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Saudis Could Face An Open Revolt At Next OPEC Meeting http://www.zerohedge.com/news/2015-08-21/saudis-could-face-open-revolt-next-opec-meeting



From the comments:


Fri, 08/21/2015 - 14:18 |6452390JustObserving

Saudis will always obey the orders from their masters and protectors in Washington.

The corrupt, criminal Saudi regime is kept in power by US support.


John Kerry, the US secretary of state, allegedly struck a deal with King Abdullah in September (2014) under which the Saudis would sell crude at below the prevailing market price. That would help explain why the price has been falling at a time when, given the turmoil in Iraq and Syria caused by Islamic State, it would normally have been rising.


The Saudis did something similar in the mid-1980s



The drop of oil to $10 a barrel in the mid-1908s, engineered by Saudi Arabia at US command, is cited by many as the cause of the breakup of the USSR.


Obama wants Saudi Arabia to destroy Russian economy



U.S. President Barack Obama tried to convince the King of Saudi Arabia to coordinate actions in the oil market to reduce world oil prices, the main source of Russia's export revenues, and "punish its behavior" in Crimea. Experts estimate that if the prices are reduced by as little as 12 dollars per barrel, the Russian Federation will lose $40 billion in revenue. There has been a precedent, because this is precisely how the USSR collapsed.


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Kerry’s Double Assisted Suicide: Russia Oil Gains, America Loses from Sanctions


Secretary John Kerry and friends have managed .... a brilliant double suicide. The September 2014 deal with Saudi Arabia to crash oil prices, then at $103 a barrel for US WTI grade crude oil, not only has managed to bring the US shale oil industry—Washington’s new strategic card allowing the US to essentially abandon her Saudi and Gulf Arab allies–to the brink of bankruptcy and collapse. The oil price collapse, ironically, also gave Russian oil beautiful profits and forced the companies to turn east for far larger and more lucrative new markets. Team Russia-Saudi Arabia: 2 to 0 for Team USA-Canada.

At the present rate of developments, with oil prices .... hovering at $47 a barrel for ... WTI, I would estimate that a major share of USA shale companies will be forced to declare Chapter 11 bankruptcy before year-end or into the first quarter of 2016.

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Sechin well knows the background to the Saudi oil price war and the fact it was triggered by a meeting between US State Department’s John Kerry and the late Saudi King Abdullah in the desert Kingdom in September 2014, where Kerry reportedly urged the Saudis to crash oil prices. For Kerry the aim was to put unbearable pressure on Russia, then hit by US and EU financial sanctions.
For the Saudis, it was a golden opportunity to eliminate the biggest disturbing factor in the OPEC domination of world oil markets — the booming production of US unconventional shale oil that had made the USA the world’s largest oil producer in 2014.
Ironically, as Sechin told the FT, the US-Saudi deal and the US financial sanctions have backfired on the US strategists. The Russian ruble lost more than 50% of its dollar value by January 2015. Oil prices similarly fell from $103 a barrel in September 2014 to less than $50 today. But Russian oil production costs are calculated in rubles, not dollars.
So, as Sechin states, the dollar cost of Rosneft oil production has dropped dramatically today from $5 a barrel before the sanctions to only $3 a barrel, a level similar to that of Arab OPEC producers like Saudi Arabia. Rosneft is not hurting despite sanctions. USA shale oil by contrast is unconventional and vastly more costly.
Industry estimates depending on the shale field and the company, put costs of shale in a range of $60-80 a barrel just to break even. The current ongoing shakeout in the US shale industry and prospects of rising US interest rates dictate the demise of shale oil from the US for years if not decades to come as Wall Street lenders and shale company junk bond investors suffer huge losses.

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With Shell's Failure, U.S. Arctic Drilling Is Dead


.... On September 28, the company announced that it had “found indications of oil and gas in the Burger J well, but these are not sufficient to warrant further exploration in the Burger prospect. The well will be sealed and abandoned in accordance with U.S. regulations.”


After the disappointing results, Shell will not try again. “Shell will now cease further exploration activity in offshore Alaska for the foreseeable future.”


Shell’s Arctic campaign was an utter failure. It spent $7 billion over the better part of a decade...

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It does not seem so difficult to understand to me. The world is currently awash with cheap oil. The producers have bills to pay and there is nobody sufficiently strong that they can stop producing to drive up the price. Yes additionally the Saudis may wish to go along with the US so the oil price is low to enable some chance of an economic recovery where the world is totally dependant upon cheap oil for survival and where importantly there is no free energy


The interesting unanswered question (particularly for me living here in Finland where we are dependant upon a healthy russia) is whether or not a country like Russia has had a sophisticated ability to forecast oil prices and is comfortable at the moment or in fact the combination of low energy prices and low commodity prices are going to bring it back to its knees all over again.

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Something Very Strange Is Taking Place Off The Coast Of Galveston, TX


FT reports that "the amount of oil at sea is at least double the levels of earlier this year and is equivalent to more than a day of global oil supply.
The storage glut is unprecedented
only half of the oil held on the water has been put there specifically by traders looking to cash in by storing the fuel until prices recover. Instead, sky-high supertanker rates have prevented them from putting more oil into so-called floating storage

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