Has Saudi Arabia declared "Oil Price War"?

[New]

@al-Hasani @Mosamania @Arabian Legend, @JUBA, @rmi5, @Serpentine, @New @Sinan @xenon54

Oil price is dropping to as low as $ 71.25 per barrel today. This is after Opec’s Tuesday meeting which didn’t result in any production reduction. KSA is producing nearly 9.7 million barrels per day right now despite the crashing price and producers' demand for reducing its production. What is going on Gents?

Iran has gone from some 4 million barrel production per day of a couple of years ago into current around 1 million BPD production.
Two days ago when the guys were discussing of production reduction to regulate prices in OPEC, Zangane, Iran's oil minister, told reporters that we are not gonna participate in regulation process because we are already too behind of our share in market, and even considering the loosening of sanctions we might even consider an increase in our share of production. (Could be considered moral knowing the fact every partner in OPEC took the advantage of prices being raised due to Iran's sanctioning, and now that Iran's back it is normal for her to seek it's position in the market)
Dude, I am not a man into conspiracy theory, but that's just like spitting in the wind, negotiations are all meant to be an increase of income for Iran, but it's both Iran and Russia standing on a point of dilemma here,
Rejecting the negotiations means the continuation of choking sanctions on Iran's economy, and proceeding the negotiations also means more integration into global economy that means the reduction in oil prices (as the analysts have predicted the oil prices to reach below 60 in case of a deal in coming year) which ultimately even in the case of production increase means the income would stay somehow intact for Iran, and also a great loss for Russia.

My opinion: The new plot is kinda set to put Iran and Russia's interests in a conflicting position, are we gonna witness old cronies becoming into rivaling foes? that's a question to ask

 

[senses]

As long as i am getting a extra mile ! i am happy.

 

[SvenSvensonov]

@LeveragedBuyout - Bloomberg is reporting that only 4% of US shale production needs $80 per barrel to be profitable, while the rest requires only an average of $42, often lower, to remain profitable. Do you see OPEC winning this fight and driving US shale into the ground? I don't as new technology lowers shale costs, and even if price declines topple some producers, when the prices rise again US shale will resume pumping large volumns. I don't see OPEC winning this fight.

"Only about 4 percent of U.S. shale production needs $80 or more to be profitable, according to the Paris-based International Energy Agency. Most production in the Bakken formation, one of the main drivers of shale oil output, remains profitable at or below $42 a barrel, the IEA estimates. The agency expects U.S. supply to rise by almost 1 million barrels a day next year, with increasing flows to international markets."

Oil in New Era as OPEC Refuses to Yield to U.S. Shale - Bloomberg

 

[Mosamania]

Stupid Saudis behaving nicely with their masters again. West will be happy and might throw some bones towards their most loyal, but dumb, dog.

Arab-Iranian rivalry is the most stupid thing I've seen.

Accept that the price reduction is directly going against US policies to drive shale oil companies out of business and reassert control of the oil business away from an emerging US oil.

Stop being ignorant and read for the first time in your life would you.

 

[Cheetah786]

OPEC policy on crude production will ensure a crash in the U.S. shale industry, just over $70 a barrel, drilling is close to becoming unprofitable.

@SvenSvensonov Canadian oil sands needs 80 dollars p/brl to break even. USA Shale gas, new drilling will come to a compete stop if the prices drop below $85 dollars.

 

[Serpentine]

@al-Hasani @Mosamania @Arabian Legend, @JUBA, @rmi5, @Serpentine, @New @Sinan @xenon54

Oil price is dropping to as low as $ 71.25 per barrel today. This is after Opec’s Tuesday meeting which didn’t result in any production reduction. KSA is producing nearly 9.7 million barrels per day right now despite the crashing price and producers' demand for reducing its production. What is going on Gents?

I don't believe in any conspiracy theories, like a secret deal between west and GCC to put Iran and Russia under pressure. Oil prices are going down mainly because of decreasing demand in the market and China's economic boost slowly hitting a straight line. I won't comment on Russia, but I'm sure it won't have any significant impact on Iran, because we exported nearly half of what we are exporting now 2 years ago and nothing went different much.

It's obvious, there has been some sort of secret agreement between the West and the GCC especially the KSA to pull the oil prices down before the end of Iranian nuclear talks to force it to kneel down to their demands regarding it's nuclear program and it's policy in the Arab world. Russia comes as the second target here to force her to soften her tone in Ukraine and Syria So it's basically hitting more than one bird with the same stone. The third bird here is helping oil importing allies especially Egypt.

Very smart and effective policy that will surely work out in getting Iran down.

What a brilliant logic, so U.S is going to mess up it's energy security's main factor, the Shale oil, in order to please GCC or 'getting Iran down'? You have basically written what you have wished for, not what is happening in reality.

U.S is about to become an oil exporter and losing shale oil market means getting back to days which reminds them of dark 1973 days and they won't lose that leverage only to put Iran under pressure, especially when it's certain that nothing important will happen for Iran.


By the way, GCC and KSA especially, are exporting oil tens of times more than Iran and naturally, they are losing billions of dollars more than Iran with current prices. They may not need that money now, but still it's a money that is never going to come back, a money that they may desperately need in not a so distant future.

PS: This table may help understanding the situation a bit more:

 

[LeveragedBuyout]

@LeveragedBuyout - Bloomberg is reporting that only 4% of US shale production needs $80 per barrel to be profitable, while the rest requires only an average of $42, often lower, to remain profitable. Do you see OPEC winning this fight and driving US shale into the ground? I don't as new technology lowers shale costs, and even if price declines topple some producers, when the prices rise again US shale will resume pumping large volumns. I don't see OPEC winning this fight.

Oil in New Era as OPEC Refuses to Yield to U.S. Shale - Bloomberg

I agree, Sven. Per your post and @lavenge lavenge's post earlier, fracking cannot be destroyed, only delayed (and even then, at extreme pain for the traditional producers). The bigger picture, of course, is that it has become a buyer's market, and once again OPEC has broken its own back (just like it did with the oil embargoes of the 70s) through shortsightedness and lack of understanding of market dynamics. Too many misunderstood our emphasis on fracking: the truth is that fracking is important to the US only insofar as it controls oil prices, not out of the mercantilist ego that drives some others. No big deal if fracking is put into mothballs, so long as oil prices are low.

No matter what Saudi Arabia's motivation is (kill fracking, kill Iran, gain market share, etc.), G-d bless them (heh, how the tide turns), because this is the equivalent of a gigantic tax cut that will stimulate the oil-consuming economies while simultaneously depriving the bad actors of the world the cash they need for their troublemaking (let alone bolstering their own authoritarian regimes).

Best of all, with Saudi's low debt levels and built up reserves, this price war can last a long, long time.

 

[LeveragedBuyout]

@Serpentine Why does everyone assume that if the price war puts fracking out of business (if that is even possible, per @SvenSvensonov 's comment about improving technology), that when the oil producers raise prices again, fracking won't simply restart where it left off? Oil producers has boxed themselves into a world of permanently low prices if they hope to keep fracking at bay.

Energy security isn't an issue. Between the oil sands of Canada, fracking, and the growing power of the non-OPEC traditional producers (especially Mexico and Nigeria), we have enough resources to combat an embargo (which will never happen again,anyway).

 

[Full Moon]

I don't believe in any conspiracy theories, like a secret deal between west and GCC to put Iran and Russia under pressure. Oil prices are going down mainly because of decreasing demand in the market and China's economic boost slowly hitting a straight line. I won't comment on Russia, but I'm sure it won't have any significant impact on Iran, because we exported nearly half of what we are exporting now 2 years ago and nothing went different much.


What a brilliant logic, so U.S is going to mess up it's energy security's main factor, the Shale oil, in order to please GCC or 'getting Iran down'? You have basically written what you have wished for, not what is happening in reality.

U.S is about to become an oil exporter and losing shale oil market means getting back to days which reminds them of dark 1973 days and they won't lose that leverage only to put Iran under pressure, especially when it's certain that nothing important will happen for Iran.


By the way, GCC and KSA especially, are exporting oil tens of times more than Iran and naturally, they are losing billions of dollars more than Iran with current prices. They may not need that money now, but still it's a money that is never going to come back, a money that they may desperately need in not a so distant future.

PS: This table may help understanding the situation a bit more:

View attachment 158134

It isn't conspiracy, it is something already going on and everybody can see it. I mean it is a change of policy in anticipation for another gain. When the U.A.E, KSA, and Kuwait oil Ministers say that they can accept prices between $60 - $100, then what are they giving up the gain for? There is a fight that is worth fighting for them to give up the difference in money, but what is it?

And who said that Iran is not feeling the economic pressure from all sides even during these two years? What happened to your currency and your economic structure and the people's well-being? Please also note that two years are not sufficient enough for the sever economic effect to show up.

 

[Full Moon]

Stupid Saudis behaving nicely with their masters again. West will be happy and might throw some bones towards their most loyal, but dumb, dog.

Arab-Iranian rivalry is the most stupid thing I've seen.

Coming from a guy that left his country to live among Americans and pay the U.S Federal government % 25 -% 30 of his income as taxes.

Terrific.

 

[Serpentine]

It isn't conspiracy, it is something already going on and everybody can see it. I mean it is a change of policy in anticipation for another gain. When the U.A.E, KSA, and Kuwait oil Ministers say that they can accept prices between $60 - $100, then what are they giving up the gain for? There is a fight that is worth fighting for them to give up the difference in money, but what is it?

And who said that Iran is not feeling the economic pressure from all sides even during these two years? What happened to your currency and your economic structure and the people's well-being? Please also note that two years are not sufficient enough for the sever economic effect to show up.

If you had studied enough, you'd know that the reason behind currency plunge wasn't oil, but many other factors, including domestic ones and sanctions on banking system, it wasn't a direct result of decreasing oil production.

The only way for all of us is to wait and see if this was has a winner and who the winner is. If it isn't a conspiracy, then we shall see in a near future whether they invested in the right strategy. Just few months and everything will be clear. Talking about it now is useless.

 

[Full Moon]

If you had studied enough, you'd know that the reason behind currency plunge wasn't oil, but many other factors, including domestic ones and sanctions on banking system, it wasn't a direct result of decreasing oil production.

The only way for all of us is to wait and see if this was has a winner and who the winner is. If it isn't a conspiracy, then we shall see in a near future whether they invested in the right strategy. Just few months and everything will be clear. Talking about it now is useless.

I haven't said it is the only reason, it is one among many. Having low oil price will surly make it worst, not better. Any way, despite our differences, I can truly say that you are a wise 23 years old guy. I am serious. You shouldn't waste your time living in Iran. There isn't much hope left for good people like you over there, other than remembering how great Cyrus' days were. Reading Shahnameh day and night is not going to make the presence any better. Head to the nearest Western embassy and seek refugee to enjoy life.

 

[Mahmoud_EGY]

Accept that the price reduction is directly going against US policies to drive shale oil companies out of business and reassert control of the oil business away from an emerging US oil.

Stop being ignorant and read for the first time in your life would you.

this would happen if the price drop remain this way do you think that GCC can keep the prices low for a year or two ?

 

[Serpentine]

I haven't said it is the only reason, it is one among many. Having low oil price will surly make it worst, not better. Any way, despite our differences, I can truly say that you are a wise 23 years old guy. I am serious. You shouldn't waste your time living in Iran. There isn't much hope left for good people like you over there, other than remembering how great Cyrus' days were. Reading Shahnameh day and night is not going to make the presence any better. Head to the nearest Western embassy and seek refugee to enjoy life.

My dear, escaping your country when there are problems is not the solution, neither it is something to be proud of. If you stay and make right even the smallest thing you can, that's called doing good. Things aren't as dark as you try to portray and I don't blame you, since you read about Iran and see it only through lenses of cameras, articles and random news. You can't have a clear view unless you live here for some time. That's true about every other country.

 

[New]

This might be an interesting article to read, guys.
With oil prices plunging, OPEC and Russia are on their knees