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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsBREAKING: Saudi Arabia is launching the oil market equivalent of a declaration of war
Saudi Arabia is launching the oil market equivalent of a declaration of war: plan for a big production hike, and offering huge discount for its crude | #OOTT #OPEC #SaudiArabia with @A_DiPaola17
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By Javier Blas and Anthony Dipaola
March 7, 2020, 5:55 PM EST
Riyadh reduces the costs of its crude well below Russian oil
Oil market braces for what hedge funds call a nasty period
Saudi Arabia plans to increase oil output next month, going well above 10 million barrels a day, as the kingdom responds aggressively to the collapse of its OPEC+ alliance with Russia.
The worlds largest oil exporter started a price war on Saturday by slashing the prices it sells crude into foreign markets by the most in at least 20 years, offering unprecedented discounts in Europe, the Far East and the U.S. to entice refiners to purchase Saudi crude at the expense of other suppliers.
At the same time, Saudi Arabia has privately told some market participants it could raise production much higher if needed, even going to a record of 12 million barrels a day, according to people familiar with the conversations, who asked not to be named to protect commercial relations. With demand being ravaged by the coronavirus outbreak, opening the taps like that would throw oil market into chaos.
In the first instance, Saudi production is likely to rise above 10 million barrels a day in April, from about 9.7 millions a day this month, according to people familiar with Saudi thinking.
Thats the oil market equivalent of a declaration of war, said a commodities hedge fund manager, asking not to be named due to the sensitivity of the situation.
More: https://www.bloomberg.com/news/articles/2020-03-07/saudis-plan-big-oil-output-hike-beginning-all-out-price-war?sref=5F8Ao01j
MelissaB
(16,420 posts)The shock-and-awe Saudi strategy could be an attempt to impose maximum pain in the quickest possible way to Russia, in an effort to bring them back to the negotiating table, and then reverse the production surge and start cutting output if a deal is achieved | #OOTT
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Under The Radar
(3,405 posts)But I dont know the benefit to SA
OregonBlue
(7,755 posts)elleng
(131,186 posts)'nice'
Initech
(100,107 posts)I've been saying this since 9/11. They are a foreign power with very hostile intentions and I know they had a hand in the 2016 election.
dewsgirl
(14,961 posts)getagrip_already
(14,881 posts)Mr. Bone Saw absolutely needs the trumps in power. His regime depends on it.
So what would lower oil prices do?
For one, they would reduce inflationary pressures which are going to pop like an overfilled balloon once price increases for commodities with supply side pressure start to show up in statistics.
Second, oil is a major cost to industries like airlines, trucking, and chemical processors. It impacts everything from farming to groceries to transportation.
It will take "some" pressure off the economic indicators at a time when they will be getting worse.
If the economy collapses, the only reason for trump's base to support him (other than racism) disappears. He is convinced his re-election is linked tot he economy.
They will pull out all stops to prevent the economy from looking bad - until he is defeated and then he will intentionally destroy it. Just out of spite.
dewsgirl
(14,961 posts)getagrip_already
(14,881 posts)Cosmocat
(14,575 posts)He is calling in the chips on their shady ass deals, desperately trying to keep our economy a above water until the first Wednesday in November.
misanthrope
(7,432 posts)We see fluctuations all the time that don't plummet pump prices like so many anticipate. Gasoline suppliers are still going to be motivated to profit as much as possible regardless of crude prices. As long as they control the refining capacity, they control the prices in the face of demand.
rickyhall
(4,889 posts)He's a spiteful old man with Nuclear Codes.
uponit7771
(90,367 posts)smirkymonkey
(63,221 posts)Thank you!
Buckeyeblue
(5,502 posts)At these prices we will be paying well under $2 per gallon for gas. With that and lower interest rates, we will see a surge in SUV and Truck sales.
But mostly the low gas prices. People will eat that up.
bullwinkle428
(20,631 posts)be the time to make a deal, as these vehicles will be growing moss on the dealer's lot.
littlemissmartypants
(22,839 posts)Who's going to be driving around during a pandemic beside undertakers and what remaining health care workers there may be that aren't sick?
Buckeyeblue
(5,502 posts)I think there is too much money on the table for us to get to that extreme. If anything, fear of the flu may cause people to drive rather than fly this summer for vacations.
littlemissmartypants
(22,839 posts)FirstLight
(13,366 posts)haha, I know right? How much of a delusional hippie am I?
misanthrope
(7,432 posts)That's how you control the price of gasoline.
DFW
(54,447 posts)It was a financial thriller from 1980 where the ruling family of Saudi Arabia finds a discreet broker in New York, funnels billions into the stock market through him, and, once heavily invested, cuts the price of oil to $10 a barrel, doubles the market practically overnight and cashes in. They then try to eliminate the broker so he can't tell anyone what happened.
This will devastate frackers (wouldn't break my heart) and proponents of nuclear power (fine with me) and renewables (I hope they are farsighted enough not to curtail their efforts). It could also brutally impair proponents of cleaning up carbon emissions, and that is downright dangerous. The efforts to increase the use of wind and solar MUST continue unabated, even if the price of oil drops to $1 a barrel. Even if oil is free, the clean-up of carbon pollution is not.