4 ms·

There's a thing I don't understand and could use some explanation. Didn't this same thing happen at a lower level in 2014, when Saudi Arabia pumped a lot of oi

There's a thing I don't understand and could use some explanation. Didn't this same thing happen at a lower level in 2014, when Saudi Arabia pumped a lot of oil to international markets to bankrupts American shale oil producers? And didn't the price go back up after some time when the Saudi government couldn't afford breaking up OPEC? Why can't the same thing happen now? The price and supply of world oil is almost completely controlled by Saudi Aramco, and there's nothing preventing them from increasing the price in the future.

Macha 6y ago
1. It takes time to adjust to demand changes and they're hoping covid19 restrictions ease in a reasonable time frame and demand goes at least partially back. 2. Russia started flooding the market prior to this to disrupt the saudis and US oil producers. Cutting production would need their collaboration or they've ceded market share and influence to Russia.
- mFixman 6y ago
  Like that very article says, Russia needs a much higher oil price than most countries in the Middle East to keep a positive balance. Demand will come back after the pandemic is over, and the Russian government can't flood the market for very long.
  - afjl 6y ago
    They can flood the market for as long as they have foreign reserves. Over the last several years, Russia has steadily reduced its budget's dependence on oil revenues, and bolstered foreign reserves/gold. They probably do have enough foreign reserves/gold to outpump the Saudis and drive the price so low that the Saudis start burning through their own reserves. And I believe Putin has a stronger grip over his own people than MBS, so in a race to the bottom I think Russia could definitely come out "on top". I really dislike the article's mention of "balanced budget" oil prices, it distracts from more salient arguments when presented alone. For proper analysis, the author should have provided more numerical data, like foreign/gold reserves, budget comparisons (historically, and across countries), etc. >> Demand will come back after the pandemic is over. Man, I go back and forth with myself/other people over this all the time. I think there's a significant risk that energy consumption will be lower in the temporary short- and mid-term futures, and slight risk that energy consumption will also be lower in long-term future. Take a look at US consumption: https://en.wikipedia.org/wiki/Energy_in_the_United_States#Primary_energy_consumption https://en.wikipedia.org/wiki/Energy_in_the_United_States#Pr... https://www.eia.gov/totalenergy/data/monthly/pdf/sec1_7.pdf https://www.eia.gov/totalenergy/data/monthly/pdf/sec1_7.pdf We still haven't reached 07/08 levels of energy consumption, of which 67% is nat gas/oil. I also read a while back that US households have steadily decreased their individual usage of energy post-2008, despite economic gains. I forget where, I think it was in an article about nuclear power plants. With that said, I think global outlook (for oil consumption) over the next 5 years is not good for developing economies. Their economies will suffer until developed economies recover and stimulate their under-developed economies. However, long-term population growth in SE Asia and Africa will demand greater energy consumption and I believe economic growth in these regions will be the primary drivers of greater oil consumption. That's because renewable energies will be much, much more expensive than non-renewables (until we tax the hell out of them) and developing economies must pursue the most cost-effective alternative. Sorry, for the long response, I just love this shit.

Macha 6y ago

1. It takes time to adjust to demand changes and they're hoping covid19 restrictions ease in a reasonable time frame and demand goes at least partially back. 2. Russia started flooding the market prior to this to disrupt the saudis and US oil producers. Cutting production would need their collaboration or they've ceded market share and influence to Russia.

mFixman 6y ago
Like that very article says, Russia needs a much higher oil price than most countries in the Middle East to keep a positive balance. Demand will come back after the pandemic is over, and the Russian government can't flood the market for very long.
- afjl 6y ago
  They can flood the market for as long as they have foreign reserves. Over the last several years, Russia has steadily reduced its budget's dependence on oil revenues, and bolstered foreign reserves/gold. They probably do have enough foreign reserves/gold to outpump the Saudis and drive the price so low that the Saudis start burning through their own reserves. And I believe Putin has a stronger grip over his own people than MBS, so in a race to the bottom I think Russia could definitely come out "on top". I really dislike the article's mention of "balanced budget" oil prices, it distracts from more salient arguments when presented alone. For proper analysis, the author should have provided more numerical data, like foreign/gold reserves, budget comparisons (historically, and across countries), etc. >> Demand will come back after the pandemic is over. Man, I go back and forth with myself/other people over this all the time. I think there's a significant risk that energy consumption will be lower in the temporary short- and mid-term futures, and slight risk that energy consumption will also be lower in long-term future. Take a look at US consumption: https://en.wikipedia.org/wiki/Energy_in_the_United_States#Primary_energy_consumption https://en.wikipedia.org/wiki/Energy_in_the_United_States#Pr... https://www.eia.gov/totalenergy/data/monthly/pdf/sec1_7.pdf https://www.eia.gov/totalenergy/data/monthly/pdf/sec1_7.pdf We still haven't reached 07/08 levels of energy consumption, of which 67% is nat gas/oil. I also read a while back that US households have steadily decreased their individual usage of energy post-2008, despite economic gains. I forget where, I think it was in an article about nuclear power plants. With that said, I think global outlook (for oil consumption) over the next 5 years is not good for developing economies. Their economies will suffer until developed economies recover and stimulate their under-developed economies. However, long-term population growth in SE Asia and Africa will demand greater energy consumption and I believe economic growth in these regions will be the primary drivers of greater oil consumption. That's because renewable energies will be much, much more expensive than non-renewables (until we tax the hell out of them) and developing economies must pursue the most cost-effective alternative. Sorry, for the long response, I just love this shit.