January....POST of the month nominations

Falena · Jan 5, 2016

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Doug_yvr · Jan 23, 2016

I'd like to nominate this post as Post of the Month. Yetzerhara's post is a combination of knowledgeable opinion and facts backed by linked sources.

Saudi Arabia initiated a massive increase of oil production and lowering of oil prices to put shale extraction in the US and tar sands extraction in Canada out of business and they have succeeded as both processes are too expensive at the moment to justify extracting gas. Both countries oil industries have been hard hit and here in Canada thousands are out of work and the economy overly dependent on oil has seen its oil rich provinces, Saskatchewan, Alberta, Newfoundland and to a lesser extent Manitoba get smack gobbed.

Canada has tried to lower the dollar to encourage exporting of manufactured goods from Ontario to try offset the collapse from the oil industry cooling off. Its had some minor impact on increasing some manufacturing exports but the increase in price of food has negated any savings to consumers from lower oil prices and the low dollar means Canadians won't be travelling and we are expected to have a bad year.

Russia unlike Canada or the US is keeping oil production at record levels in 2016 to compete directly with Saudi Arabia and preserve its market share. Since it has no cost intensive extraction processes like the US and Canada for now its holding its own.

In 2015 Russia oil supplies reached 534 million tons - the largest amount since the fall of the Soviet Union and it says it has no intention of decreasing its supplies.

Supposedly oil prices decreased by more than 70% since June 2014 or down from $90 per barrel to $30 and even lower.

As I understand it the cost to produce oil is anywhere from $5 to $10 (obviously shale extraction and tar sands extraction is much more costly I believe at around $60 although I stand open to challenge on that one)

So the question is will Putin cont. to go toe to toe with Saudi Arabia.

The so called big shots in the know like Forbes magazine say oil should be back up to $60-$70 per barrel by US election time.

Now interestingly the Russian finance ministry predicted a 156.4 billion roubles ($4.5 billion) decline in 2016 oil export revenue from the earlier figure stipulated in the federal budget law for 2014 and the planned period 2015 and 2016, according to itsdraft federal budget for 2015-2017....see: http://en.itar-tass.com/economy/739324

Also take note that the oil-pipeline monopoly Transneft has predicted a cut to crude shipments by 6.4pc over the course of 2016, based on applications submitted so far by Lukoil, Rosneft, Gazprom and its other producers which according to the math is a drop of
460,000 barrels a day, which they feel is sufficient to eliminate 1/3rd of the excess supply flooding the world.

I also did not know but it is a fact Russia is the worlds biggest producer of oil, and has been exporting 7.3m b/d over recent months.

The above info I get from several sources including: http://www.telegraph.co.uk/finance/e...sh-output.html

Russia's budget deficit is said to be running near 5pc of GDP at current oil prices.

The lifting of sanctions against Iran are going to provide more oil as well as Saudi Arabia and Russia but Iran is said to have 30m to 40m barrels sitting in tankers offshore, of ultra-light or condensate oil which apparently is harder to sell quickly and so experts say will not have much effect on the crude price.

The so called experts think Iran won't want to flood the markets and prices will go back up to around $60 as the markets re-correct.

If you believe that Russia can survive. If it can't get back up to $60 in this next year then yes Russia could feel the impact.

Some experts though believe because Iran and Saudi Arabia are at war now, Iran will do something.

With the sanctions lifted, Iran will have access to some $100 billion in frozen funds and and no sanction preventing it from increasing its oil exports notwithstanding low prices.

Iran says it will increase its output by 500,000 barrels a day by the end of 2016.

The math on that is that this increase would allow Iran to take in more than five times as much cash from oil sales by year-end as the lifting of economic sanctions frees the OPEC member to boost crude exports and attract foreign investment needed to rebuild its energy industry according to Bloomberg reports which also says that the lifting of sanctions means Iran could immediately boost oil revenue to about $2.35 billion a month, based on the countrys estimated current output of 2.7 million barrels a day and oil at $29 a barrel.

(all the above comes from: http://www.zerohedge.com/news/2016-0...e-revenue-2016)

So we are in for a strange year and not just Russia is experiencing a strain on its economy.

So that means even if oil hovers between $30 and $35 a barrel, Iran would still earn $3 billion a month by summer and nearly $4 billion a month by December.

other sources for my info comes from:

http://crudeoilpeak.info/russia-peak

http://www.dw.com/en/russia-refuses-...016/a-18982706
Click to expand...

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January....POST of the month nominations

Falena Cherry Bomb Staff Member Past Donor

Doug_yvr Well-Known Member Past Donor

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January....POST of the month nominations

Falena Cherry Bomb Staff Member Past Donor

Doug_yvr Well-Known Member Past Donor

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