Saudi Arabia just won control of the oil market

[ابن_حیزون]

https://edition.cnn.com/2020/03/20/perspectives/saudi-arabia-oil-market/index.html

When Saudi Arabia, OPEC's de facto leader and most influential member, decided at its latest meeting in Vienna to break its recent strategic oil partnership with Russia and adopt a new policy to maximize production levels, oil prices crashed — posting their biggest slide since the Gulf war in 1991.

But even more importantly, this new policy recalibrated global oil markets, giving Saudi Arabia the long-term advantage. This move marks a big change for the world's largest oil exporter, which has in recent years attempted to manage the global oil markets by altering production levels, while garnering the difficult cooperation of Russia. Crown Prince Mohammed bin Salman has finally decided to pursue a long-term policy that not only preserves and ultimately increases the kingdom's market share, but also may signal the end of OPEC as a united functioning organization.
This decision is very unpopular with most oil exporting countries, international energy companies and American shale producers because collapsing prices will drastically decrease their revenues and, in some cases, force them into bankruptcy.

 

[ShaikhKamal]

LOL ! It is consumers that won ! Now Oil is as cheap as water. It is the West and Industrial economies that have won. Most countries will win as global recession is upon us and low oil prices will help in recovery.

 

[Saddam Hussein]

If you look at the charts it always corrects back

 

[Hakikat ve Hikmet]

Let's see how long the Russians will stay in Syria......

 

[BHarwana]

Although Saudis can take price much lower than what Russia can do. But to be profitable and maintain current budget the last price for Saudis is $50 and Russia is $30

If Saudis push it lower we can see budget cuts both in Russia and China. The biggest loser here will be USA. So I think both Russia and Saudis are actually teaching trump a lesson.

 

[Cookie Monster]

Although Saudis can take price much lower than what Russia can do. But to be profitable and maintain current budget the last price for Saudis is $50 and Russia is $30

If Saudis push it lower we can see budget cuts both in Russia and China. The biggest loser here will be USA. So I think both Russia and Saudis are actually teaching trump a lesson.

But considering that oil is a major source of revenue for KSA's economy...
...having the largest market share can also be a double edged sword. By increasing the supply and plummeting the price...it's just a war of attrition at this point between KSA and Russia. A way of punishing Russia for not playing along with OPEC...though it comes at a cost to KSA itself.

By not having the OPEC sort of model(with Russia) where they kind of collectively managed the supply...it is only going to create competition(like we see here)...which is good for the consumers and bad for the producers IMO.

 

[XTQ1999]

Although Saudis can take price much lower than what Russia can do. But to be profitable and maintain current budget the last price for Saudis is $50 and Russia is $30

If Saudis push it lower we can see budget cuts both in Russia and China. The biggest loser here will be USA. So I think both Russia and Saudis are actually teaching trump a lesson.

how will USA be the biggest loser? out of 3 countries only US economy is not dependent on oil, Saudis and Russians are bleeding 10s of billions fighting this war.

 

[BHarwana]

how will USA be the biggest loser? out of 3 countries only US economy is not dependent on oil, Saudis and Russians are bleeding 10s of billions fighting this war.

Lol whole us economy is dependent on oil. Dollar hold it value cause it can trade against oil.

Currently USA is the biggest producer of oil but at low price USA has to import oil and thus pump money into Saudia real money. At low more than half of US oil is not economical to pump and thus USA production drops. This means reduced tax revenue from domestic production of oil and out flow of funds to purchase oil. This bring Russia out of sanctions as USA has to make purchase oil from there. On top of all recession from coronavirus. Russia and Saudis will sustain due to high oil production although cheap price. China is a consumer of oil majorly so Chinese revenue is not oil based so China India Pakistan will be big gainers from this.

 

[Amavous]

Oil trading below 20$, Let see who is the ultimate winner.

Crude Oil Apr 20 (CL=F)
NY Mercantile - NY Mercantile Delayed Price. Currency in USD
19.84$ -5.38 (-21.33%)
As of March 20 2:29PM EDT. Market open.

 

[Beast]

Although Saudis can take price much lower than what Russia can do. But to be profitable and maintain current budget the last price for Saudis is $50 and Russia is $30

If Saudis push it lower we can see budget cuts both in Russia and China. The biggest loser here will be USA. So I think both Russia and Saudis are actually teaching trump a lesson.

I think it's the reverse. Saudi oil extraction is nearer to the top ground and easy to extract while Russia oil deposit is deeper and many near cold region which makes extraction more difficult.

 

[AUz]

This is truly a great power move. Saudi Arabia is a energy super and can operate in international system as an actual great power (unlike laughing-stock countries that are given this title in Tabloid mags on internet---like israel, or India or even France to a large extent).

Saudi Arabia can alter the global markets by its own independent decision-making and Saudi decision-making can literally impact every single pocket on the planet (we all engage in buying activity in the energy market in one way or the other).

Only if Saudi Arabia had a bigger population---it could have been a truly global force military-wise (atleast on paper). Saudi population is just too small to have a blue water navy and a large air force (even though Saudi Arabia can afford it).

 

[ARMalik]

Although Saudis can take price much lower than what Russia can do. But to be profitable and maintain current budget the last price for Saudis is $50 and Russia is $30

If Saudis push it lower we can see budget cuts both in Russia and China. The biggest loser here will be USA. So I think both Russia and Saudis are actually teaching trump a lesson.

I will find the data and come back to you but the Saudis can produce a barrel of oil at $10. It is the US Shale which needs around minimum $60 be make break even. One cannot beat the Saudis when it comes to cheap oil production.

 

[BHarwana]

I will find the data and come back to you but the Saudis can produce a barrel of oil at $10. It is the US Shale which needs around minimum $60 be make break even. One cannot beat the Saudis when it comes to cheap oil production.

I didn't checked it so I could be mixing up but the general point of what I wrote is correct. When you find data plz try to bring the production price which supports each countries current budget.

 

[GumNaam]

I don't think it was smart of Mbs to tick off putin...

 

[BHarwana]

I will find the data and come back to you but the Saudis can produce a barrel of oil at $10. It is the US Shale which needs around minimum $60 be make break even. One cannot beat the Saudis when it comes to cheap oil production.

https://data.imf.org/regular.aspx?key=60214246