If you are unaware of the ongoing price war refresh your memory with this post- Oil Wars? US/Saudi Arabia vs Russia/IranOil price wars = economic warfare Then onto the latest: Saudi Arabia cuts oil prices, again!
Futures fell as much as 3.7% to US$75.84 a barrel, the weakest since Oct. 4, 2011. Saudi Arabian Oil Co. reduced December differentials for all grades it ships to the U.S., while supplies to Asia and Europe were priced higher, according to an e-mailed statement Monday. U.S. crude inventories climbed by 1.9 million barrels last week to a four-month high, a Bloomberg News survey shows before government data Wednesday
Saudi Arabia, OPEC’s largest producer, reduced the premium of Arab Light to U.S. Gulf Coast benchmarks by 45 cents a barrel to the lowest level this year. Discounts for Medium and Heavy grades were widened for a fourth month, according to Saudi Aramco, the state oil company.
“Saudi Aramco have once again shown their ability to move the market,” Ole Sloth Hansen, an analyst at Saxo Bank A/S in Copenhagen, said by e-mail. “It was the price cut to the U.S. Gulf which sent oil below US$80
This has nothing to do with the Shale oil industry in the US. Saudi Arabia is not the supplier of vast quantities of oil to the US- Canada is. (See below) Neither is Saudi Arabia trying to price shale oil out of the market- (See below)
Shale Oil is a PipedreamThe study, “Drilling Deeper,” projects that production rates from the two largest shale plays — the Bakken and Eagle Ford fields — will be less than 10 percent of that projected by over optimistic and unrealistic forecasts from the EIA.“Shale gas production from the top seven plays will also likely peak before 2020,” the study finds. “Production from shale gas plays other than the top seven will need to be four times that estimated by the EIA in order to meet its reference case forecast.”The upshot, according to Hughes’ research, is not exactly upbeat.
Shale is just a gift for the crony capitalists from taxpayers via fascist governmentsNo matter which party is in office, in any western 'democracy'Saudi Arabia oil continued- Is there a price war going on?
Saudi Arabia—the world’s largest oil exporter—cut its oil prices to Asia four months in a row between August and November, as it responded to aggressive price discounts from Angola and Libya.
The U.S. is also a strategic customer for the Kingdom because of their decades-long security alliance.
The US is indeed a "strategic customer of Saudi Oil via their decades long security alliance- But no where does it say the US is a major consumer of Saudi oil?
The US is a major consumer of Canadian Oil not Saudi Oil
Crude oil imports (Top 15 countries)
(thousand barrels per day)CountryAug-14Jul-14YTD 2014Aug 13YTD 2013CANADA2,9562,8022,7742,6132,561SAUDI ARABIA8941,2311,2831,3321,241
Total imports of petroleum (Top 15 countries)
(thousand barrels per day)CountryAug-14Jul-14YTD 2014Aug 13YTD 2013CANADA3,4333,2813,2813,0823,121SAUDI ARABIA8941,2321,2931,3321,243 What’s OPEC going to do about this move by the KSA?
Though OPEC’s secretary general has told the oil market not to panic about the recent slide in prices, many within the organization are uncomfortable about the impact this is having on government revenues. Some non-Gulf OPEC members are pushing for the group to cut its production when it meets later this month. However, Saudi Arabia has made it clear it has no intention of balancing the market alone, raising tensions within the group. And clearly causing division within Saudi Arabia-
Pepe weighs in on the total war against the BRICS
Bottles of Crimean champagne could be bet that the US response to such a process couldn’t be but a sort of total information war - not dissimilar in spirit to the NSA’s deep state Total Information Awareness (TIA), a crucial element of the Pentagon’s Full Spectrum Dominance doctrine.The BRICS are seen as a major threat – so to counteract them implies domination of the information grid. Vladimir Davydov, director of the Russian Academy of Sciences' Institute of Latin America, was spot on when he remarked, “The current situation shows that there are attempts to suppress not only Russia but also the BRICS given that the global role of this association has only intensified.”Russia demonization has quickly escalated in the US from sanctions related to Ukraine to Putin as the “new Hitler” and the resurrection of the time-tested Cold War scare “The Russians are coming”.In the case of Brazil the information war already started way before the reelection of President Dilma Rousseff. As much as Wall Street and its local comprador elites were doing everything to tank what they define as a “statist” economy, Dilma was also personally demonize
From energy war to currency war
The new Saudi oil shock – which got at a minimum a green light by the Obama administration – totally fits the pattern of a TIA-style offensive against the BRICS, with two of them as key targets: Russia and Brazil.
Over 50% of Russia’s budget comes from revenue from oil and gas. Every $10 drop in the price of a barrel of oil means Russia losing up to $14.6 billion a year. This may be offset somewhat by the weakening of the ruble – more than 25% against the US dollar since early 2014. And Russia of course still has around $450 billion in reserves. Still, Russia’s economy may grow by just 0.5 to 2% in 2015.
With each $1 drop in crude oil prices, Brazil’s number one company, Petrobras, loses more than $900 million. At current oil price levels, Petrobras will be losing around $14 billion a year. So the price drop does undermine Petrobras’ long-term expansion to fund new infrastructure and exploration projects linked to its valuable “pre-salt” oil deposits. Petrobras was a key target linked to the demonization of Rousseff.
Roughly 24 hours - 4 posts, lots of good reading.