'Irresponsible' non-Opec output behind oil price plunge: UAE

[up-country_sinclair]

Since we're all just expressing our opinions, here's mine:

The West (particularly the US) requested that OPEC (particularly KSA) not decrease production so that it would put the screws to Russia. KSA complied because it was in their best interest: potentially making the shale operations in the US unprofitable. If/when Russia gets back in line, I think we'll see the price of oil head right back up to the $85.

[Anthony5]

LOL. Which is it, UAE? Countries outside of Opec are responsible, or Opec made the right decision to pump all-out? The OP says it's both, in an about face.

UAE, You are a member of Opec. All of the Opec countries plus Russia depend on oil to feed their people. You all need about $100 oil to make enough money to feed your people and sustain your oil-driven economies.

You've have the world by the balls since the 1960's. Some don't remember the deliberate Opec stunt of causing a global oil shortage in the 1970's and having gasoline stations around the world out of gasoline while the price skyrocketed.

Now you have competition outside of Opec, the shoe is on the other foot and you don't like losing your monopoly.

I can't keep my eyes dry.

Must be a big inflation in that part of the world, because until about 6 years ago they were able to feed their people with oil below 30$ .

Looks more like an outsider, who jacked up the price for years by igniting wars everywhere, needs 100$ to feed its people, and current policies don't play out to well for them.

If you're taking a crack at the US again, you'd be wrong.

OPEC and Russia run their economies and feed their people with oil money. In the US the oil companies are private with only private capital at risk. That oil feeds only stockholders.

The US has a diversified economy that doesn't rely on oil production. The other countries don't. Oil is only a bonus for the US.

There is a hell of a big difference between a country going broke and a privately capitalized oil company going broke. The US itself isn't at risk over this oil debacle but Russia and OPEC countries are.

Now I'd like to see some numbers showing that OPEC countries can sustain their budgets with $30 oil. It's obvious that Russia can't with $60 oil.

Stockholders? That almost sound like you and me.

Private company going broke means many people on the street losing their money, while the CEO of the company doesn't lose a dime of course.

US not at risk? Well a nice bonus, as you call it, disappearing isn't really a luxury but of course they are not at much risk because there isn't such thing like broke, more broke, brokest.

[impulse]

LOL. Which is it, UAE? Countries outside of Opec are responsible, or Opec made the right decision to pump all-out? The OP says it's both, in an about face.

UAE, You are a member of Opec. All of the Opec countries plus Russia depend on oil to feed their people. You all need about $100 oil to make enough money to feed your people and sustain your oil-driven economies.

You've have the world by the balls since the 1960's. Some don't remember the deliberate Opec stunt of causing a global oil shortage in the 1970's and having gasoline stations around the world out of gasoline while the price skyrocketed.

Now you have competition outside of Opec, the shoe is on the other foot and you don't like losing your monopoly.

I can't keep my eyes dry.

Must be a big inflation in that part of the world, because until about 6 years ago they were able to feed their people with oil below 30$ .

Looks more like an outsider, who jacked up the price for years by igniting wars everywhere, needs 100$ to feed its people, and current policies don't play out to well for them.

The sub-link from rijb has the data...

Source: http://www.businessinsider.com/saudi-arabia-breakeven-oil-2014-12

Just keep in mind this isn't cost of production. This is the oil price they need to balance their entire national budgets.

[realenglish1]

THey state that it will put "undue burden" on OPEC nations due to falling oil prices. Thats a laugh. OPEC was putting undue burden on everyone with High prices before.

Now the shoe is on the other foot ENJOY IT GUYS

[KarenBravo]

From someone in the business.

The USA used to import 60% of it's oil. It now imports only 30% due to fracking which increases production on existing reserves within the US, and the flood of oil from shale and tar sands in the US and especially Canada.

There is a lot more oil coming on to the market. Saudi Arabia has a long history of defending it's market share, which is why they won't lower production.

The price of oil is down due to increased supply. It's as simple as that.

This has nothing to do with "punishing" Russia. Just a fortuitous coincidence.

Edited December 22, 2014 by KarenBravo

[NeverSure]

I hope it falls through the floor. It'll hurt everyone, no doubt, but more so the bigwigs and overpaid workers. The world needs to move away from oil.

OK, You go first. No more oil or gasoline for you. Be a purist and walk the talk.

[impulse]

I'm thinking about pulling out my old "Let the bastards freeze in the dark" T-shirts from Texas in the '80s.

But I doubt they'd fit me any more.

I quit riding my bike when crude was cheap... Like it is now.

Edited December 22, 2014 by impulse

[IAMHERE]

First time I've herd about the "Arab" version of OPEC. This is the Organisation of Arab Petroleum Exporting Countries.

Not the same OPEC we are familiar with it would seem.

[vijer]

LOL. Which is it, UAE? Countries outside of Opec are responsible, or Opec made the right decision to pump all-out? The OP says it's both, in an about face.

UAE, You are a member of Opec. All of the Opec countries plus Russia depend on oil to feed their people. You all need about $100 oil to make enough money to feed your people and sustain your oil-driven economies.

You've have the world by the balls since the 1960's. Some don't remember the deliberate Opec stunt of causing a global oil shortage in the 1970's and having gasoline stations around the world out of gasoline while the price skyrocketed.

Now you have competition outside of Opec, the shoe is on the other foot and you don't like losing your monopoly.

I can't keep my eyes dry.

Yes, and all the morons in the US (can't speak for other countries but my own) continued to pour money into oil companies instead of electric vehicles, alternative energy, more fuel efficiency, etc. and we continue to do it to this day. Not to mention Fing up the climate. We could have skipped the Gulf War, the Iraq invasion, and the coming Iranian war, just buy going green. But hey we want to make our friends in the oil business rich and not just the Middle East.

[Scott]

I would imagine that this precipitous drop in oil prices is also having a very negative effect on ISIS.

[Morch]

I would imagine that this precipitous drop in oil prices is also having a very negative effect on ISIS.

Indeed. As far as the USA and Saudi Arabia goes, hitting three birds with one stone seems to be well worth taking

some economic losses for a while. Curds should be effected as well (after Iraq practically ceded oil production and

independent exports), though.

[Publicus]

Call me irresponsible but I just have to say to turn out the lights cause the party's over. That in fact is the message from the squawky UAE oil minister who is one of the few who has chosen to speak openly about what is happening...or, more precisely, what has happened already.

What's happened is that Opec has been broken. The US is the new swing producer of oil in the world...and by the end of next year it will surpass Russia in natural gas production.

The party is just beginning for the US economy in the global scheme of things. We do remember the Opec oil embargoes of the 1970s, lining up behind a string of cars at one of the few gas/petrol stations open to get an allotment / ration of a couple of gallons into a fuel tank so dry we could hear it coughing.

Karma indeed, as someone here suggested.

As for Russia, it is in Opec's direct interest to take Russia out of the market given Opec's battle against the US that everyone anyway knew for several years was coming. Which makes Russia a casualty of history and of the course of events yet again.

OPEC is broken

The Organization of Petroleum-Exporting Countries (OPEC) is no longer a "viable entity" following its refusal to cut oil production in November, Dennis Gartman, founder and editor of the closely-watched The Gartman Letter, told CNBC on Tuesday.

"I really do think that we have seen the end of OPEC as a viable entity," Gartman told CNBC Europe's "Squawk Box" on Tuesday. "I think it's still broken. We'll see what happens in a year from now but I honestly think that OPEC, as it has been in the past, is a finished issue."

"The fact that OPEC, for all intents and purposes, is broken apart and is really now a broken cartel only serves to make certain that crude oil prices are still going to fall even further".

http://www.cnbc.com/id/102250850

Power of OPEC broken: US changing the balance of power in oil and gas production

The surge in US production will reshape the whole industry, according to the IEA, which made the prediction in its closely-watched bi-annual report examining trends in oil supply and demand over the next five years.

The IEA said it expected the US to overtake Russia as the world's biggest gas producer by 2015 and to become "all but self-sufficient" in its energy needs by about 2035.

The rise in US production means the world's reliance on oil from traditional oil producing countries in the Middle East, which make up Opec (the Organization of the Petroleum Exporting Countries), would end soon, according to the report.

http://grendelreport.blogspot.com/2013/05/power-of-opec-broken-us-changing.html

All Opec can do is gape at the falling price of crude and contemplate the destruction of their cartel at the hands of the Americans, whom they thought they had supplanted for good 40 years ago. Energy economist Philip Verleger says shale is to OPEC what the Apple II was to the IBM mainframe.

Petrodollars anyone....sandwiches....tea..coffee...???

Citigroup has forecast that prices would have to fall as low as $50 a barrel in order to stop production growth. "US shale is the marginal swing barrel in the new order," Goldman Sachs said in a report.

Opec is a diverse group of oil producers with vastly differing abilities to withstand a prolonged period of low oil prices. Whereas Saudi Arabia could fulfil its current budgetary requirements with prices at $89 a barrel, fellow member Iran requires prices closer to $130 a barrel, Libya requires prices of around $185 a barrel, while Venezuela needs a price of around $161.

Edited December 22, 2014 by Publicus

[Pakboong]

I think you have to look at who can afford a trillion$ loss to make a political point. Looking no farther than to whom the $40trillion of world debt is owed would seem to me to be a logical place to start.. Gets complicated quickly but broken down to common denominators, basically two families have control of all central banks but 5 and now have total control of the vast oil producing capability of South Sudan. these two families are spreading their world influence from international finance to oil production not as a business really but to tighten control.

These same families have controlling interest in the IMF. World Bank and BIS. They don't need the money so it is not about money, it is about the power and influence that could possibly be lost should BRICS be allowed to mature. Everything going on with Russia, Iran and Syria is related. I don't know what the annual revenue of the two families actually is, and neither does anyone else but we do know that the $40trillion in world debt is owed to them and they don't really care if it ever gets paid because they don't need the money.

Edited December 22, 2014 by Pakboong

[canman]

I would imagine that this precipitous drop in oil prices is also having a very negative effect on ISIS.

Indeed. As far as the USA and Saudi Arabia goes, hitting three birds with one stone seems to be well worth taking

some economic losses for a while. Curds should be effected as well (after Iraq practically ceded oil production and

independent exports), though.

Please not the curds too! Cheese is expensive enough as it is.

Sorry, couldn't resist

[NeverSure]

I think you have to look at who can afford a trillion$ loss to make a political point. Looking no farther than to whom the $40trillion of world debt is owed would seem to me to be a logical place to start.. Gets complicated quickly but broken down to common denominators, basically two families have control of all central banks but 5 and now have total control of the vast oil producing capability of South Sudan. these two families are spreading their world influence from international finance to oil production not as a business really but to tighten control.

These same families have controlling interest in the IMF. World Bank and BIS. They don't need the money so it is not about money, it is about the power and influence that could possibly be lost should BRICS be allowed to mature. Everything going on with Russia, Iran and Syria is related. I don't know what the annual revenue of the two families actually is, and neither does anyone else but we do know that the $40trillion in world debt is owed to them and they don't really care if it ever gets paid because they don't need the money.

This is interesting. You should write a book. The title should be "How To Stick Bubblegum In a Forum Topic."

I'll ask my helpers if they'll produce it. They are little green aliens who walk around my bed all night every night.

[canman]

I think you have to look at who can afford a trillion$ loss to make a political point. Looking no farther than to whom the $40trillion of world debt is owed would seem to me to be a logical place to start.. Gets complicated quickly but broken down to common denominators, basically two families have control of all central banks but 5 and now have total control of the vast oil producing capability of South Sudan. these two families are spreading their world influence from international finance to oil production not as a business really but to tighten control.

These same families have controlling interest in the IMF. World Bank and BIS. They don't need the money so it is not about money, it is about the power and influence that could possibly be lost should BRICS be allowed to mature. Everything going on with Russia, Iran and Syria is related. I don't know what the annual revenue of the two families actually is, and neither does anyone else but we do know that the $40trillion in world debt is owed to them and they don't really care if it ever gets paid because they don't need the money.

This is interesting. You should write a book. The title should be "How To Stick Bubblegum In a Forum Topic."

I'll ask my helpers if they'll produce it. They are little green aliens who walk around my bed all night every night.

Are they the same green aliens who make the chem trails?

[Scott]

One post removed. Let's please stay on topic. It's too close to Christmas and I get those little green aliens mixed up with Elves.

[Publicus]

From someone in the business.

The USA used to import 60% of it's oil. It now imports only 30% due to fracking which increases production on existing reserves within the US, and the flood of oil from shale and tar sands in the US and especially Canada.

There is a lot more oil coming on to the market. Saudi Arabia has a long history of defending it's market share, which is why they won't lower production.

The price of oil is down due to increased supply. It's as simple as that.

This has nothing to do with "punishing" Russia. Just a fortuitous coincidence.

If the KSA thinks he can defeat both Russia and the US then he's in for a long and hard ride. The US and Saudis jointly are knocking Russia off but the US is already the swing producer of the world so the House of Saud is gonna have to accept going 1 for 2 in this economic battle that is expected to carry through most of H1 of next year.

The UAE minister guy and who knows how many other Opec governments have already seen the handwriting across the sky, which is why he's making the noises the Saudis still refuse to hear. Opec is overwhelmed by US production, are internally divided and disintegrating while fighting a fight they can't win.

There's an old rule about getting into a serious contest, which is that you never enter a battle while the playing field is still level. The Saudi and Opec team went into this seeing a playing field that was definitely tilted. Trouble is they found out they are the ones that have to play up a 45-degree angle and into a stiff wind.

[lannarebirth]

From someone in the business.

The USA used to import 60% of it's oil. It now imports only 30% due to fracking which increases production on existing reserves within the US, and the flood of oil from shale and tar sands in the US and especially Canada.

There is a lot more oil coming on to the market. Saudi Arabia has a long history of defending it's market share, which is why they won't lower production.

The price of oil is down due to increased supply. It's as simple as that.

This has nothing to do with "punishing" Russia. Just a fortuitous coincidence.

Yeah, that's part of it and the other part is that prices that were sky high in no way indicative of supply and demand. Derivatives brought it up and derivatives will bring it down. Today's prices are much closer to fair value than what we've seen the past several years. Sure it can go under fair value but my guess there's a bounce here in the mid to low 50's.

[Anthony5]

From someone in the business.

The USA used to import 60% of it's oil. It now imports only 30% due to fracking which increases production on existing reserves within the US, and the flood of oil from shale and tar sands in the US and especially Canada.

There is a lot more oil coming on to the market. Saudi Arabia has a long history of defending it's market share, which is why they won't lower production.

The price of oil is down due to increased supply. It's as simple as that.

This has nothing to do with "punishing" Russia. Just a fortuitous coincidence.

If the KSA thinks he can defeat both Russia and the US then he's in for a long and hard ride. The US and Saudis jointly are knocking Russia off but the US is already the swing producer of the world so the House of Saud is gonna have to accept going 1 for 2 in this economic battle that is expected to carry through most of H1 of next year.

The UAE minister guy and who knows how many other Opec governments have already seen the handwriting across the sky, which is why he's making the noises the Saudis still refuse to hear. Opec is overwhelmed by US production, are internally divided and disintegrating while fighting a fight they can't win.

There's an old rule about getting into a serious contest, which is that you never enter a battle while the playing field is still level. The Saudi and Opec team went into this seeing a playing field that was definitely tilted. Trouble is they found out they are the ones that have to play up a 45-degree angle and into a stiff wind.

Hmmm,

http://finance.yahoo.com/news/putin-is-winning-the-oil-war--katusa-020428723.html

Putin is winning the oil war: Katusa

The falling ruble makes Russian oil less expensive and more desirable to other countries—Russia also produces oil quite cheaply while the American shale industry has a larger cost of operation. Russia is more than able to weather the current storm, Katusa says. “They have a $200 billion a year trade surplus. They have over $400 billion in reserve currency. They’ve increased their gold reserve. They have much lower debt to their GDP than America. So yes there’s pain in the economy… [but] it's far from terminal.”

[Publicus]

From someone in the business.

The USA used to import 60% of it's oil. It now imports only 30% due to fracking which increases production on existing reserves within the US, and the flood of oil from shale and tar sands in the US and especially Canada.

There is a lot more oil coming on to the market. Saudi Arabia has a long history of defending it's market share, which is why they won't lower production.

The price of oil is down due to increased supply. It's as simple as that.

This has nothing to do with "punishing" Russia. Just a fortuitous coincidence.

If the KSA thinks he can defeat both Russia and the US then he's in for a long and hard ride. The US and Saudis jointly are knocking Russia off but the US is already the swing producer of the world so the House of Saud is gonna have to accept going 1 for 2 in this economic battle that is expected to carry through most of H1 of next year.

The UAE minister guy and who knows how many other Opec governments have already seen the handwriting across the sky, which is why he's making the noises the Saudis still refuse to hear. Opec is overwhelmed by US production, are internally divided and disintegrating while fighting a fight they can't win.

There's an old rule about getting into a serious contest, which is that you never enter a battle while the playing field is still level. The Saudi and Opec team went into this seeing a playing field that was definitely tilted. Trouble is they found out they are the ones that have to play up a 45-degree angle and into a stiff wind.

Hmmm,

http://finance.yahoo.com/news/putin-is-winning-the-oil-war--katusa-020428723.html

Putin is winning the oil war: Katusa

The falling ruble makes Russian oil less expensive and more desirable to other countries—Russia also produces oil quite cheaply while the American shale industry has a larger cost of operation. Russia is more than able to weather the current storm, Katusa says. “They have a $200 billion a year trade surplus. They have over $400 billion in reserve currency. They’ve increased their gold reserve. They have much lower debt to their GDP than America. So yes there’s pain in the economy… [but] it's far from terminal.”

I'll get to the Russians in a minute, but before that it needs to be said (again) what the Saudis know (barely) and don't understand, comprehend or appreciate is that the vast number of shale oil producers in the US are small cap operations that have relatively small financing and operational costs or needs. Some of 'em will go under but those would likely go under anyway.

The significance of this reality is that so many of shale producers have been able to wait out the decline in oil prices without any significant impact on their financing costs or their operating costs to include some pretty hefty salaries and shareholder dividends. Oil at $50 a barrel is an inconvenience to them, not a curse and nowhere near disastrous. Disastrous would be in the $30s a barrel which not even the man in the moon can see as realistically coming.

The Saudis and the Russians can't appreciate this, much less comprehend it, because they are statists. Each has these huge conglomerate state oil and gas companies that have capital and operating costs of $1 Trillion. Putin needs oil at $100+ a barrel while the Saudis have been making do at $80 a barrel, tentatively and only temporarily. Many other Opec countries such as Iran and Venezuela need oil at well above $100, upwards of $160 or more a barrel.

As oil stays at the current low level, and the November Opec decision not to increase production means a low prices happy new year and hangover into the spring, the state oil conglomerates will suffer more, not less. The small cap entrepreneur up in North Dakota and across the border into western Ontario province over to Manitoba and Saskatchewan will still be extracting both oil and a more than appreciable revenue stream.

Everything in the post about Russian forex reserves and low debt blah blah blah means nothing because the Russian statist economy is too big to save and too far gone to restructure in time, even if the will to restructure it were there, which it decidedly is not.

[Bwanatickey]

I saw Max on the Keiser Report on Russia Today.

His take on the low oil price was Saudi production going flat out, thereby creating the Fracking shale companies production costs to be too costly with a low oil price. Saudi wants to destroy Fraking Shail companies.

[maidee]

in 1973, the oil price suddenly went up from $3 dollar to $12

= 400 % increase !

taking the whole world economies hostage

USA should have invaded all OPEC members ...