OPEC to cut oil production by two million barrels/day

[ivwshane]

Yep, what are countries like SA going to do when the west is almost entirely on EV's? They're going to be geopolitically and economicly irrelevant. It can't come fast enough.

That appears to be the part they aren’t getting. If you like your profits and long term customers to keep buying your product, it’s probably best not to push them in the direction of competing products faster than they are already switching.

 

[woolfe9998]

That appears to be the part they aren’t getting. If you like your profits and long term customers to keep buying your product, it’s probably best not to push them in the direction of competing products faster than they are already switching.

Yep, it's the same mistake that Russia is making right now. They want to squeeze the west to make us not want to help Ukraine, but what are they doing to their long term markets for oil and NG? It's half their economy. They're dead without it.

 

[Pens1566]

Yep, it's the same mistake that Russia is making right now. They want to squeeze the west to make us not want to help Ukraine, but what are they doing to their long term markets for oil and NG? It's half their economy. They're dead without it.

I look forward to them trying to export sand.

 

[cytg111]

That appears to be the part they aren’t getting. If you like your profits and long term customers to keep buying your product, it’s probably best not to push them in the direction of competing products faster than they are already switching.

That was my thinking as well, but I am not the one looking into the spreadsheet that extrapolates profit 20 years out… If you were to cut gas prices in half, what would that do to EV adoptation? Maybe the only shot SA figure they have as to not slide into irrelevance is to reshape the axises of alliances on the map and is using the remainder of their oil wealth towards that goal.

 

[Dave_5k]

I didn't realize we still had troops in Saudi Arabia and UAE ~ past time to bring them home.

https://twitter.com/x/status/1577841166594236416

 

[Pens1566]

I didn't realize we still had troops in Saudi Arabia and UAE ~ past time to bring them home.

https://twitter.com/x/status/1577841166594236416

5th fleet is HQ'd in Bahrain as well.

 

[J30_Uwe]

I look forward to them trying to export sand.

Might be a bigger market for that than you think.

https://www.zmescience.com/ecology/environmental-issues/hidden-shortage-world-running-low-sand/

 

[hal2kilo]

Might be a bigger market for that than you think.

https://www.zmescience.com/ecology/environmental-issues/hidden-shortage-world-running-low-sand/

Navy nixed a big project to mine drilling sand in a place that just happened to be on the other side of the Hood Canal from the Bangor sub base.

 

[JEDI]

Which is a fuck you to Ukraine
Which is a fuck you to Biden and dems
Which is a fuck you to Europe
Which is a sloppy BJ to Russia.

https://www.cbc.ca/news/business/opec-oil-prices-1.6606887

1) Why are the Saudis going this?
They know it's going to hurt the Dems in the mid term elections.

2) Also, can biden unilaterally says only excess domestic oil can be sold?
3) And why can US oil be exported in the 1st place when there's no surplus?

 

[[DHT]Osiris]

I didn't realize we still had troops in Saudi Arabia and UAE ~ past time to bring them home.

https://twitter.com/x/status/1577841166594236416

Spoiler alert: US troops never really leave.

 

[Dave_5k]

Spoiler alert: US troops never really leave.

lol ~ hmm, yes, even Japan and Germany still both have US troops - but it has only been 77 years since the end of that war

 

[JEDI]

i disagree. its about money. Price per barrel has slowly been going down again, they sell the oil, higher it is, the more they make.
I have been over in that area for a total of 7 years. They are not short sighted like the people in the US are. They play the long game. They have the oil, they can cut production, raise prices, make more money over time. That is what it is all about.

But why cut now instead of next month AFTER elections?
i suspect it's more than just the 4weeks of slightly more profits.

it's a big middle finger to Biden.
but WHY?

 

[Dave_5k]

1) Why are the Saudis going this?
They know it's going to hurt the Dems in the mid term elections.

2) Also, can biden unilaterally says only excess domestic oil can be sold?
3) And why can US oil be exported in the 1st place when there's no surplus?

1) The Saudis prefer politicians they have bought
2) Yes, for up to 1 year. The law that re-enabled oil exports in 2015 granted president power to suspend the resumed exports

Pallone Calls on President Biden to Halt Crude Oil Exports to Help Reduce Domestic Prices at the Pump

Chairman Pallone's letter to President Biden on halting crude oil exports to help reduce domestic prices at the pump.

energycommerce.house.gov

3) See above. US actually imports very little from OPEC, and imports of oil are primarily to keep domestic oil refineries fed - which mostly (net) turn around and export higher value petroleum products. Banning crude exports would do very little to reduce US gasoline prices, and would be a strong deterrent to new domestic production.

If wanting lower domestic prices, while minimizing market disruptions, better theoretical government policy would to be establish a moderate export duty on both crude and petroleum products (ignoring the minor issue that such action would violate the U.S. Constitution), bans are a very crude blunt instrument

 

[JTsyo]

1) Why are the Saudis going this?
They know it's going to hurt the Dems in the mid term elections.

2) Also, can biden unilaterally says only excess domestic oil can be sold?
3) And why can US oil be exported in the 1st place when there's no surplus?

It's a free market. So oil drilled in the US will be sold overseas if they pay more than local buyers. Local buyers have an advantage since they don't have to pay as much for transportation. That's why when OPEC cuts supply, costs go up in the US too. Domestic buyers have to compete in the global market.

 

[evident]

How much oil can Venezuela produce if we normalize relations with them tomorrow?

 

[K1052]

now we're talking

https://twitter.com/x/status/1579561843252948992

 

[K1052]

How much oil can Venezuela produce if we normalize relations with them tomorrow?

Maybe a couple hundred thousand barrels a day more in the near term. It will take a couple years of investment to get them cranked up again to the 2M bpd level again.

 

[JWade]

They have openly and plainly said in their earning calls they DO NOT plan to do any drilling and have no desire to in the future. Go ahead and blame whatever you like. I will continue to listen to them. Every last one of them says it's got nothing to do with regulations or anything else. They are under pressure to keep margins up. it's that simple.

here is an article from NPR, it says your reasons and two others. it is more complicated than just the investors, but it does have more to do than just investors. but hey, its easy to read a couple articles that all say the same thing and assume thats the only reason. I will add, the same time Biden opened up more leases, he increased environmental regulations on drilling, may not be #1, but is also a factor. just like supply chain issues (ie the new equipment to drill new wells) and work force, every job is hurting for workers. but, lets only blame the investors

3 reasons why Big Oil can't simply drill to ease high gas prices : NPR

 

[fskimospy]

here is an article from NPR, it says your reasons and two others. it is more complicated than just the investors, but it does have more to do than just investors. but hey, its easy to read a couple articles that all say the same thing and assume thats the only reason. I will add, the same time Biden opened up more leases, he increased environmental regulations on drilling, may not be #1, but is also a factor. just like supply chain issues (ie the new equipment to drill new wells) and work force, every job is hurting for workers. but, lets only blame the investors

3 reasons why Big Oil can't simply drill to ease high gas prices : NPR

Biden could solve the investment problem by pledging to refill the SPR at some predetermined, moderately high price. He has already floated doing this and should carry through with it.

 

[MomentsofSanity]

here is an article from NPR, it says your reasons and two others. it is more complicated than just the investors, but it does have more to do than just investors. but hey, its easy to read a couple articles that all say the same thing and assume thats the only reason. I will add, the same time Biden opened up more leases, he increased environmental regulations on drilling, may not be #1, but is also a factor. just like supply chain issues (ie the new equipment to drill new wells) and work force, every job is hurting for workers. but, lets only blame the investors

3 reasons why Big Oil can't simply drill to ease high gas prices : NPR

Regulations are not a factor. This isnt based on a couple articles. It’s based on listening to what oil companies are saying and understanding the marketplace. About 6% of the blame goes to regulation according to oil executives. 60% is pressures to maintain margins and financial discipline.

What I responded to seemed to be placing the blame for tepid production on regulations like it was some determining factor and the primary blame. its not. It’s not even really a factor. The boogeyman of regulations has nothing to do with why oil companies do not want to drill. It’s money. That’s it. tThe NPR article you linked doesn’t even have the word “regulation” in it.

 

[amenx]

Have feeling this whole thing was Putins undertaking. He convinced MBS of it esp the timing a month before the mid-terms. Both would like to undermine Biden and the dems. Not sure if MBS advisors tried to talk some sense into him, because clearly its against his interests. Short term gains in price of oil could be wiped out when recession kills demand. Not to mention the US potentially halting weapons sales and defense contracts to Saudi. Have feeling MBS is disregarding his advisors on this. He loves to plot and undertake ill thought out hare-brained schemes. The potential for this whole thing backfiring on him is really high imo.

 

[MrSquished]

Biden could solve the investment problem by pledging to refill the SPR at some predetermined, moderately high price. He has already floated doing this and should carry through with it.

From what I read in these latest negotiations, filling the SPR back up was actually on the table by the Biden team. But not only did Saudi Arabia reject that and continue with the 1 million cut, They went along with increasing it to 2 million.

 

[ElFenix]

That appears to be the part they aren’t getting. If you like your profits and long term customers to keep buying your product, it’s probably best not to push them in the direction of competing products faster than they are already switching.

what's happened is they're finally realizing that those customers are now former long term customers, and the oligopolist's best interest is to start squeezing them.

From what I read in these latest negotiations, filling the SPR backup was actually on the table by the Biden team. But not only did Saudi Arabia reject that and continue with the 1 million cut, They went along with increasing it to 2 million.

the actual cut is only 1 million because OPEC+ was 1 million down on the quota already anyway.

It's a free market. So oil drilled in the US will be sold overseas if they pay more than local buyers. Local buyers have an advantage since they don't have to pay as much for transportation. That's why when OPEC cuts supply, costs go up in the US too. Domestic buyers have to compete in the global market.

due to the jones act's requirement that ocean freight between US ports must be carried on US built, owned and crewed ships, foreign buyers often have the advantage (and is a big chunk of why a lot of US refineries are set up to refine foreign oil). if it can't go on pipes or rails it almost has to go overseas.

anyway, regarding US oil, rig counts are a decent proxy for drilling activity, and august's active rigs were at 764, down 3.3% from february 2020's count of 790. the pandemic (remember oil going negative?) and then materials shortages hit activity hard, but it's been trending monotonically up since august of 2020 (lowest on record of 250 rigs).

rig counts barely reached half as high under trump as they did under obama, interestingly. dunno if that's due to greater efficiencies / improved effectiveness or what.

https://www.eia.gov/dnav/ng/hist/e_ertrr0_xr0_nus_cm.htm764

 

[Brovane]

Biden could solve the investment problem by pledging to refill the SPR at some predetermined, moderately high price. He has already floated doing this and should carry through with it.

Start pumping more oil from the US that will bring down prices and cause OPEC to squeal. I remember in the 2010's when OPEC tried to break US Shale Oil producers by pumping more oil to drop the price below the point that Shale would be profitable. The shale Oil producers found ways to be profitable at a lower price point.

 

[ivwshane]

Start pumping more oil from the US that will bring down prices and cause OPEC to squeal. I remember in the 2010's when OPEC tried to break US Shale Oil producers by pumping more oil to drop the price below the point that Shale would be profitable. The shale Oil producers found ways to be profitable at a lower price point.

And what mechanism will be used to force producers to pump/drill for more oil?