Saudi Arabia Won't Let Oil Head Back To $20s Again

[thackney]

Saudi Arabia Won't Let Oil Head Back To $20s Again
https://www.forbes.com/sites/panosmourdoukoutas/2017/03/12/saudi-arabia-wont-let-oil-head-back-to-20s-again

Saudi Arabia and American frackers are gearing up for the second oil war.

It will take oil lower, but not back to $20 again.

Saudi Arabia has kept its promise. It has cut oil output by 486,000 barrels a day, in line with the OPEC agreement the Kingdom pulled together last October, helping oil stabilize above $50 per barrel.

And it has set up an example for the rest of OPEC and Russia, who have kept their own promise to stick with the October accord, officially at least.

For a while things in the oil market seemed like back in the old good days: oil prices headed north, approaching the magic number of $60, and the Saudi Kingdom was talking up its grand plan, the Aramco IPO.

But in the last three days the oil market has gotten oversupplied, and oil prices are heading south again, dropping below the other magic number, $50.

Apparently, American frackers—the new swing producers—did it again. They have flooded the market with oil to fill in the shortfall generated by OPEC and Russia, as evidenced by the rise in oilrigs—up 288 from last year to 768, and the growing US oil inventories.

That’s why American frackers and Saudi Arabia are headed for a second oil war that will take the price of oil lower – but as mentioned previously, not back to the $20s. Saudi Arabia won’t let it happen.

For a number of reasons. First, the Kingdom has learned a lesson the hard way: it cannot end the American fracking revolution by engaging in a price war with the frackers -- who have demonstrated an exceptional ability to survive even at extremely low prices.

Second, Riyadh’s leaders do not want to antagonize the new Washington administration by declaring another war on American frackers.

Third, there’s Riyadh’s grand plan: the Aramco IPO -- float shares of state-owned company Aramco to the public to pay for its vision 2030, which will make the Saudi economy less dependent on oil....

[IsailedawayfromFR]

This reads like a surrender document.

OPEC's clout is not what it used to be in this new world order, and that means a lot beyond the oil industry.

[thackney]

This reads like a surrender document.

OPEC's clout is not what it used to be in this new world order, and that means a lot beyond the oil industry.

I read it more of a reality check, but not a great article.  This point seems quite true:

First, the Kingdom has learned a lesson the hard way: it cannot end the American fracking revolution by engaging in a price war with the frackers -- who have demonstrated an exceptional ability to survive even at extremely low prices.

[Idiot]

I read it more of a reality check, but not a great article.  This point seems quite true:

I'm not sure our local oil producers could survive another plunge into the $20's. 

Hmm...wonder if Walmart is still hiring greeters....

[thackney]

I'm not sure our local oil producers could survive another plunge into the $20's. 

Hmm...wonder if Walmart is still hiring greeters....

This article indicates that isn't going to happen.  I agree.

Of course my crystal ball of future oil prices tends to be a bit cloudy.

[Taxcontrol]

Saudi Arabia is rapidly loosing the ability to set the price of oil.

[Sanguine]

I read it more of a reality check, but not a great article.  This point seems quite true:

That's how I read it too.  Frackers are here to stay. 

[IsailedawayfromFR]

I'm not sure our local oil producers could survive another plunge into the $20's. 

Hmm...wonder if Walmart is still hiring greeters....

Are you aware that over 90% of the oil producers operating 50 years ago are out of business?

And yet, here we are with oil aplently.

What does that signify?

[Idiot]

Are you aware that over 90% of the oil producers operating 50 years ago are out of business?

And yet, here we are with oil aplently.

What does that signify?

Died of old age?...lol

[IsailedawayfromFR]

Died of old age?...lol

It is physically impossible for a corporation to die of old age.  It is likely they had their day in the sun and melted away.

The point in all this is the oil industry is vibrant, much more vibrant than people realize.

Sure folks right now will go out of business, but more will crop up somewhere in the future. 

As long as the resource is there and available, smart (or sometimes lucky) people will go after it.

And it is there by God's blessing a long, long time in the future/

[Idiot]

It is physically impossible for a corporation to die of old age.  It is likely they had their day in the sun and melted away.

The point in all this is the oil industry is vibrant, much more vibrant than people realize.

Sure folks right now will go out of business, but more will crop up somewhere in the future. 

As long as the resource is there and available, smart (or sometimes lucky) people will go after it.

And it is there by God's blessing a long, long time in the future/

Most of the small oil/gas producers that I knew are pretty much all gone.  They did indeed die and had no heirs to carry on....sadly. 

In finding oil....I'd much rather be lucky than good....lol.

Regards......

[IsailedawayfromFR]

Most of the small oil/gas producers that I knew are pretty much all gone.  They did indeed die and had no heirs to carry on....sadly. 

In finding oil....I'd much rather be lucky than good....lol.

Regards......

A lot of smaller types do tend to go away as the original entrepreneur is not followed by heirs or associates who have the same risk-taking or oil smarts to be as successful.  That is unfortunate.

Fortunately for the oil industry, someone else will step up to the plate and continue in his place.

And I agree, being lucky is the way to go.  A lot of people believe they are just unlucky by lot.  I believe lucky people position themselves to take in 'luck'.

Many years ago there was a Reader's Digest article called "How lucky people got that way".  I had many copies made and gave them out all the time to colleagues at work.

I lost the article as I guess I gave out my last copy and now cannot find it.

I did find this one on Google.  The bottomline is that lucky people are resourceful to take advantage, they just do not win the lottery.  http://www.rd.com/advice/work-career/get-lucky/

[Joe Wooten]

Most of the small oil/gas producers that I knew are pretty much all gone.  They did indeed die and had no heirs to carry on....sadly. 

In finding oil....I'd much rather be lucky than good....lol.

Regards......

The ones I knew in West Texas back in the 70's and 80's had kids that did not want to carry on the business, mostly because of the boom/bust cycles and the sheer amount of hard work that went on 7 days a week. Either the founder sold out to another small or large oil company, or the kids did when the old man died.