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The Saudis are doing it not just to counter Iran - they also have to compete with South American, Canadian, American, and Russian oil. They've increased the vol

by rrrx3 11y ago

The Saudis are doing it not just to counter Iran - they also have to compete with South American, Canadian, American, and Russian oil. They've increased the volume of production to keep the prices artificially low in order to squeeze all of those players out of the market. It's also why Russia has a vested interest to act in Syria, propping up the Assad regime - to keep their oil under the control of an entity friendly to their interests.

TheOtherHobbes 11y ago
I think the Saudis are gambling they can keep it together politically and financially longer than their competition can, leaving them with a de facto monopoly. It's a very ballsy move, but it's also a very dangerous one, because the Saudi regime relies heavily on direct patronage - handouts - and if those stop happening there's a real danger of instability. It's also very dangerous to poke Russia too hard, because Putin really isn't likely to say "Fine then, I'll just give up." This could all end very badly for everyone.
- AnAfrican 11y ago
  Or maybe, as many people have argued, Saudi Arabia realized that OPEP (and the non-OPEP players) are simply not disciplined enough to bring their production down enough to move prices up. So they've decided to fight for market-share this time. And they can, since their production prices are on the low side.
spangry 11y ago
Also one of their few friends in the middle-east who also happens to be a big customer for Russian military hardware. But yeah, the Saudi's are engaging in pretty classic cartel behaviour, in response to Iran and US shale: https://en.wikipedia.org/wiki/Predatory_pricing https://en.wikipedia.org/wiki/Predatory_pricing It gets more bizarre though. Putting aside economics, the US, the Saudis and the Iranians all have a pretty aligned geo-political reason for pumping the oil hard: ISIS. Politics and war make strange bedfellows.
AnAfrican 11y ago
Who's oil ? Syria's ? Syria's production is close to Belarus's production and behind Cuba's. And even before its decline it was behind Ukraine's production. It's not a big enough player for anything. Especially for a juggernaut like Russia.
- gaius 11y ago
  Syria has Russia's deepwater port in the region. They won't give that up easily.
erikpukinskis 11y ago
I was just thinking, if we really do stop using oil for transportation, that means at this point there's probably a fixed number of barrels that are going to get sold, period. That's going to become cash, and the rest of everyone's oil is going to stay in the ground. Well, there will always be a market, it'll just be fundamentally smaller potatoes. But so if there's only so many barrels of oil going to be sold, then at this point it really is an all-out scrap for market share. Maybe Saudi Arabia is aiming to just to divest themselves of the majority of their reserves while volumes like that can still be moved at all, i.e., over the next 20-50 years. If this is a 20 year game then it's time for bold moves.

by rrrx3 11y ago

TheOtherHobbes 11y ago

I think the Saudis are gambling they can keep it together politically and financially longer than their competition can, leaving them with a de facto monopoly. It's a very ballsy move, but it's also a very dangerous one, because the Saudi regime relies heavily on direct patronage - handouts - and if those stop happening there's a real danger of instability. It's also very dangerous to poke Russia too hard, because Putin really isn't likely to say "Fine then, I'll just give up." This could all end very badly for everyone.

AnAfrican 11y ago
Or maybe, as many people have argued, Saudi Arabia realized that OPEP (and the non-OPEP players) are simply not disciplined enough to bring their production down enough to move prices up. So they've decided to fight for market-share this time. And they can, since their production prices are on the low side.

spangry 11y ago

Also one of their few friends in the middle-east who also happens to be a big customer for Russian military hardware. But yeah, the Saudi's are engaging in pretty classic cartel behaviour, in response to Iran and US shale: https://en.wikipedia.org/wiki/Predatory_pricing https://en.wikipedia.org/wiki/Predatory_pricing It gets more bizarre though. Putting aside economics, the US, the Saudis and the Iranians all have a pretty aligned geo-political reason for pumping the oil hard: ISIS. Politics and war make strange bedfellows.

AnAfrican 11y ago

Who's oil ? Syria's ? Syria's production is close to Belarus's production and behind Cuba's. And even before its decline it was behind Ukraine's production. It's not a big enough player for anything. Especially for a juggernaut like Russia.

gaius 11y ago
Syria has Russia's deepwater port in the region. They won't give that up easily.

erikpukinskis 11y ago

I was just thinking, if we really do stop using oil for transportation, that means at this point there's probably a fixed number of barrels that are going to get sold, period. That's going to become cash, and the rest of everyone's oil is going to stay in the ground. Well, there will always be a market, it'll just be fundamentally smaller potatoes. But so if there's only so many barrels of oil going to be sold, then at this point it really is an all-out scrap for market share. Maybe Saudi Arabia is aiming to just to divest themselves of the majority of their reserves while volumes like that can still be moved at all, i.e., over the next 20-50 years. If this is a 20 year game then it's time for bold moves.