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The Great Petrostate Panic.
This isn't a great time to be a petrostate.
With the coronavirus outbreak set to inflict untold damage on the global economy, sapping demand for crude and thereby choking off income streams, producers had already fallen on tough times.
Then came the Saudi-Russia split after an acrimonious OPEC+ meeting in Vienna which dead-ended in a price war. Through Friday, that feud (which promises to exacerbate a supply glut) pushed oil prices to the lowest in nearly two decades. This is set to be the wor
I’d previously thought that the Saudis had picked an awful (i.e. tactically brilliant) time for a price war but I’m starting to realize how wrong that judgement was: no amount of supply restrictions on the part of OPEC could meaningfully revive prices at this point. So here’s the question… Are they secretly kicking themselves? Like Indy in Raiders of the Lost Ark, they could have sat back and done nothing and the story would have ended just the same.
For the Saudis, this is looking like a case of be careful what you wish for. WWI led to the demise of three empires. Would anyone be surprised to see the Sauds’ petrostate bite the dust before this is over?
My guess is that Russia and Saudi want to make a deal with US producers, forcing them to cut production together with them. Open+ was in the end a failure, because to push prices higher Russia and Opec members had to cut their production, while US companies were free to increase their production and at the same time benefiting from higher prices; basically, US had a free ride. This time, there will be no deal unless US producers take a share of the production cut. How it can be done, idk.
Agree with the above. Obviously a perfect storm here. Also…
“Buy a Slurpee and a honey bun, and get 5 free gallons!“ Glad this was brought up again. The price of gas has come down only in the last week here in the Northwest. At that not really a meaningful amount. One gets the impression perhaps sellers are worried the gas is going bad in the tanks thus trying to move inventory. Price hasn’t really come down.
On the bleeding edge a trip to the rec 5 acreage yesterday found me driving past a fairly young normally busy impressive sized frack water transport facility with a very large “available” real estate sign. That was quick!
Multiple scenarios exist in (think Tanks) for implementing and dealing with specifically this and generally other such issues that are World Changers… There is a lot more to this story than we are being told and the source here is reliable….. Xi , Putin and MBS are not imbeciles like their Western Competitors …. and they have seen the changing World order over the past decade.. Geopolitics Rules and the Corona virus (unfortunate ) as it is a Trigger Mechanism…. Remember …..All is fair in Love and War…..