26 ms·
The Saudis Are Lying About Their Oil Production?
- the_duke 7y agoClickbait title, bad article (completely unsubstantiated/unsourced, openly hostile, ...), and a pretty horrible website in general. SA inflating their production and capacity numbers is perfectly possible (and probably likely), but that kind of writing is not exactly trustworthy. But some things to think about: * With modern drone/missle capabilities, it seems quite easy to severely compromise global oil and gas production with just a few targeted strikes; mainly on the big refineries. Quite scary. * Is Iran, after years of fighting proxy wars, now moving towards more direct conflict with Saudi Arabia?
- mc32 7y agoI think this will prompt other countries on the ME who haven’t yet embraced unconventional warfare, uavs in particular, to begin familiarization and adoption and then use it strategically. SA are overinvested in conventional defense and offense. I imagine they’re looking to ramp up quickly.
- fmajid 7y agoThe Turks have: https://theintercept.com/2019/05/14/turkey-second-drone-age/ https://theintercept.com/2019/05/14/turkey-second-drone-age/
- Expez 7y agoGuarding a refinery is at least doable in principle, but most oil is transported there by way of a pipeline. Guarding miles and miles of pipes in the middle of nowhere is going to be prohibitively expensive. The Trans-Arabian pipeline for example is a whopping 1214 km (754 mi) long[0]! [0]https://en.wikipedia.org/wiki/Trans-Arabian_Pipeline https://en.wikipedia.org/wiki/Trans-Arabian_Pipeline
- gruez 7y ago>The Trans-Arabian pipeline for example is a whopping 1214 km (754 mi) long[0]! FYI it's not in use anymore.
- H8crilA 7y agoTrans-Alaskan is even slightly longer (800mi/1300km) and more importantly totally exposed - it's overground for many hundreds of miles (because you can't bury a pipeline in permafrost, it would melt the permafrost and sink the pipeline, breaking it). Bottom line is that crazy shit happens. There is no way to mitigate all the substantial risks.
- mrfusion 7y ago754 security guards on dirt bikes with radios? Maybe a helicopter on standby.
- DuskStar 7y agoAh yes, "dude on a dirt bike with a radio and rifle" - the supreme air defence asset of our time. Seriously, this might work for stopping people walking up to the pipeline with explosives - but it wouldn't stop someone with an RPG, recreational drone or (lol) cruise missile.
- johnrgrace 7y agoAre you sure that guarding a refinery is doable in principle? One mortar crew in the back of a pickup truck gets within 5km of a refinery for a few minutes and the facility is burning. If someone can get access to a towed artillery piece that 5km goes up to 20km.
- hogFeast 7y agoJust to say: people have known this for absolutely years and OPEC nations have been lying about production/reserves/everything since the cartel was formed. And yes, it is unsourced...because the point is very much that OPEC is using this data to determine things like production share, so there is a massive incentive to fabricate data which no-one can prove.
- AsyncAwait 7y ago> Is Iran, after years of fighting proxy wars, now moving towards more direct conflict with Saudi Arabia? I mean the Saudis have been commuting war crimes in Yemen, Iran may've supplied some equipment, but I certainly think the Yemenis would be motivated enough themselves.
- azernik 7y agoThe proxies in proxy wars always have their own motivations and agency (see also Egypt, Israel, and Syria in the Cold War; or North/South Vietnam). Doesn't change the great-power dynamics of both sides' sponsors.
- boomboomsubban 7y agoThough Iran's role has always been greatly oversold in the conflict, calling Iran a "great-power" in a war against a US backed force is ridiculous.
- azernik 7y agoI was thinking more of the Iran-KSA relationship; in the Middle Eastern context, the defining regional-power conflict is between Iran and the KSA. The anti-Houthi militias are more clearly Saudi and Emirati proxies than American ones.
- panpanna 7y agoCome on, call it what it is. The "anti-Houthi militias" are local branches of ISIS and al-qaida. Which makes the current US policy even more confusing.
- azernik 7y agoThat's complete nonsense. Neither the Hadi (Saudi-backed) nor STC (UAE-backed) types are particularly Islamist; ISIS and al-Qaeda are a third bloc in the rural/desert east that the US periodically bombs, while the Saudis are busy generally bombing Houthi-governed civilians.
- olivermarks 7y agoComment by Dr Mamdouh G Salameh, International Oil Economist Visiting Professor of Energy Economics at ESCP Europe Business School, London is also interesting. No way of verifying accuracy. 'Having done a lot of research and analysis for years about Saudi proven oil reserves, I reached the final conclusion that Saudi reserves couldn’t be more than 55 billion barrels (bb) rather than the 266 bb the Saudi have been claiming for years. Moreover, the Saudis haven’t been transparent enough about their production capacity. Their oil production peaked in 2005 at 9.65 million barrels a day (mbd) and has been in decline since. In my estimate, their production capacity doesn’t exceed 8.5 mbd. Moreover, they never had a spare capacity of 2 mbd as they have been claiming because to have such a spare capacity would mean that their production capacity is 12 mbd and this figure has never been tested. When they say they are producing 10 mbd, at least 1.5 mbd come from their stored crude. With estimated stored crude oil of 130 million barrels , the Saudis could continue to meet their customer needs for less than a month after which their stored oil would have been totally exhausted. The proof they aren’t telling the truth about the timetable for repairs is that they have been telling their customers that some lighter grades would likely be replaced with heavier crude grades. The truth about Saudi oil potential and reserves will eventually come out. And when it does, the global oil market will get the shock of its life with a horrendous global oil crisis to match.'
- magashna 7y agoMight be the shock we need to work on renewables and batteries more seriously on a global level.
- ajross 7y agoThat's what we thought 20 years ago during the "peak oil" nonsense and they just invented fracking. Talking about oil "reserves" paints a picture that petroleum extraction is like just scooping sludge out of a big underground bucket. Real deposits come in a huge variety of forms and qualities, and extracting them sits on a cost spectrum. All making oil more expensive does is make the more expensive oil worth extracting, prices stabilize at a slightly higher point and the market adapts. Unfortunately we aren't going to run out of oil anywhere near soon enough to save the planet. We need to do it the hard way.
- eisa01 7y agoHow reputable is the oilprice.com? I see articles linked quite often on EV forums I follow I only remember Upstream [1] from when I was briefly in the oil industry ten years ago [1] https://www.upstreamonline.com/ https://www.upstreamonline.com/
- sambroner 7y agoI'd love an answer to this. The article was very aggressively written and I have no basis for understanding any bias if there is one.
- coliveira 7y agoAggressive doesn't mean wrong. It is just a writing style. If you don't agree with the contents, just use facts to refute the article, but your impression of the writing style doesn't mean anything.
- adventured 7y agoOilprice.com is kind of like Forbes is today. Filled full of articles written by freelancers. Some of them are good, some of them are terrible. You have to know the writer, primarily, to sift through the rubble of the site. I've read the site on an occasional basis for years. Usually I only end up there when looking for recent production updates. They often have good industry updates on production, expansion, etc. There is also plenty of quackery, over the top conspiracy writing, mediocre speculation and very questionable pumping & bashing.
- sambroner 7y agoThanks.
- m23khan 7y agoquestion - what do Saudis gain from inflating their production capacity and oil reserves? Do they want to come across as some sort of superpower / critical country based on their reserves -- to continue getting preferential treatment from rich countries?
- colechristensen 7y agoShowing weakness internally and abroad welcomes threats and change. Perhaps their external investments (and IPO of aramco) are being driven by more immediate needs than they admit.
- yasp 7y agoAramco IPO
- _ph_ 7y agoThat is the most obvious gain of inflating their reserve numbers. It should ring a warning bell, if a relative old company is going to the stock market. That means, the owners want to cash in at the current value and they don't believe in huge value gains. The typical reason for an IPO is a company in its early life phase which needs money to grow. There is no lack of cash in SA, so why would they sell off Aramco, if it had a great future?
- gurumeditations 7y agoJust like all these tech IPOs.
- fmajid 7y agoSpecially when oil prices are relatively low. If you're playing poker and can't see who the chump is, that means you are the chump.
- cagenut 7y agoWhen OPEC sets production targets they all haggle with each other over what they'll each produce. This is based on things like percentages of reserves, percentages of capacity, percentages of historical rates, percentages of historical revenues, etc. Over the course of decades and dozens of iterations of negotiations the underlying numbers have become, lets just say, very very loosely coupled with reality. They are mostly produced by literal monarchies (I'll never get over this) or military dictatorships with no third party verification. So in addition to being part of an economic/revenue negotiation, they are also part of a regime-stability bluff. That is why, as a general rule, every year they "discover" approximately the same amount of oil they produced/delivered that year.
- neoplatonian 7y agoOk. So let's say I believe in this, with the implication that oil prices in the future are likely to go up. Any investment advice? How can one - say a UK taxpayer - profit off of this investment thesis?
- Enginerrrd 7y agoStay the f away from USO, which was supposed to track the price of oil as an ETF, but is in fact kind of a scam.
- shiftpgdn 7y agoHow on Earth is USO a scam? It's an ETF.
- matwood 7y agoNot advice, but you can trade oil futures and options if you have belief in your thesis.
- SimonPStevens 7y agoExcept, if other people already have the same belief, won't it will already be priced into any oil futures prices. So that only works if it's a belief you hold, but you also think that others believe the opposite.
- dagw 7y agoWith futures and options you have to be right about both direction and timing. If you trade on the belief that oil prices are going up significantly in the next 6 month, but it actually takes 8 month for the oil prices to rise significantly then you've still lost money.
- georgeecollins 7y agoAs a UK taxpayer.. buy some BP stock. It's a reasonable investment if oil prices stay the same. It pays a dividend. If Oil prices go up it should also go up in value.
- cascom 7y agoA truism at the commodities hedge fund I used to work at was the "the Saudis are always lying" along with "never be long a country's currency if they have their own word for afternoon nap"
- Jweb_Guru 7y agoI think that says more about the hedge fund you worked at than it does about the wider world, to be perfectly honest.
- PetroOption 7y agoPeak Oil as a concept for production in a conventional reservior makes sense. It's on a time frame/size that makes sense. Reserves are not explicity capacity based, reserves are heavilly economically based. As price increases you get more reserves despite having produced oil. This, in addition to technological changes, allows for increased reserves and is why global peak oil as a concept is a bad predictor. Global peak oil was originally predicted to be 1970's. Edit: grammer/spelling
- BlueTemplar 7y agoNo, it wasn't? Reread the paper... (Also, it already tends to take technology improvements and prices into account...)
- quattrofan 7y agoAh reminds me of the famous leak on Oil Production here: https://en.m.wikipedia.org/wiki/Contents_of_the_United_States_diplomatic_cables_leak_(Saudi_Arabia) https://en.m.wikipedia.org/wiki/Contents_of_the_United_State...
- kamyarg 7y agoNon-Mobile link: https://en.wikipedia.org/wiki/Contents_of_the_United_States_diplomatic_cables_leak_(Saudi_Arabia) https://en.wikipedia.org/wiki/Contents_of_the_United_States_...
- duxup 7y agoI thought it was common for everyone to lie about their oil production for all sorts of reasons and everyone knows it. Half the battle within OPEC was over who lies how much and everyone coming to the table to figure that out and come to guidelines about production that are largely general guidelines in practice. Sort of "Ok everyone we're all way off the agreed numbers way too much let's dial it back for a bit." agreements. I want to say that I've heard representatives in OPEC have openly say such things plenty of times.
- deleted 7y ago[deleted]
- secfirstmd 7y agoNot just lieing about oil production https://www.reuters.com/article/us-gold-swiss-fakes-exclusive/exclusive-fake-branded-bars-slip-dirty-gold-into-world-markets-idUSKCN1VI0DD https://www.reuters.com/article/us-gold-swiss-fakes-exclusiv...
- SanchoPanda 7y ago>Once the hedge funds, who had handily positioned themselves long some days before the attacks, had taken their profits... This implication is so far beyond the pale it borders on satire.
- adsupthewazoo 7y agoWhat an absolutely terrible website. The page constantly kept reflowing as ads loaded. I got a pop up to subscribe and finally a dialogue asking to enable notifications. We should not reward this sorry website by upvoting to HN frontpage
- jnurmine 7y agoI'm trying to understand what all this means. The recent attacks are said to have cut Saudi production by 50%. The Saudis claim production capacity of ca. 12 mbd. 6 mbd lost to attack. Their estimated stores are at ca. 180 million barrels. To keep a happy face, the Saudis could sell from their stores to offset for the loss of Abqaiq and Khurais, but this can only be kept up a limited time, as the store is empty in roughly 30 days. The time to fix the damage has been estimated at 8 months. Does this mean the Saudis face losing 50% of their oil income in about 30 days?
- onlyrealcuzzo 7y agoThat means they'll be eating King Salmon for dinner in 60 days.
- adventured 7y agoPeople certainly love oil related conspiracy theories. So here's a fun one: the US staged the attack on Saudi oil production. The US gets to blame Iran, benefit its own growing oil industry (new export pipeline recently hooked up in the Permian), and harm China (increasingly dependent on Saudi oil) - all in one neat little package. I'm not suggesting that scenario is legitimate at all. I'm just surprised that I've never seen anyone else float it, so far.
- trhway 7y ago> the US staged the attack on Saudi oil production. that is definitely no for so many reasons that there is no point in going over them. This is why nobody floats it. After all a good conspiracy theory must have a good theory element in it - ie. a plausible explanation of some facts without contradicting the rest of the facts :) What may have happened is US finally decided that it may be the time to stop the blood bath in Yemen, yet how one would go about it without displeasing the Saudis? So may be the US just did let the drones pass through (as in the ships carrying the drones as well as the drones flying to the target). Thus US preserves Saudis as dear friends, while the Saudis become very interested in ending the war because their lower back becomes on fire, and how are they going to do the oil IPO if the oil infrastructure/assets overnight became de-facto located in the war zone?
- vondur 7y agoI remember reading something years ago about how the Saudi's have always over reported the amount of oil reserves they have and the quality of the crude oil.
- voisin 7y agoWorth a read: Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy by American investment banker Matthew Simmons. https://en.m.wikipedia.org/wiki/Twilight_in_the_Desert https://en.m.wikipedia.org/wiki/Twilight_in_the_Desert
- Robotbeat 7y agoBook was in 2005. Simmons made a bet that oil would be $200/barrel in 2010 and lost (it was $80 in 2010). It's almost 15 years ago now. Eventually the Saudis will run out, but this book failed in its prediction of imminent collapse.
- dehrmann 7y ago> ...Recently it’s occurred to me that [the Saudis] genuinely don’t know anything about the oil industry Or tech. Softbank's vision fund is dumb money.
- Merrill 7y agoWhen you listen to official announcements by government leaders these days, you have to conclude that Mohammed Saeed al-Sahhaf was ahead of his time.
- zhte415 7y agoReference for Muhammad_Saeed_al-Sahhaf: https://en.wikipedia.org/wiki/Muhammad_Saeed_al-Sahhaf https://en.wikipedia.org/wiki/Muhammad_Saeed_al-Sahhaf The Iraqi Minister for Information during the 2003 invasion of Iraq.
- Scapeghost 7y agoShouldn't the title be "Are the Saudis lying about their oil production?" or remove the ?
- Freak_NL 7y agoThe literal title seems to be: Why The Saudis Are Lying About Their Oil Production A question mark makes no sense at the end of a sentence that states a fact.
- imulligan 7y agoIran knows how to play this game because the Middle East is somewhat personal....they appear to be a family run oil business. IF we took oil away from the M.E. equation then it would be void..just saying. This game is slated to change becasue of the large oil discoveries taking place in Guyana and it is going to surpass what the Saudi has been touting as their "real production". Perhaps the USA needs to shift it's focus a little more to the Americas. Just adding to your comment
- BlueTemplar 7y agoInteresting, just how large ?
- cat199 7y ago"This is despite the all-out oil price war that Saudi started in 2014 against U.S. shale producers to try to destroy the industry through low prices caused by flooding the markets with oil. “If the Saudis had anything near 12 million barrels per day capacity, that would have been the time to pump it but all it managed was just under 10 [million bpd] with 10.5 [million bpd] managed for just one month over that two-year period [2014-2016 before Saudi reversed it strategy],” Would it have been the time to pump it? If the goal was just to impact US shale producers, why also undercut your own sales? The best strategy factoring in shale-targeting AND profits would be to pump just as much as to impact shale producers, but no more. Also, another angle as hinted at from conclusions, but not included: "Saudi Arabia ends up boosting the bank accounts of the very people that it thinks was behind the attacks on its own oil infrastructure, the Islamic Revolutionary Guards Corps " but, counterpoint, if they pumped too much at that time, dropping prices against US interests, when the political climate was more favorable to Iran, trade talks could have further favored Iran as a counterbalance, if for no other reason than to 'keep the saudis in line'. i have no direct knowledge, but the analysis is quick to highlight some angles and not others.
- xvilka 7y agoThat will explain recent bold moves by the crown prince in attempts to modernize and diversify their economy like UAE did. Will it work out? We will see.
- DSingularity 7y ago“ the hedge funds, who had handily positioned themselves long some days before the attacks” Wow, really? Would love to see numbers. Sheer luck or conspiracy?
- audiometry 7y agoIt's nonsense. This website, and this author in particular, are very low quality. A couple weeks ago spun a meeting between China FM and Iran FM as some massive 25 year oil development/marketing deal with China. All unsourced. And almost all of it unsubstantiated by anyone except vague anonymous sources. Wrapped around a kernel of truth (the Iranian and Chinese FM did meet the preceeding week). Regarding his accusations that hedge funds knew Iran would attack Saudi that weekend.... zzzz 1st there are few commod-specific hedge funds left, 2nd macro funds currently hate oil if anything, and don't have big positioning in either case (see CFTC data), 3rd any oil specialist that is long was/is long because our markets are very tight currently -- crude oil markets are strongly backwardated (implying urgency to acquire spot barrels) and refining margins are large globally. The Iran attacks were a (fleeting) side benefit and are very nearly lower than they were before the attacks now. Reading this sort of garbage on oil markets always reminds me the Gell-Mann effect must be real and I should quit reading news in other domains, because it's probably as crap.
- throwawaynihil 7y agoThe primary lies here are: * There was any attack * The alleged attack took out 50% of it's oil capacity * Iran performed the attack despite confessions from the Houthi rebels * This is about anything but giving the white christian terrorists in the USA and the abrahamic terrorists in Israel the the bloody war with Iran that they white christian terrorist crowd wants so desperately If this attack happened? Good. Saudi Arabia deserves it.
- SuoDuanDao 7y agoI thought some time ago that the Saudis would likely try to exhaust all their production without telling anyone, then try to sell of Aramco under the pretext there was still a lot of oil in the ground. Did not expect them to sell it so soon.