/amp/news/...co-slashes-crude-prices-kicking-off-price-war

    This is gonna put a lot of pressure on US frackers. Before this announcement, oil was in the low to mid $40 range. Most frackers need $60+ to be profitable. The industry was already in trouble, with sources of credit drying up.

    This price war is directly related to the Coronavirus effects on the global economy. Who knows how long oil prices will be depressed and how US frackers will be able to handle operating at a (further) loss.
     
    Last edited: Mar 8, 2020
    ButterBalls, Ddyad and Spim like this.
  2. US Conservative

    US Conservative Well-Known Member Past Donor

    Joined:
    May 19, 2015
    Messages:
    66,099
    Likes Received:
    68,212
    Trophy Points:
    113
    Gender:
    Male
    There have been some interesting recent developments out of SA...

    Crown Prince Mohammed Bin Salman arrests 'treasonous' rivals: Saudi Arabia king's brother, an ex-crown prince and a cousin are held by masked black-clad guards for 'coup plot' as MBS tightens his grip on power
    https://www.dailymail.co.uk/news/ar...audi-royal-family-arrested-plotting-coup.html

    MBS replaced his uncle as the next ruler of SA-this was done by King Salmon who has reportedly been ill for some time. MBS has been running the show and is more favorable towards the US vs the King, as well as a series of liberalization, including concerts and women driving.

    The uncle and cousin could be competitors for the throne.

    Additionally, there have been recent (unconfirmed) reports that the King has died.
    [​IMG]

    As far as Arab monarchies go-this isn't unheard of.

    The Ottomans used to let rival heirs live if they could outrun the executioner...
     
    Last edited: Mar 8, 2020
  3. Woogs

    Woogs Well-Known Member

    Joined:
    Aug 6, 2011
    Messages:
    8,382
    Likes Received:
    2,556
    Trophy Points:
    113
    Yeah, I saw that. Looks like Americans may be involved in the alleged coup plot.

    Five sources told Reuters that Prince Ahmed and Mohammed bin Nayef were detained in the latest operation. Three of the sources, including a regional source, said Mohammed bin Nayef and his half-brother, Nawaf, were picked up at a private desert camp on Friday. Two sources said Ahmed was taken from his home.

    Crown Prince Mohammed, also referred to as MbS, "accused them of conducting contacts with foreign powers, including the Americans and others, to carry out a coup d’etat," the regional source said.

    "With these arrests, MbS consolidated his full grip on power. It's over with this purge,” the source added, indicating that no rivals remain to challenge his succession to the throne.

    Another source said the princes were accused of "treason". A third source said they had been discussing a coup with the support of powerful tribes but had not reached advanced stages.


    https://www.google.com/amp/s/mobile.reuters.com/article/amp/idUSKBN20U001

    Will be interesting to see how this shakes out.
     
    ButterBalls likes this.
  4. fiddlerdave

    fiddlerdave Well-Known Member Past Donor

    Joined:
    Sep 9, 2010
    Messages:
    19,083
    Likes Received:
    2,706
    Trophy Points:
    113
    So both oil profits and fracking profits will be having a deeper price dives than they have already in the USA based companies. Interesting.

    I don't have have a good idea of the exposure these companies' losses will have to USA profitability but certainly we can expect far more layoffs, profits, and company failures in the USA.

    The Trump has had a major factor in the current wealth as Trump increased the oil use and proudly claimed the USA is now an oil exporter now.

    Don't both the oil and fracking fields get some permanent losses of production when they are shut down? Looks like maybe Saudi wants to the big guns again and make the USA become a smaller share. Certainly Canada will suffer as their expensive oil from their rocks.

    Sweet crude from Saudi will be on top for a couple years until the Coronavirus is more manageable.

    In fact, the whole world's power map may be remade as China recovers as the USA and the West struggles with pandemic fever!
     
  5. Woogs

    Woogs Well-Known Member

    Joined:
    Aug 6, 2011
    Messages:
    8,382
    Likes Received:
    2,556
    Trophy Points:
    113
    From December 2018:

    Estimates by consulting firm R.S. Energy Group peg break-evens excluding land costs and overhead at about $37 for the Permian Basin of West Texas and New Mexico, $42 for the Eagle Ford in South Texas and $47 for the Bakken in North Dakota. But companies require much higher oil prices in order to come out ahead if more of those necessary expenses are taken into account, the consulting firm’s data show. All-inclusive break-evens are about $51 in the Permian, $57 in the Eagle Ford and $64 in the Bakken, according to R.S. Energy.

    https://ieefa.org/low-oil-prices-to-test-u-s-fracking-companies/
     
    ronv and LogNDog like this.
  6. fiddlerdave

    fiddlerdave Well-Known Member Past Donor

    Joined:
    Sep 9, 2010
    Messages:
    19,083
    Likes Received:
    2,706
    Trophy Points:
    113
    Oh, well, when all these oil and fracking workers, suppliers, owners can go out and get jobs at McDonalds, and our ex-Vice President Cheney, who made who himself billions, moved his whole company to the Middle-East, can buy that equipment for a nickle on the dollar and then turn it on again for the next war when Trump wins again! Yahoo!
     
    Last edited: Mar 8, 2020
  7. Same Issues

    Same Issues Well-Known Member

    Joined:
    Jun 10, 2014
    Messages:
    1,559
    Likes Received:
    530
    Trophy Points:
    113
    Could get a lot worse for oil prices, Iran is heavily sanctioned and Libya is basically shut down at the moment. If something opens those spigots in the near future it will just mean more oil on the market, as they are both relevant producers and will need the money regardless of the price per barrel. Going to be some hardship in the American oil business again if prices don't get back to the 50's as soon as possible.
     
    ButterBalls and Ddyad like this.
  8. Same Issues

    Same Issues Well-Known Member

    Joined:
    Jun 10, 2014
    Messages:
    1,559
    Likes Received:
    530
    Trophy Points:
    113
    Some of this might also have a source from the fact KSA wants to start fracking for the nat gas, and Russia wants to control more nat gas share. As sighted in your link, this is due to a conflict of interest between KSA and Russia on the production cuts. KSA is supposed to have significant fracking fields and just now have stated they want to heavily develop them.
     
    Last edited: Mar 8, 2020
  9. NMNeil

    NMNeil Well-Known Member

    Joined:
    Sep 11, 2015
    Messages:
    3,043
    Likes Received:
    919
    Trophy Points:
    113
    I live near the Permian Basin and I know for a fact that nobody is hiring workers on the oil patch.
    https://www.clickondetroit.com/busi...ivity-in-permian-basin-as-oil-prices-plummet/
     
  10. Thedimon

    Thedimon Well-Known Member

    Joined:
    Mar 17, 2018
    Messages:
    12,121
    Likes Received:
    8,714
    Trophy Points:
    113
    Gender:
    Male
    Many companies can run on losses for quite a while. The SA actions seem temporary.
    For now I’ll enjoy cheap fuel and maybe even fly somewhere.
     
    ButterBalls and Ddyad like this.
  11. Andrew Jackson

    Andrew Jackson Well-Known Member

    Joined:
    Feb 1, 2016
    Messages:
    48,452
    Likes Received:
    32,206
    Trophy Points:
    113
    Exactly.

    And, totally LMAO at the "King Salman is Dead" BS.

    He has already appeared in Public to dispel those Absurd Rumors.

    Imagine that:

    Hijacking a Thread about oil prices to post a FAKE Rumor about a Live Person Being Dead?:bored:

    Anyway, once again, it will be nice to have cheap gas.

    But, there is no doubt that if the price stayed that low, that it would put enormous pressure on the fracking industry.
     
    Last edited: Mar 8, 2020
    ButterBalls likes this.
  12. Woogs

    Woogs Well-Known Member

    Joined:
    Aug 6, 2011
    Messages:
    8,382
    Likes Received:
    2,556
    Trophy Points:
    113
    Don't forget Venezuela, which is also heavily sanctioned. It is slowly getting production back up, though nowhere near prior levels.

    https://www.google.com/amp/s/oilpri...Is-Quietly-Ramping-Up-Oil-Production.amp.html
     
  13. Ddyad

    Ddyad Well-Known Member

    Joined:
    Nov 17, 2015
    Messages:
    53,268
    Likes Received:
    25,271
    Trophy Points:
    113
    When fuel prices drop it is like a tax cut. Timely.
     
    Thedimon and ButterBalls like this.
  14. Rush_is_Right

    Rush_is_Right Well-Known Member

    Joined:
    May 23, 2019
    Messages:
    3,873
    Likes Received:
    4,411
    Trophy Points:
    113
    Gender:
    Male
    I haven't seen the price drop around here.
     
    ButterBalls likes this.
  15. fmw

    fmw Well-Known Member

    Joined:
    Aug 21, 2009
    Messages:
    37,762
    Likes Received:
    14,563
    Trophy Points:
    113
    Hard to say. Wasn't gasoline cheaper when Saudi crude was $100 per barrel compared to today?
     
  16. Woogs

    Woogs Well-Known Member

    Joined:
    Aug 6, 2011
    Messages:
    8,382
    Likes Received:
    2,556
    Trophy Points:
    113
    It's under $2 here (Mississippi Coast). A little cheaper upstate. Has been slowly dropping ever since we didn't get into a shooting war with Iran.

    The Saudi announcement is new so give it a few days for an effect.
     
  17. Rush_is_Right

    Rush_is_Right Well-Known Member

    Joined:
    May 23, 2019
    Messages:
    3,873
    Likes Received:
    4,411
    Trophy Points:
    113
    Gender:
    Male
    Yet when a refinery blows up the prices go up immediately, go figure.
     
    ButterBalls likes this.
  18. Cubed

    Cubed Well-Known Member Past Donor

    Joined:
    Mar 28, 2012
    Messages:
    17,964
    Likes Received:
    4,953
    Trophy Points:
    113
    *cries in Alberta*
     
  19. Rush_is_Right

    Rush_is_Right Well-Known Member

    Joined:
    May 23, 2019
    Messages:
    3,873
    Likes Received:
    4,411
    Trophy Points:
    113
    Gender:
    Male
    How much is gas up there?
     
    ButterBalls likes this.
  20. Woogs

    Woogs Well-Known Member

    Joined:
    Aug 6, 2011
    Messages:
    8,382
    Likes Received:
    2,556
    Trophy Points:
    113
    Oil prices plunged more than 20% on chaotic Asian markets opening, with main crude benchmarks, Brent and WTI, trading below $35 a barrel amid fears of an all-out price war following the collapse of OPEC output cut deal last week.
     
    Cubed and ButterBalls like this.
  21. ButterBalls

    ButterBalls Well-Known Member

    Joined:
    Dec 2, 2016
    Messages:
    51,205
    Likes Received:
    37,552
    Trophy Points:
    113
    I dunno, Halliburton and Dowell both laid off all their frack crews and sent most of their equipment back to home base here. All that's left now is the cement crews and even they are a skeleton crew.. This was less then 60 days ago and I'm sure they knew then what we know now..
     
    Last edited: Mar 8, 2020
    US Conservative likes this.
  22. ButterBalls

    ButterBalls Well-Known Member

    Joined:
    Dec 2, 2016
    Messages:
    51,205
    Likes Received:
    37,552
    Trophy Points:
    113
    Depends on storage, they will not reflect lower prices until the product price is met for the stuff that in storage.. Once it's replaced with lower cost product then you'll see the price drop..
     
    US Conservative likes this.
  23. Rush_is_Right

    Rush_is_Right Well-Known Member

    Joined:
    May 23, 2019
    Messages:
    3,873
    Likes Received:
    4,411
    Trophy Points:
    113
    Gender:
    Male
    I hope so, but why is it when I watch the news and a refinery blows up, the price gets jacked up immediately?
     
  24. ButterBalls

    ButterBalls Well-Known Member

    Joined:
    Dec 2, 2016
    Messages:
    51,205
    Likes Received:
    37,552
    Trophy Points:
    113
    I couldn't say other then an excuse to gouge the retailers and finally the consumers.. I often wondered it myself ¯\_(º¸º)_/¯
     
  25. Texas Republican

    Texas Republican Well-Known Member Past Donor

    Joined:
    Aug 10, 2015
    Messages:
    28,121
    Likes Received:
    19,405
    Trophy Points:
    113
    The last gas sign I saw here in Dallas was $1.88/gallon. Seems cheap. Cheaper would be better. Screw Russia, OPEC, and Venezuela.
     

Share This Page