Saudi Arabia Declares Cease-Fire in Oil War

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http://www.bloomberg.com/view/articles/2016-06-23/saudi-arabia-declares-cease-fire-in-oil-war

"Saudi Arabia can live with these results of its war. The current price level of about $50 a barrel is acceptable, and Al-Falih admits that attempts to target specific price levels by regulating output have failed in the past. Russia and the surviving U.S. shale producers are not at death's door at this price point, either: The former's economic decline will probably end this year, and the latter can start making cautious plans for the future rather than fighting for survival."
 
Originally Posted By: rshaw125
Originally Posted By: Y_K
They finance all those West haters. Skrew them


And one of our presidential candidates.



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Originally Posted By: GiveMeAVowel
Originally Posted By: PandaBear
And people said oil price is driven by "market economy"...


Exactly. Clearly a LIE.


If you can control the supply side, then the demand side will bring the prices to the desired level.
IOW, controlling supply is not enough. You need market demand to maintain a price level.
OPEC has never been successful in controlling supply for very long. Cheating on agreed quotas has always been rife within OPEC and there are now significant new sources of oil that are entirely outside the influence of OPEC. High prices called forth new sources of supply, exactly as microeconomic theory would predict.
Fracked American crude is one example as are the Canadian unconventional recovery ventures.
We also see the emerging Persian production. The Iranians have been boycotting OPEC meetings.
The Saudis aren't so much declaring a cease-fire as they are acknowledging that there's nothing they can do in the current market environment.
 
Originally Posted By: rshaw125
Originally Posted By: Y_K
They finance all those West haters. Skrew them


And one of our presidential candidates.


A so called liberal here but truer words have never been said.
lol.gif
 
This was never about market share. It was a political agreement hammered out between us and the Saudis to bankrupt Russia (in combination with the sanctions). The Saudis have paid a heavy price as far as their government revenues goes and have started seeing some discontent among the population as services were being threatened. Our oil producers were considered a collateral damage and unfortunately, the biggest impact was on them. The Russians suffered, too, but there was no revolt to overthrow their government.

The biggest winner were consumers. The shores around Singapore are dotted with tankers filled with crude and parked as part of speculative traders' portfolios.
 
Originally Posted By: fdcg27
Originally Posted By: GiveMeAVowel
Originally Posted By: PandaBear
And people said oil price is driven by "market economy"...


Exactly. Clearly a LIE.


If you can control the supply side, then the demand side will bring the prices to the desired level.
IOW, controlling supply is not enough. You need market demand to maintain a price level.
OPEC has never been successful in controlling supply for very long. Cheating on agreed quotas has always been rife within OPEC and there are now significant new sources of oil that are entirely outside the influence of OPEC. High prices called forth new sources of supply, exactly as microeconomic theory would predict.
Fracked American crude is one example as are the Canadian unconventional recovery ventures.
We also see the emerging Persian production. The Iranians have been boycotting OPEC meetings.
The Saudis aren't so much declaring a cease-fire as they are acknowledging that there's nothing they can do in the current market environment.
This ^.
 
This an interesting and oft repeated theory, but the reality that Saudi Arabia did not significantly increase production over the period in question belies it.
The Suadis simply can't exert the kind of marginal production heft as a proportion of all producers that they could back in the nineties, when they did permanent damage to their fields and drove crude down to a level that brought back ninety cent gas in late summer 1999.
Too many other producers who habitually ignore their assigned quotas as well as new sources of crude supply.
The slowing economies of the BRICs as well as of the EU have also weakened growth in demand, leading to lower prices.
 
Originally Posted By: Y_K
They finance all those West haters. Skrew them


They finance all those West haters, but they are one of the best allies of US.

What a hypocrisy.
 
I think high oil prices drove US innovation to get more oil by using more advanced methods. And I doubt they will stop with innovating. Even if they develop it and keep it in their back pocket.

And we need to leave 1/3 of the fossil fuel in the ground.
 
Is this announcement what made the stock market uptick 230 points today?
 
No, the verdict that the UK was unlikely to vote to leave the EU calmed world markets.
 
Originally Posted By: fdcg27
No, the verdict that the UK was unlikely to vote to leave the EU calmed world markets.
That would P.O. the banksters and multinational corporations.
 
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