4 ms·

The Saudis Have a High-Stakes Plan to Win the Global Oil War

61 points by Tortoise 7y ago

LeoTinnitus 7y ago
Who is that moron that wrote the article? Byzantine art of diplomacy? Saudia Arabia never existed when the Byzantines did! Also the Byzantines weren't known for their diplomacy. It's like saying the prussians enagaged in Catholic meditative sessions.
- itismetheidiot 7y ago
  Byzantines were in fact well known for their diplomacy.
  - agumonkey 7y ago
    heh, seems so https://en.m.wikipedia.org/wiki/Byzantine_diplomacy https://en.m.wikipedia.org/wiki/Byzantine_diplomacy
- aatharuv 7y ago
  If you're not a fluent English language speaker, you might want to look at a dictionary before calling people morons. In addition to its original definition as "what the Eastern Roman Empire morphed into", it also means: "excessively convoluted" "highly complex, intricate, and devious". These other definitions unsurprisingly are based on what English language speakers thought of the Byzantines..
  - narag 7y ago
    Right, but it is nothing specific of English language. Oh, and the original definition should be simply "born in Byzantium", now Istambul.
siruncledrew 7y ago
Saudi Arabia has shifted away from thinking like manufacturers to thinking like investors. Oil doesn’t matter to them - it does now, but it doesn’t psychologically. Wealth is what matters. Oil is still their golden goose - their special “10x” or “unicorn” status sauce. If the forecast for long-term global oil demand is losing steam in light of desires to shift away from fossil fuels, then perhaps sooner is the best time to sell those assets to accumulate wealth to save and invest in other areas to grow more wealth (ex. Vision Fund). IMO - the price war is a short game to fund pivots into different long games - and as we all know, starting out with wealth to fund that is a nice situation to have.
- djmobley 7y ago
  At $30/barrel they’re selling oil at a loss, not building up wealth to invest elsewhere.
  - thawaway1837 7y ago
    I guess their thinking is with the current state of the world they would be selling oil at a loss anyways. So might as well slightly increase that loss and hurt their competitors as well.
  - D_Alex 7y ago
    No... the Saudi oil production costs are circa US$10/bbl, and their marginal production costs (ie costs to produce one more barrel) are circa US$3.00. They are not selling at a loss, but they are not making enough to run their country (that would take prices of ca US$80/bbl at the current rate).
    - w0utert 7y ago
      >> They are not selling at a loss, but they are not making enough to run their country So without further measures to run the country differently, that effectively means they are losing money and not 'building wealth', right?
      - 7y ago
Maledictus 7y ago
http://archive.is/yevdh http://archive.is/yevdh
- GrumpyNl 7y ago
  dead link
  - splintercell 7y ago
    Turn off your VPN
siscia 7y ago
I don't get it. It is estimated that below 50$/barrel Saudi Arabia is basically pushing wealth out of their country. (Balance of payment in negative, it is right?.) And below 80$/barrel they are running the country at a deficit. They are now selling to 30$/barrel. What is the strategy here? Push all "high-tech" producers out of the market and shut up the price again? How long can they last? And how much it will cost?
- godzillabrennus 7y ago
  Bankrupt the fracking companies in America and deprive Russia of money so they can’t effectuate greater sphere of influence in the Middle East through Syria/Iran. It’s a temporary measure for sure but obviously they felt it necessary,
  - nickik 7y ago
    > Bankrupt the fracking companies in America So are they fighting a war with North Dakota? Overall this is good for the US and the frackers equipment is still there, if price goes up they will come back, as they have done before. > Russia of money so they can’t effectuate greater sphere of influence in the Middle East through Syria/Iran Why are you referencing Iran? Iran and Russia while not enemies are hardly friends.
    - sunstone 7y ago
      More Texas/New Mexico than North Dakota. And the US doesn't have to stand idly by while their frackers die on the vine.
      - catawbasam 7y ago
        Yup. Time for tariffs.
        valuearb 7y ago
        Why would the US want to turn victory into defeat?
LatteLazy 7y ago
Driving everyone else bankrupt failed with fracking. Why would it work with Russia?
- rcMgD2BwE72F 7y ago
  Nothing needs to work with Russia, it is an excuse. Russia's oil output as % of global production hasn't really changed for decades. It's is all about US frackers, peak oil demand, and a prince's concern about his personal future.
  - LatteLazy 7y ago
    Even then, it failed before because fracking companies could shut down and start back up without too much loss of capital. To me this reeks od trying the same thing again and expecting a different result. MBS seems to behave quite randomly. Maybe that's logical: being predictable is dangerous. But that's the only explanation that fits here I think: he'll burn 1tn usd because no one would expect that! Has anyone got a better logic to explain this? Does it suit Saudi to weaken other OPEC members?
neonate 7y ago
https://archive.md/yevdh https://archive.md/yevdh
aussiegreenie 7y ago
MSB has already lost. It is only a matter of time before he gets the Khashoggi treatment. He personally stole $100 Billion from his extended family and other Saudis. https://www.nytimes.com/2018/03/11/world/middleeast/saudi-arabia-corruption-mohammed-bin-salman.html https://www.nytimes.com/2018/03/11/world/middleeast/saudi-ar... Saudi Aramco is only $101 Billion or half the "required" market cap of $200 Billion MSB needs to fund Saudi Arabia. He is a deadman walking but so it Saudi Arabia. "My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a came"
woodandsteel 7y ago
"Aramco, on the prospectus for its 2019 initial public offering, warned that oil demand might peak within 20 years." From what I read, it's going to be more like ten years from now. That because in a another two or three years, battery prices will be low enough that ev sticker prices will match ice ones, and that plus public policies will lead to ev sales skyrocketing and ice sales plunging. Saudi Arabia knows the big transition is coming, and is working as fast as it can go get its economy out of oil. I don't see how it is going to be able to do this fast enough to avoid financial disaster.

61 points by Tortoise 7y ago

Who is that moron that wrote the article? Byzantine art of diplomacy? Saudia Arabia never existed when the Byzantines did! Also the Byzantines weren't known for their diplomacy. It's like saying the prussians enagaged in Catholic meditative sessions.

itismetheidiot 7y ago
Byzantines were in fact well known for their diplomacy.
- agumonkey 7y ago
  heh, seems so https://en.m.wikipedia.org/wiki/Byzantine_diplomacy https://en.m.wikipedia.org/wiki/Byzantine_diplomacy
aatharuv 7y ago
If you're not a fluent English language speaker, you might want to look at a dictionary before calling people morons. In addition to its original definition as "what the Eastern Roman Empire morphed into", it also means: "excessively convoluted" "highly complex, intricate, and devious". These other definitions unsurprisingly are based on what English language speakers thought of the Byzantines..
- narag 7y ago
  Right, but it is nothing specific of English language. Oh, and the original definition should be simply "born in Byzantium", now Istambul.

siruncledrew 7y ago

Saudi Arabia has shifted away from thinking like manufacturers to thinking like investors. Oil doesn’t matter to them - it does now, but it doesn’t psychologically. Wealth is what matters. Oil is still their golden goose - their special “10x” or “unicorn” status sauce. If the forecast for long-term global oil demand is losing steam in light of desires to shift away from fossil fuels, then perhaps sooner is the best time to sell those assets to accumulate wealth to save and invest in other areas to grow more wealth (ex. Vision Fund). IMO - the price war is a short game to fund pivots into different long games - and as we all know, starting out with wealth to fund that is a nice situation to have.

djmobley 7y ago
At $30/barrel they’re selling oil at a loss, not building up wealth to invest elsewhere.
- thawaway1837 7y ago
  I guess their thinking is with the current state of the world they would be selling oil at a loss anyways. So might as well slightly increase that loss and hurt their competitors as well.
- D_Alex 7y ago
  No... the Saudi oil production costs are circa US$10/bbl, and their marginal production costs (ie costs to produce one more barrel) are circa US$3.00. They are not selling at a loss, but they are not making enough to run their country (that would take prices of ca US$80/bbl at the current rate).
  - w0utert 7y ago
    >> They are not selling at a loss, but they are not making enough to run their country So without further measures to run the country differently, that effectively means they are losing money and not 'building wealth', right?
    - 7y ago

Maledictus 7y ago

http://archive.is/yevdh http://archive.is/yevdh

GrumpyNl 7y ago
dead link
- splintercell 7y ago
  Turn off your VPN

siscia 7y ago

I don't get it. It is estimated that below 50$/barrel Saudi Arabia is basically pushing wealth out of their country. (Balance of payment in negative, it is right?.) And below 80$/barrel they are running the country at a deficit. They are now selling to 30$/barrel. What is the strategy here? Push all "high-tech" producers out of the market and shut up the price again? How long can they last? And how much it will cost?

godzillabrennus 7y ago
Bankrupt the fracking companies in America and deprive Russia of money so they can’t effectuate greater sphere of influence in the Middle East through Syria/Iran. It’s a temporary measure for sure but obviously they felt it necessary,
- nickik 7y ago
  > Bankrupt the fracking companies in America So are they fighting a war with North Dakota? Overall this is good for the US and the frackers equipment is still there, if price goes up they will come back, as they have done before. > Russia of money so they can’t effectuate greater sphere of influence in the Middle East through Syria/Iran Why are you referencing Iran? Iran and Russia while not enemies are hardly friends.
  - sunstone 7y ago
    More Texas/New Mexico than North Dakota. And the US doesn't have to stand idly by while their frackers die on the vine.
    - catawbasam 7y ago
      Yup. Time for tariffs.
      - valuearb 7y ago
        Why would the US want to turn victory into defeat?

LatteLazy 7y ago

Driving everyone else bankrupt failed with fracking. Why would it work with Russia?

rcMgD2BwE72F 7y ago
Nothing needs to work with Russia, it is an excuse. Russia's oil output as % of global production hasn't really changed for decades. It's is all about US frackers, peak oil demand, and a prince's concern about his personal future.
- LatteLazy 7y ago
  Even then, it failed before because fracking companies could shut down and start back up without too much loss of capital. To me this reeks od trying the same thing again and expecting a different result. MBS seems to behave quite randomly. Maybe that's logical: being predictable is dangerous. But that's the only explanation that fits here I think: he'll burn 1tn usd because no one would expect that! Has anyone got a better logic to explain this? Does it suit Saudi to weaken other OPEC members?

neonate 7y ago

https://archive.md/yevdh https://archive.md/yevdh

aussiegreenie 7y ago

MSB has already lost. It is only a matter of time before he gets the Khashoggi treatment. He personally stole $100 Billion from his extended family and other Saudis. https://www.nytimes.com/2018/03/11/world/middleeast/saudi-arabia-corruption-mohammed-bin-salman.html https://www.nytimes.com/2018/03/11/world/middleeast/saudi-ar... Saudi Aramco is only $101 Billion or half the "required" market cap of $200 Billion MSB needs to fund Saudi Arabia. He is a deadman walking but so it Saudi Arabia. "My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a came"

woodandsteel 7y ago

"Aramco, on the prospectus for its 2019 initial public offering, warned that oil demand might peak within 20 years." From what I read, it's going to be more like ten years from now. That because in a another two or three years, battery prices will be low enough that ev sticker prices will match ice ones, and that plus public policies will lead to ev sales skyrocketing and ice sales plunging. Saudi Arabia knows the big transition is coming, and is working as fast as it can go get its economy out of oil. I don't see how it is going to be able to do this fast enough to avoid financial disaster.