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  1. #1
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    US oil crashes below $0 for the first time in history

    Saudi Arabia slashed its export oil prices over the weekend in what is likely to be the start of a price war aimed at Russia but with potentially devastating repercussions for Russia’s ally Venezuela, Saudi Arabia’s enemy Iran and even American oil companies.

    The effects were quickly felt, as the Brent global oil benchmark price collapsed by about $11 a barrel, or 25 percent, late Sunday in the sharpest decline since at least 1991, and stock market futures fell by about 3 percent.

    The Saudi decision to cut prices by nearly 10 percent on Saturday was a dramatic move in retaliation for Russia’s refusal on Friday to join the Organization of the Petroleum Exporting Countries in a large production cut as the coronavirus continues to slow the global economy and, with it, demand for oil.

    The cut added further uncertainly to global markets already roiled by the coronavirus. Australian stocks led a plunge in early Monday trading in the Asia-Pacific region, falling 5.9 percent. Tokyo shares fell 4.7 percent, and Hong Kong opened 4.1 percent lower. Futures markets indicated big losses for Wall Street and Europe when they open later on Monday.

    Continue reading the main storythe Saudis and Russians can still reach a compromise. But if the collapse is lasting, oil executives say there is nothing to stop oil prices from tumbling to the lowest levels in at least five years.

    “If a true price war ensues, there will be plenty of pain in the oil markets,” said Badr Jafar, president of Crescent Petroleum, a United Arab Emirates oil company. “Many will be bracing for the economic and geopolitical shocks of a low-price environment.”

    A major drop in oil prices would hurt producers around the world, particularly Venezuela and Iran, whose oil-based economies are already under pressure from American sanctions. Export earnings of both countries have already been reduced to a trickle, and a further decline would stretch their abilities to pay for vital services and security.

    The one bright spot may be at the gas pump. The average price of a gallon of regular gasoline in the United States, according to the AAA Motor Club, has already fallen five cents in the last week, to $2.40 from $2.45, and prices could easily drop below $2 a gallon in some states in the coming weeks. Lower-income drivers, who typically own older, less fuel-efficient vehicles and spend a higher percentage of their wages on energy, stand to gain the most.

    But a prolonged price collapse would add to financial pressure on highly indebted American oil companies, dozens of which have gone out of business in recent years, with a decline in American oil production likely to follow. Oil companies have been laying off workers in Texas and other oil producing states.

    Canadian oil sands development, already lagging because of environmental concerns and costs, stands to be hit hard by a price war. And developing countries that depend on oil, like Nigeria, Angola and Brazil, may suffer significant economic slowdowns.

    Get an informed guide to the global outbreak with our daily coronavirus newsletter.

    The first big impact was felt by Saudi Arabia itself. Shares of Saudi Aramco, the Saudi national oil company, plummeted by more than 9 percent on Sunday, falling below its December initial public offering price of 32 riyals for the first time.

    The Riyadh stock exchange fell more than 8 percent. On the Kuwaiti exchange, trading on a major index was halted after it tumbled 10 percent.

    As they cut prices, Saudi officials are now preparing to ramp up the kingdom’s oil output to compensate for the lost revenue caused by lower prices. China, the biggest oil importer, has historically bought oil at cheap prices to stockpile for future use when prices rise.

    Low oil prices, now about $34 a barrel for Brent crude, the international benchmark, and about $31 for West Texas Intermediate, the U.S. marker, could also stoke public discontent with governments, including Saudi Arabia’s, as falling revenues mean less money for social and other programs used by governments to bolster support.

    Saudi Arabia is the world’s largest oil exporter and has been producing about 9.7 million barrels a day, well under its roughly 12 million-barrel-a-day capacity.

    Whether producing more oil will help the kingdom is another question. There is no easy cure for the predicament that Saudi Arabia and the rest of the oil industry face. The world is awash in oil, analysts say, and demand will probably continue to decline.

    The prospect of more oil on the market could accelerate the collapse in prices, which have fallen about a third this year.

    Both Russia and Saudi Arabia appear to be acting for short-term advantage with risky strategies. Russia has gained significant political clout in the Middle East by aligning with OPEC. Helping to support oil prices in concert with Saudi Arabia and other Persian Gulf states has helped the government of President Nicolás Maduro survive in Venezuela. Now, the Russians have chosen to go it alone, refusing to coordinate with OPEC in proposed production cuts perhaps in the hope of undercutting American oil producers.

    For Saudi Arabia, cooperation with Russia had reinforced OPEC’s clout at a time it is being threatened by the recent surge in American oil production that has turned the United States into a major crude exporter for the first time in decades.

    “Saudi Arabia is protecting its market position in the face of a collapse in oil demand, a shrinking physical market and greatly reduced prices,” said Sadad al-Husseini, a former executive vice president of Saudi Aramco. He argued that both Russia and Saudi Arabia would “come out of this down cycle as stronger players, while shale oil, oil sands and other costly or politically unstable producers struggle for financing.”

    But their success is far from certain.

    The last time Saudi Arabia and other OPEC members allowed global supplies to rise in the face of increasing volumes of oil from shale producers in the United States was in late 2014, and prices plummeted to below $30 a barrel. Two years later, Russia joined with OPEC in a production pact that has helped prop up prices for the last three years by coordinating cuts in output.

    But OPEC’s intention in 2014 of undercutting American and other producers backfired and reduced its share of the market. American oil companies managed to increase production anyway, as they became more efficient at drilling through shale and investors continued to pour money into their enterprises. This time may be different, though, because Wall Street has grown tired of sluggish oil investment returns and the high debts of many small and medium-size companies.

    At the meetings at OPEC’s headquarters in Vienna last week, Russia declined to go along with a Saudi-led proposal to cut 1.5 million barrels a day, or around 1.5 percent of global supply, to deal with plunging demand because of the spreading coronavirus epidemic. The two sides also failed to agree on an extension of existing cuts of 2.1 million barrels a day. That failure opens the way for increases by those producers that do have additional capacity.

    “If you are Russia, it’s worth it for you to take a three-month price hit to see if you can knock out U.S. oil exports,” said Amy Myers Jaffe, an oil and Middle East expert at the Council on Foreign Relations. “They might be correct for three months but the shale never gets destroyed.”

    She said that the divergence in Saudi and Russian strategies “signals that the relationship between Saudi Arabia and Russia is on the skids.”

    In a report published last month, the International Energy Agency, the Paris-based monitoring group, said the Saudis could produce more than 2 million barrels a day more while the United Arab Emirates, Kuwait and Iraq could add roughly 1 million barrels a day between them.

    Falling prices are a huge problem for Saudi Arabia and other oil-dependent nations. Low prices erode the petroleum revenues that sustain the government budgets of these countries.

    Jim Krane, a Persian Gulf analyst at Rice University’s Baker Institute, said that oil prices were already well below the $80-a-barrel level that the Saudis need to finance government spending.

    A weakened Aramco share price could be a blow to the prestige of the country’s crucial decision maker, Crown Prince Mohammed bin Salman. He led the campaign to bring Aramco to the public markets, and many Saudis bought shares.

    The crown prince’s ambitious and expensive economic development program, known as Vision 2030, could also be in trouble, Mr. Krane said, if oil producers open the taps and beat down prices.

    “A price war would cause the Saudis to put the entire Vision 2030 diversification plan on hold, while the kingdom hunkers down on austerity wages,” Mr. Krane said.

    In what may signal increasing political jitters in the kingdom, the prince has detained members of the royal family considered to be potential rivals for his authority.

    https://www.nytimes.com/2020/03/08/b...il-prices.html


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  2. #2
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    Global shares plunge after oil prices crash
    Shares in London have plummeted in early trading, with the FTSE 100 index of shares plunging 8%.


    It comes after big falls in Asia, with Japan's Nikkei 225 index down 5% while Australia's ASX 200 slumped 7.3%, its biggest daily drop since 2008.

    Markets have been rattled by the threat of a price war between oil exporting group Opec and its main ally Russia, which sent oil prices down by 30%.

    The wobble compounds fears over the effect of coronavirus on the economy.
    With oil prices crashing on Monday, energy firms have seen some of the biggest share price falls.

    Euro STOXX 50 futures fell 10%, on course for their worst day on record. Futures are bets on stock markets and trade outside normal market hours. Traders use them as a barometer for how a market will perform when it opens.
    Asian investors also reacted to a slump in Chinese export figures and the shrinking of the Japanese economy.

    In China, the benchmark Shanghai Composite share index fell more than 2%, while in Hong Kong, the Hang Seng index sank 3.5%.

    On Saturday, China released import and export figures for the first two months of the year. Exports fell by 17.2% while imports dropped by 4%. This gave the Chinese economy a trade deficit of $7.1 billion as it struggles with the economic impact of the coronavirus outbreak.

    "China may slowly be returning to work, but manufacturers will now likely be facing an international fall in demand, with coronavirus now well-established outside of Chinese shores," said Jeffrey Halley, senior market analyst at broker OANDA

    https://www.bbc.com/news/business-51...al.link1_.auin

  3. #3
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    Great, meanwhile in Canada I can already anticipate the 'blame Trudeau' game

  4. #4
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    Where I live, Gas prices have fallen from $2.50 to $2.00 in the past few days.

  5. #5
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    The problem is this crash in oil prices doesnt translate to the consumer. Oil down roughly 25% doesnt mean 25% cheaper petrol at the pumps.

  6. #6
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    Quote Originally Posted by GenericBrand View Post
    Great, meanwhile in Canada I can already anticipate the 'blame Trudeau' game
    Unfortunately the reality is, when oil is down t hings are bad. When oil is up things are good. For Canadian Oil, things were bad when Oil was up (all thanks to both provincial and federal govt policies, that includes Trudeau). Now that oil is down, things are going to get worse. And let me remind you, things will get worse not just for Oil provinces, but for whole of Canada. Tax money in Saskatchewan and Alberta pays for education and health care in Quebec and Ontario. You will see more teachers' strike, more health workers strike Canada wide.

    Since 2016 there was a golden opportunity to capitalize on the industry that gives Canada its 70% exports. Now it's a lost opportunity.

  7. #7
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    Quote Originally Posted by Technics 1210 View Post
    The problem is this crash in oil prices doesnt translate to the consumer. Oil down roughly 25% doesnt mean 25% cheaper petrol at the pumps.
    If you are in Canada, then yes. Refined oil is bought from US refineries and is heavily taxes. You barely see any difference in the pumps.

    In US though and other places you could see clear difference though.

  8. #8
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    Oil plunges 24% for worst day since 1991, hits multi-year low after OPEC deal failure sparks price war

    Oil prices plunged to multi-year lows on Monday as tensions between Russia and Saudi Arabia escalate, sparking fears on the Street that an all-out price war is imminent.

    The sell-off in crude began last week when OPEC failed to strike a deal with its allies, led by Russia, about oil production cuts. That, in turn, caused Saudi Arabia to slash its oil prices as it reportedly looks to ramp up production

    U.S. West Texas Intermediate crude and international benchmark Brent crude on Monday posted their worst day since 1991.

    WTI plunged 24.59%, or $10.15, to settle at $31.13 per barrel. It was WTI’s second worst day on record. International benchmark Brent crude slid $10.91, or 24.1%, to settle at $34.36 per barrel.

    Earlier in the session each contract fell more than 30%. WTI dropped to $30 while Brent traded as low as $31.02, both of which were the lowest levels since Feb. 2016.

    “This has turned into a scorched Earth approach by Saudi Arabia, in particular, to deal with the problem of chronic overproduction,” Again Capital’s John Kilduff said. “The Saudis are the lowest cost producer by far. There is a reckoning ahead for all other producers, especially those companies operating in the U.S shale patch.”

    On Saturday, Saudi Arabia announced massive discounts to its official selling prices for April, and the nation is reportedly preparing to increase its production above the 10 million barrel per day mark, according to a Reuters report. The kingdom currently pumps 9.7 million barrels per day, but has the capacity to ramp up to 12.5 million barrels per day.

    “We believe the OPEC and Russia oil price war unequivocally started this weekend when Saudi Arabia aggressively cut the relative price at which it sells its crude by the most in at least 20 years,” Goldman Sachs analyst Damien Courvalin said in a note to clients Sunday. “The prognosis for the oil market is even more dire than in November 2014, when such a price war last started, as it comes to a head with the significant collapse in oil demand due to the coronavirus,” the firm added.

    Goldman cut its second and third quarter Brent forecast to $30 per barrel, and said that prices could dip into the $20s.

    Saudi Arabia’s price cut followed a breakdown of talks in Vienna last week. On Thursday, OPEC recommended additional production cuts of 1.5 million barrels per day starting in April and extending until the end of the year. But OPEC ally Russia rejected the additional cuts when the 14-member cartel and its allies, known as OPEC+, met on Friday.

    The meeting also concluded with no directive about the production cuts that are currently in place but set to expire at the end of the month. This effectively means that nations will soon have free rein over how much they pump.

    “As from 1 April we are starting to work without minding the quotas or reductions which were in place earlier,” Russian Energy Minister Alexander Novak told reporters Friday at the OPEC+ meeting in Vienna, adding, “but this does not mean that each country would not monitor and analyze market developments.”

    Oil prices have already moved sharply lower this year as the coronavirus outbreak has led to softer demand for crude. A potential supply glut could pressure prices further.

    “Both events – coronavirus and OPEC+ falling apart were not expected or priced into the market a month ago,” said Rebecca Babin, senior equity trader for CIBC Private Wealth Management. She said the key things to watch going forward are whether or not Saudi Arabia and Russia reach a “Hail Mary” deal, and if not, how quickly U.S. supply is shut in to support prices.

    “There is still significant uncertainty, but the commodity market is not waiting around to find out if miracles can happen,” she added.

    The XLE, which tracks the energy sector, and the XOP, which tracks oil and gas companies, fell 19% and 29%, respectively, on Monday.

    The unfolding of events is reminiscent of 2014 when Saudi Arabia, Russia, and the U.S. competed for market share in the oil industry. As production escalated, prices plummeted. Some see prices heading back to those lows.

    ″$20 oil in 2020 is coming,” Ali Khedery, formerly Exxon’s senior Middle East advisor and now CEO of U.S.-based strategy firm Dragoman Ventures, wrote Sunday on Twitter. “Huge geopolitical implications. Timely stimulus for net consumers. Catastrophic for failed/failing petro-kleptocracies Iraq, Iran, etc - may prove existential 1-2 punch when paired with COVID19.”

    But others, including Eurasia Group, believe that Saudi Arabia and Russia will eventually come to an agreement.

    “The most likely outcome of the failure of the Vienna talks is a limited oil price war before the two sides agree on a new deal,” analysts led by Ayham Kamel said in a note to clients Sunday. The firm puts the chances of an eventual agreement at 60%.

    Vital Knowledge founder Adam Crisafulli said Sunday that oil “has become a bigger problem for markets than the coronavirus,” but also said that he does not foresee prices falling to the Jan. 2016 lows.

    “Saudi Arabia can’t tolerate an oil depression – the country’s fiscal breakeven oil prices remain very high, Saudi Aramco is now a public company, and MBS’s grip on power isn’t yet absolute. As a result, the [government] won’t be so cavalier in sending oil back into the $30s (or even lower),” he said in a note to clients Sunday.

    https://www.cnbc.com/2020/03/08/oil-...war-fears.html

  9. #9
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    Quote Originally Posted by troodon View Post
    Where I live, Gas prices have fallen from $2.50 to $2.00 in the past few days.
    Dallas costco has it at 1.81 , just a diff about 15 cents in last 1-2 months, not a big one here

  10. #10
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    Quote Originally Posted by ahmedzee View Post
    If you are in Canada, then yes. Refined oil is bought from US refineries and is heavily taxes. You barely see any difference in the pumps.

    In US though and other places you could see clear difference though.
    Not in the UK.

    I am paying £1.27 a LITRE of petrol (NOT a Gallon)

    I do not see this price dropping anytime soon!

  11. #11
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    This is good, puts pressure on the USA producers who probably didnt expect this again after 2014.

  12. #12
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    Quote Originally Posted by SensiblePakFan View Post
    This is good, puts pressure on the USA producers who probably didnt expect this again after 2014.
    US would handle it, lot of other countries can crumble, US is well diversified eventhough globalized.

    US oil industry will figure it as said above Canada, Russia, Opec are going to be worst hit.

  13. #13
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    Quote Originally Posted by Technics 1210 View Post
    Not in the UK.

    I am paying £1.27 a LITRE of petrol (NOT a Gallon)

    I do not see this price dropping anytime soon!
    Wait a couple days to a week. You will see the change. It takes some time for the cheaper oil to hit the pumps.

  14. #14
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    Quote Originally Posted by JaDed View Post
    US would handle it, lot of other countries can crumble, US is well diversified eventhough globalized.

    US oil industry will figure it as said above Canada, Russia, Opec are going to be worst hit.
    US oil industry actually won't. They don't make any money if the price of oil is below $45/barrel.

  15. #15
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    Hopefully this will help our situation a bit. Our oil import bill will have drastically lower. I doubt average person will see the impact. But the government will get some breathing space.

  16. #16
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    Quote Originally Posted by ahmedzee View Post
    Wait a couple days to a week. You will see the change. It takes some time for the cheaper oil to hit the pumps.
    You don't live in the UK. Oil would have to be in the current price range for atleast 6 months before consumers see any material benefit in the UK.

  17. #17
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    I remember in 2007, gas price was down to $1.19 per gallon. Now, in my state it is around $2.40 even though we are at ~$30/barrel.

  18. #18
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    Quote Originally Posted by Technics 1210 View Post
    You don't live in the UK. Oil would have to be in the current price range for atleast 6 months before consumers see any material benefit in the UK.
    At least you know it won't go up for a while now. Eventually we should see a price drop of sorts, even if it doesn't reflect the real drop elsewhere.


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  19. #19
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  20. #20
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    Quote Originally Posted by Technics 1210 View Post
    You don't live in the UK. Oil would have to be in the current price range for atleast 6 months before consumers see any material benefit in the UK.
    I work in oil industry and know inside out on how the price translates to pumps. Don't have to live in UK to give an input on why you don't see the change. Besides the price you see in world market is crude price, and your gasoline is one of the byproducts of crude after distillation and other processes. Telling you, you will see the change in a week or so.

  21. #21
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    Quote Originally Posted by ahmedzee View Post
    I work in oil industry and know inside out on how the price translates to pumps. Don't have to live in UK to give an input on why you don't see the change. Besides the price you see in world market is crude price, and your gasoline is one of the byproducts of crude after distillation and other processes. Telling you, you will see the change in a week or so.
    In the UK, when oil prices jump, the pumps change the price the next day, this is a fact, and when oil prices drop, it takes time for the price to reflect. Why is this? Why isn't the cost reduction in oil passed on to the consumer the next day unlike the rise in cost of oil does? Let me guess you are going to tell me how Oil companies are heavily weighted on the FTSE 100, hence passing on a saving to the consumer means lower profits, means lower FTSE index.

    I do not need to work in the oil industry to understand the commercial realities and implications of greed.

  22. #22
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    Quote Originally Posted by Technics 1210 View Post
    In the UK, when oil prices jump, the pumps change the price the next day, this is a fact, and when oil prices drop, it takes time for the price to reflect. Why is this? Why isn't the cost reduction in oil passed on to the consumer the next day unlike the rise in cost of oil does? Let me guess you are going to tell me how Oil companies are heavily weighted on the FTSE 100, hence passing on a saving to the consumer means lower profits, means lower FTSE index.

    I do not need to work in the oil industry to understand the commercial realities and implications of greed.
    There are always factors like transportation, cost of refining, market conditions and market projections. That's why when the oil goes up, pumps would change it right away as their projections indicate it is going to get higher. Yes there is corporate greed in there to some extent and that's why govts should regulate this price with the changing trend of crude price.

    I know for a fact if you guys use North Sea crude (which seems the case), then it would take a week for it to transport it to a refinery, and refine it and transport gasoline locally. Just notice the price next Monday or tuesday and compare it from Thursday (Mar-5). You will get your answer.

  23. #23
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    The price does usually come down to reflect the market, albeit it takes a while to filter through. No doubt the oil companies will take a bit of profit taking by delaying as much as they can get away with, but ultimately petrol and diesel will be cheaper as a result of the price wars.


    I for one welcome our new In____ overlords - Kent Brockman

  24. #24
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    Quote Originally Posted by ahmedzee View Post
    There are always factors like transportation, cost of refining, market conditions and market projections. That's why when the oil goes up, pumps would change it right away as their projections indicate it is going to get higher. Yes there is corporate greed in there to some extent and that's why govts should regulate this price with the changing trend of crude price.

    I know for a fact if you guys use North Sea crude (which seems the case), then it would take a week for it to transport it to a refinery, and refine it and transport gasoline locally. Just notice the price next Monday or tuesday and compare it from Thursday (Mar-5). You will get your answer.
    OK.

    Here is today's data on the price of fuel in the UK on the 8th March.

    Name:  petrol.JPG
Views: 1269
Size:  213.6 KB

    https://www.racfoundation.org/data/u...with-breakdown

    Let's see what the price is next week.

  25. #25
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    Quote Originally Posted by Cpt. Rishwat View Post
    The price does usually come down to reflect the market, albeit it takes a while to filter through. No doubt the oil companies will take a bit of profit taking by delaying as much as they can get away with, but ultimately petrol and diesel will be cheaper as a result of the price wars.
    100% agreed!

    Quote Originally Posted by Technics 1210 View Post
    OK.

    Here is today's data on the price of fuel in the UK on the 8th March.

    Name:  petrol.JPG
Views: 1269
Size:  213.6 KB

    https://www.racfoundation.org/data/u...with-breakdown

    Let's see what the price is next week.
    Also forgot to mention, at times these refineries are benefiting by buying cheaper crude. You do get the refined product and unfortunately Gasoline/Diesel doesn't have fixed global price, but crude does. Similarly, any kind of plastic, tire, petroleum jelly, cosmetics, etc. won't have a fixed global price. The product they come from, crude oil (Brent of WTI) will have a fixed global price.

  26. #26
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    Saudi Arabia Books Supertankers To Flood U.S. Markets With Oil

    Saudi Arabia’s state-run shipping company has hired multiple very large crude carriers to carry all the extra oil it plans on exporting next month—a rare move indeed for the shipping company that sports its own fleet of 41 tankers, according to Bloomberg sources.

    Bahri, as the Saudi’s shipping company is known, has booked passage for its crude oil on three VLCCs, each with the capacity to haul 2 million barrels of crude. The preliminary bookings are heading to the US Gulf Coast, the sources say—but the bookings could still fail.

    The extra VLCC charters are a logical step given Saudi Arabia’s professed plans to ramp up its crude production to more than 12 million barrels per day, after the OPEC+ fell apart last Friday when Russia refused to join in on additional production cuts.

    Next month, Saudi Arabia has plans to increase shipments of crude to its prized market, Asia, who will be more than happy to take on more oil at the substantial discount that the Saudis are selling their oil for as part of its oil war strategy. However, trips from to the US take 40 days, and Bahir’s own tankers would not return to Saudi Arabia in time to load these extra volumes.

    But all that could change in the blink of an eye.

    ****The other active participant in the oil price war, Russia, said today that it had not ruled out yet the possibility of rekindling its love affair with Saudi Arabia by returning to cooperation with OPEC should necessity dictate. Russian oil companies and the Russian Oil Ministry will hold talks on Wednesday to discuss the matter, Reuters sources said on Tuesday.

    https://oilprice.com/Energy/Crude-Oi...-With-Oil.html

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    I smell a tacit understand between OPEC and Russia to flood the world with cheap oil and hit the North American oil industry hard The US oil industry that is built on high interest debt cannot sustain lower oil prices much longer and will self implode.

  28. #28
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    Quote Originally Posted by troodon View Post
    Where I live, Gas prices have fallen from $2.50 to $2.00 in the past few days.
    1.66 at costco today lowest I ve seen in states.

  29. #29
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    Was going to fill the tank today, but being a cheapskate decided to wait until Monday in case the price drops a couple more pence/ltr.


    I for one welcome our new In____ overlords - Kent Brockman

  30. #30
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    Quote Originally Posted by Technics 1210 View Post
    OK.

    Here is today's data on the price of fuel in the UK on the 8th March.

    Name:  petrol.JPG
Views: 1269
Size:  213.6 KB

    https://www.racfoundation.org/data/u...with-breakdown

    Let's see what the price is next week.
    So, did it go down? I assume it did.. the price at the pumps here in Canada is probably the loweest we have seen since 2001

  31. #31
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    This is not the time for oil war. Not a good move.

    Canada depends on oil a lot and hence it is not a good news for Canada.


    Bangladeshi Fan

  32. #32
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    Global oil prices have dropped after Saudi Arabia and Russia postponed a meeting about a deal to cut output as the pandemic hits demand.

    The two countries have been locked in an oil price war for the last month.

    Traders are concerned that, with large parts of the world in lockdown, there will be too much crude available, putting pressure on prices.

    In Asian trade, the global benchmark Brent crude fell 12%, while US-traded oil, known as West Texas Intermediate, was more than 10% lower.


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  33. #33
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    On the final day of March, the supertanker Newton, loaded with crude from Saudi Arabia, did something rarely seen in the world of oil trading: it abruptly diverted from its original destination, Egypt, setting sail for the U.S. Gulf Coast instead.

    The Newton is just part of a flood of Saudi crude that’s headed for the U.S., with oil prices near the lowest levels in almost two decades. And it occurs as President Trump’s administration considers tariffs on imports of oil from OPEC’s largest producer.

    Saudi crude exports to the U.S. in March jumped to at least 516,000 barrels a day, the highest in a year, according to tanker-tracking data compiled by Bloomberg. So far in April, at least seven supertankers have left Saudi Arabia for America’s Gulf Coast, and another is expected to load in the coming days. Almost all of the vessels are chartered by Bahri, the Saudi national shipping company, fixture data show.

    The seven tankers that have sailed for the U.S. this month are hauling a combined 14 million barrels of crude. Through the same period in March, the kingdom exported just 2 million barrels to America. Saudi Arabia has pledged to boost exports in general, following the collapse of the OPEC+ alliance last month, and as of last week it was on track to ship 10 million barrels a day.

    The surge of Saudi crude comes at a decisive moment for the oil market, with the coronavirus outbreak squelching demand and a price war led by Saudi Arabia itself contributing to a supply glut. Prices have slumped so low that they could lead to forced output cuts if the current situation continues.

    That may not happen. Members of the former OPEC+ alliance are set to hold an online meeting on Thursday to discuss the possibility of voluntary cuts. On Friday, energy ministers from the Group of 20 nations will also hold a virtual meeting, giving the U.S. and others an opportunity to weigh in. Trump said earlier this week that he didn’t think tariffs would be necessary to blunt the impact of cheap oil imports, but added that he would impose them if he had to do so.

    https://www.aljazeera.com/ajimpact/s...142443637.html


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  34. #34
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    Opec producers and allies have agreed to cut output by around 10% to counter the slump in demand caused by coronavirus lockdowns.

    The group said it would cut output in May and June by 10 million barrels to help prop up prices. The cuts will then be eased gradually until April 2022.

    Opec+, made up of Opec producers and allies including Russia, held talks on Thursday via video conference.

    Talks were complicated by disagreements between Russia and Saudi Arabia.

    The group and its allies agreed to cut 10 million barrels a day or 10% of global supplies. Another 5 million barrels is expected to be cut by other nations.

    It said the cuts would be eased to eight million barrels a day between July and December. Then they would be eased again to six million barrels between January 2021 and April 2022.

    Oil prices slumped in March after Opec+ failed to agree cuts.

    In the wake of the March meeting, Saudi Arabia and Russia moved to boost production in order to retain market share amid falling global demand.

    That, together with the collapse in demand for oil amid the coronavirus pandemic, help to push oil prices to 18-year lows by the end of March.

    Prices have recovered some ground since then. Last week, prices jumped 20% after US President Donald Trump said he expected Saudi Arabia and Russia to end their feud.

    Thursday's talks will be followed by a conference call on Friday between energy ministers from the G20 countries. It will be hosted by Saudi Arabia.

    Kirill Dmitriev, head of Russia's wealth fund and one of Moscow's top oil negotiators told Reuters: "We are expecting other producers outside the Opec+ club to join the measures, which might happen tomorrow during G20."

    The US has not committed itself to any cuts although it did say that its oil output was gradually reducing anyway due to plunging oil prices.

    President Donald Trump had warned Saudi Arabia that the US would impose sanctions if it did not cut oil production.

    https://www.bbc.com/news/business-52226236


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  35. #35
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    Top oil nations struggled to finalise record output cuts at G20 talks on Friday to boost prices slammed by the coronavirus crisis, as Saudi Arabia clashed with Mexico despite United States President Donald Trump's mediation offer.

    OPEC led by Saudi Arabia and its allies led by Russia, which together make up the informal OPEC+ group, had forged a pact to curb crude production by 10 million barrels per day (bpd) or 10 percent of global supplies in marathon talks on Thursday.

    Russia and OPEC said they wanted other producers, including the US and Canada, to cut a further five percent.

    But efforts to conclude the deal hit the buffers when Mexico said it would only cut output by a quarter of the amount demanded by OPEC+.

    Measures to curb the spread of the coronavirus have destroyed demand for fuel and driven down oil prices, straining the budgets of oil producers and hammering the US shale industry, which is more vulnerable to low prices due to its higher costs.

    Mexico President Andres Manuel Lopez Obrador said on Friday that Trump had offered to make extra US cuts on his behalf, an unusual offer by a president who has long railed against OPEC.

    Trump, who had threatened Saudi Arabia with oil tariffs if it did not fix the market's oversupply problem, said Washington would help Mexico by picking up "some of the slack" and being reimbursed later. He did not say how this would work.

    But the offer was still not enough to close the deal.

    Two sources familiar with the discussions told Reuters News Agency that Saudi Arabia clashed with Mexico on Thursday and again on Friday, when the kingdom hosted talks of energy ministers from the Group of 20 major economies that were aimed at endorsing OPEC+ efforts.

    Hours after talks ended, a G20 communique made no mention of the cuts or quantities, but only referred to "measures to ensure energy market stability". It remained unclear how the OPEC+ pact could now be finalised.

    "We call on all nations to use every means at their disposal to help reduce the surplus," US Energy Secretary Dan Brouillette had told the G20 talks.

    Brouillette said the US would offer support with a natural decline in its oil output driven by economic forces. Although not a formal cut, it still represents a significant shift for by a country that has never joined OPEC in coordinated action.

    Brouillette said US output could fall by between two and three million bpd by the end of 2020 - a bigger drop over a shorter period of time than officials previously indicated.

    Market crisis

    Kremlin spokesman Dmitry Peskov said action involving others was "unavoidable", even though he acknowledged US law barred US producers from joining any price cartel.

    Trump and Russian President Vladimir Putin held talks on Friday that included discussing the energy market.

    Oil markets were closed on Friday, but prices failed to rally after Thursday's talks on cuts, because even an unprecedented cut of 15 percent in global supplies, as envisaged by OPEC+, would still leave a huge overhang when demand has plunged 30 percent.

    The Mexican president said Mexico offered OPEC+ a cut of just 100,000 bpd - not the 400,000 bpd demanded - but said Trump had "very generously said to me that they were going to help us with the additional 250,000 (bpd)" of cuts.

    Mexico, which has long been in a standoff with Washington over Trump's plan to build a wall between the two countries, cares less about low oil prices and more about volume because of its hedging programme, which protects it against price falls.

    The crisis in the oil market has pushed Russia and Saudi Arabia to patch up differences after their acrimonious OPEC+ meeting in March. At that meeting, a dispute over how best to tackle falling prices led them to scrap their existing pact on production restraint that had helped balance the market for three years.

    The new OPEC+ deal envisaged all members reducing output by 23 percent, with Saudi Arabia and Russia each cutting 2.5 million bpd and Iraq cutting over one million bpd in May and June.

    Riyadh and Moscow agreed that their cuts would both be calculated from an October 2018 baseline of 11 million bpd, even though Saudi supplies surged to 12.3 million bpd this April.

    Under the plans, OPEC+ would ease cuts to eight million bpd from July to December and relax them further to six million bpd between January 2021 and April 2022, OPEC+ documents showed.

    Norway and Canada, both outside OPEC+, have suggested they could cut if the deal was implemented.

    UBS said the cuts were still not enough. "We still see Brent [crude oil] falling to $20 per barrel or lower in the second quarter of 2020," it said.

    https://www.aljazeera.com/ajimpact/s...234652751.html


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  36. #36
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    OPEC+ agree to record oil-production cut

    Demand for oil has plummeted amid the coronavirus crisis - and with it the price per barrel.

    In response OPEC, Russia and other oil-producing nations have reached a deal to reduce production by around 10 million barrels a day in May and June.

    https://www.aljazeera.com/news/2020/...191831644.html

  37. #37
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    Good too see commonsense prevail. The Middle Eastern economies and thousands of expat jobs depend on this.


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  38. #38
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    US oil prices drop to 21-year low as demand dries up

    The price of US oil has fallen to a level not seen since 1999, as demand dries up and storage runs out.

    The price of a barrel of West Texas Intermediate (WTI), the benchmark for US oil, dropped 14% to $15.65 In Asia trading on Monday morning.

    The oil market has come under intense pressure during the coronavirus pandemic with a huge slump in demand with factories and manufacturing plants closed.

    US storage facilities are struggling to cope with the glut of oil. "With storage filling, no one wants to take delivery of oil anymore," said Stephen Innes, chief global market strategist at Axicorp.

    Major US producers with deep pockets are reluctant to cut output to avoid higher costs to restart should demand rebound. But smaller drillers face a financial squeeze under low prices and many have curbed or shut production.

    That situation has kept oil flowing to storage hubs even with demand now weak.


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  39. #39
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    Oil plunged to a more than 21-year low on Sunday. The commodity's latest round of sharp selling comes as uncertainty mounts around storage for excess oil. Demand for crude has plummeted since the coronavirus outbreak has frozen activity worldwide.

    intraday drop since at least 1982. Brent crude losses were muted by comparison, with the commodity sliding 6.6% to $26.23 a barrel at intrasession lows.

    The price of oil has continued to slide even after OPEC and its allies agreed to the biggest-ever production cut — one intended to backstop prices. Investors remain unconvinced the cuts can offset cratering demand for the commodity as the novel coronavirus keeps society from operating normally.

    Concerns around storage come as near-term WTI crude prices trade at large discounts to longer-dated contracts. That dynamic is playing out amid worry that a key storage hub in Cushing, Oklahoma, is nearing capacity, according to Bloomberg.

    "Basically, bears are out for blood," said Naeem Aslam, the chief market analyst at AvaTrade. "The steep fall in the price is because of the lack of sufficient demand and lack of storage place given the fact that the production cut has failed to address the supply glut."

    Aslam said WTI could crash even further to $10 a barrel with US rig counts — the number of active oil-producing facilities — falling to their lowest levels since 2016.

    "The bottom line is that there is no doubt that oil prices are way oversold at the current level, but given the circumstances, it is likely that the price may continue to fall further because the rig count hasn't touched its bottom yet," he said.

    Oil prices and rig counts are strongly correlated. Higher oil prices make production more profitable, encouraging more producers to operate.

    The closely watched Baker Hughes oil-rig report showed that as of Friday oil-rig counts in the US were 544, 35% down from the same time in March.

    The movements prompted WTI oil prices to enter contango, meaning that oil contracts for future delivery are more expensive than spot prices.

    "The contango on WTI from now spot to the June contract can be described as a mega-contango," Jeffrey Halley, a senior market analyst of Asia Pacific at Oanda, said. "As of Friday, spot was $18 a barrel with the June contracts around $25 a barrel."

    "The extreme contango tells us nobody in America wants the oil in the short-term," Halley added.

    Aslam added: "For an investor who holds a long term perspective, a time frame of 12 months to 24 months, the current plunge in oil price represents an opportunity."

    https://markets.businessinsider.com/...low-1029106364


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  40. #40
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    Analysis: 'The world has more crude oil than it can use'

    The oil market has come under intense pressure during the coronavirus pandemic with a huge slump in demand.

    The leading exporters - Opec and allies such as Russia - have already agreed to cut production by a record amount.

    In the US and elsewhere, oil-producing businesses have made commercial decisions to cut output. But still the world has more crude oil than it can use.

    And it's not just about whether we can use it. It's also about whether we can store it until the lockdowns are eased enough to generate some additional demand for oil products.

    Capacity is filling fast on land and at sea. As that process continues it's likely to bear down further on prices.

    It will take a recovery in demand to really turn the market round, and that will depend on how the health crisis unfolds.

    There will be further supply cuts as private sector producers respond to the low prices, but it's hard to see that being on a sufficient scale to have a fundamental impact on the market.


    Arsenal all the way!! (and Pakistan, of course!)


  41. #41
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  42. #42
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    Was about to post this. Amazing. A few months into this crisis we are already seeing some unprecedented developments. It gives me the chills to think about the near future if things don't improve. The economic and consequently geopolitical implications of all this can be monumental.

  43. #43
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    US oil prices have dropped to negative values for the first time in history, as global demand dries up as a result of the coronavirus.

    May futures' contracts for the main benchmark - West Texas Intermediate - closed at -$37.63 a barrel. This means producers are paying buyers to take crude oil that they cannot sell and fear they won't be able to store.

    The falls are partly based on warnings that storage capacity could be filled within weeks. They come despite a landmark deal reached by oil producers earlier this month to cut world output and keep prices up.

    European oil prices have also fallen, but not to such an extent, as oil production continues to exceed the massively reduced demand.


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  44. #44
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    Brent is at $25 down 8%

  45. #45
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    this is for may contracts since the contract expires tomorrow and no one wants to take the liability of being on the hook for delivery.

    June contracts still in the $20s


    #MPGA

  46. #46
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    US oil prices have dropped to negative values for the first time in history, as global demand dries up as a result of the coronavirus.

    May futures' contracts for the main benchmark - West Texas Intermediate - closed at -$37.63 a barrel.
    This means producers are paying buyers to take crude oil that they cannot sell and fear they won't be able to store.

    The falls are partly based on warnings that storage capacity could be filled within weeks. They come despite a landmark deal reached by oil producers earlier this month to cut world output and keep prices up.

    European oil prices have also fallen, but not to such an extent, as oil production continues to exceed the massively reduced demand.

  47. #47
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    Wow the curse of free market, wonder if free market economies are going to take a setback.

  48. #48
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    Quote Originally Posted by Slog View Post
    this is for may contracts since the contract expires tomorrow and no one wants to take the liability of being on the hook for delivery.

    June contracts still in the $20s
    So media making a mountain out of a molehill as usual?


    Mein inko rolaonga

  49. #49
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    Quote Originally Posted by Slog View Post
    this is for may contracts since the contract expires tomorrow and no one wants to take the liability of being on the hook for delivery.

    June contracts still in the $20s
    What happens when its negative? if someone is liable now?

  50. #50
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    Quote Originally Posted by Syed1 View Post
    So media making a mountain out of a molehill as usual?
    not necessarily, you shouldn't have such over supply of any commodity to the extent you are paying someone to take it from you.

    this has happened because it takes a lot of money to close and reopen an oil well, and saudi have pumped supply to levels unsustainable for most of the world.

    its a break down in pricing for one of the most actively traded product in the world

    Quote Originally Posted by JaDed View Post
    What happens when its negative? if someone is liable now?
    if you are short the contract u have to deliver someone 1,000 barrels, which is easy since people are desperate to get rid of their oil, you just buy it from someone if u aint got it.

    if you are long you have to find somewhere to store your 1,000 barrels, which is a lot tougher given all the us storage houses are close to capacity and most texas oil is far from the sea.

    if you have the place to store it, then you sell next months contract, which is trading $20, and u get a tidy profit, about $40,000 for storing it for a month per contract.

  51. #51
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    Quote Originally Posted by ElRaja View Post
    not necessarily, you shouldn't have such over supply of any commodity to the extent you are paying someone to take it from you.

    this has happened because it takes a lot of money to close and reopen an oil well, and saudi have pumped supply to levels unsustainable for most of the world.

    its a break down in pricing for one of the most actively traded product in the world



    if you are short the contract u have to deliver someone 1,000 barrels, which is easy since people are desperate to get rid of their oil, you just buy it from someone if u aint got it.

    if you are long you have to find somewhere to store your 1,000 barrels, which is a lot tougher given all the us storage houses are close to capacity and most texas oil is far from the sea.

    if you have the place to store it, then you sell next months contract, which is trading $20, and u get a tidy profit, about $40,000 for storing it for a month per contract.
    Thanks Appreciate it!

  52. #52
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    Name:  fef00ab9-30e7-407f-ae48-c14920008b6d.jpg
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  53. #53
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    Quote Originally Posted by ElRaja View Post
    not necessarily, you shouldn't have such over supply of any commodity to the extent you are paying someone to take it from you.

    this has happened because it takes a lot of money to close and reopen an oil well, and saudi have pumped supply to levels unsustainable for most of the world.

    its a break down in pricing for one of the most actively traded product in the world



    if you are short the contract u have to deliver someone 1,000 barrels, which is easy since people are desperate to get rid of their oil, you just buy it from someone if u aint got it.

    if you are long you have to find somewhere to store your 1,000 barrels, which is a lot tougher given all the us storage houses are close to capacity and most texas oil is far from the sea.

    if you have the place to store it, then you sell next months contract, which is trading $20, and u get a tidy profit, about $40,000 for storing it for a month per contract.
    Thank you for explaining


  54. #54
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    Dan Pena called it!

  55. #55
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    This price below zero thing sounds like they will pay me to take their oil. I'm game. Where do I get a couple of barrels, and the cash that comes with it?


    Silver-tongued seraphim circling the spire...
    Gather in the gallery in their best attire...

  56. #56
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    i was watching this in real time, it was the most crazy day in oil markets since John Rockefellar first refined oil.

    For those people who arnt knolagble about financial markets this day was akin to someone staring out there window and seeing a ufo land and aliens coming out on earth. Crazy day.

    However with contracts expiring it will be back above 0 tmrw, but what does this mean for the petrodollar?


    If you want to destroy a country, just create enmity between its people and their army - Salahuddin

  57. #57
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    Quote Originally Posted by JaDed View Post
    US would handle it, lot of other countries can crumble, US is well diversified eventhough globalized.

    US oil industry will figure it as said above Canada, Russia, Opec are going to be worst hit.
    lollll

  58. #58
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    Quote Originally Posted by SensiblePakFan View Post
    lollll
    Lmao.. this was before Corona bro !!! 😛

  59. #59
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    Quote Originally Posted by JaDed View Post
    Lmao.. this was before Corona bro !!! ��
    Keep telling yourself that lol.

  60. #60
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    Too Much Oil: How a Barrel Came to Be Worth Less Than Nothing

    One oil price went negative on Monday, signaling that there is no place to store all the crude the world is producing but not using.

    Something bizarre happened in the oil markets on Monday: Prices fell so much that some traders paid buyers to take oil off their hands.

    The price of the main U.S. oil benchmark fell more than $50 a barrel to end the day about $30 below zero, the first time oil prices have ever turned negative. Such an eye-popping slide is the result of a quirk in the oil market, but it underscores the industry’s disarray as the coronavirus pandemic decimates the world economy.

    Demand for oil is collapsing, and despite a deal by Saudi Arabia, Russia and other nations to cut production, the world is running out of places to put all the oil the industry keeps pumping out — about 100 million barrels a day. At the start of the year, oil sold for over $60 a barrel but by Friday it hit about $20.

    Prices went negative — meaning that anyone trying to sell a barrel would have to pay a buyer $30 — in part because of the way oil is traded. Futures contracts that require buyers to take possession of oil in May are expiring on Tuesday, and nobody wanted the oil because there was no place to store it. Contracts for June delivery were still trading for about $22 a barrel, down 16 percent for the day.

    “If you are a producer, your market has disappeared and if you don’t have access to storage you are out of luck,” said Aaron Brady, vice president for energy oil market services at IHS Markit, a research and consulting firm. “The system is seizing up.”

    Refineries are unwilling to turn oil into gasoline, diesel and other products because so few people are commuting or taking airplane flights, and international trade has slowed sharply. Oil is already being stored on barges and in any nook and cranny companies can find. One of the better parts of the oil business these days is owning storage tankers.

    “Traders have sent prices up and down on speculation, hopes, tweets and wishful thinking,” said Louise Dickson, an oil markets analyst at Rystad Energy, a research and consulting firm. “But now reality is sinking in.”

    The world has an estimated storage capacity for 6.8 billion barrels, and nearly 60 percent is filled, according to energy experts.

    Some of the oil glut is evident in Cushing, Okla., a critical storage hub where the oil that trades on the U.S. futures market is delivered. With a capacity to hold 80 million barrels of oil, Cushing has only 21 million barrels of free storage left, according to Rystad Energy, or less than two days of American production. As recently as February, Cushing was not even up to 50 percent. Now, experts say it will be filled to the brim in May.

    Storage is almost completely filled in the Caribbean and South Africa, and Angola, Brazil and Nigeria may run out of warehousing capacity within days.

    In his news briefing on Monday, President Trump said the government was “looking to put as much as 75 million barrels” into the Strategic Petroleum Reserve, which is used as a buffer during crises and was created after the 1973-1974 oil embargo.

    The reserve has about 635 million barrels of oil, and is equipped to store 75 million barrels more. But the reserve can take only about 500,000 barrels a day.

    Congressional Democrats recently balked when the administration proposed spending $3 billion to fill the reserve as part of the stimulus package lawmakers passed last month. But on Monday Representative Lizzie Fletcher, a Houston Democrat, said she would introduce legislation appropriating funds for a reserve purchase.

    But it will be hard to quickly fix the oil industry’s problems. The oil infrastructure is complicated and it’s not easy to turn off the taps. In addition, countries like Saudi Arabia and Russia, whose economies are reliant on oil, only reluctantly cut production.

    Shutting down oil wells and then restarting them when demand returns can require expensive manpower and equipment. Fields do not always recover their former production. In addition, some oil companies keep pumping, even if they are losing money, in order to pay interest on their debts and stay alive.

    The huge drop in prices on Monday was exaggerated by the way oil prices are set.

    When traders sell oil they guarantee delivery at a future time. Normally the price differences between oil for next month and the following one are relatively minor. But on Monday oil to be delivered next month, or May, was essentially deemed worthless. Oil set for delivery in June also fell but not nearly as much — more reflective of the market’s view on the current value of crude.

    Brent crude, the oil price benchmark outside the United States used by much of the world, whose May contract has already expired, fell about 5 percent to a little under $27 a barrel.

    The disparities showed a market “undergoing extreme stress,” said Antoine Halff, a founding partner of Kayrros, a research firm. “It’s a sign of the very real imbalance between supply and demand.”

    A little over a week ago, there was some optimism in the oil industry. The Organization of the Petroleum Exporting Countries, Russia and other producers said they would cut 9.7 million barrels a day of production, or about 10 percent of global oil output, the largest cut ever. It was a grim acknowledgment that global demand had collapsed.

    But that record cut will not be nearly enough. Analysts expect daily oil consumption to fall by as much as 29 million barrels in April, about three times the cuts pledged by OPEC and its allies, and May isn’t expected to be much different.

    “It’s relatively impressive in terms of the overall number, but it’s not enough to tighten the market between now and the fourth quarter of 2020,” David Fyfe, chief economist at Argus Media, a commodities pricing firm, said about the cut by OPEC and its partners.

    U.S. oil producers are also reducing production, but not rapidly enough. At the current pace, American production will decline to less than 11 million barrels a day by the end of the year, from 13.3 million barrels a day at the end of 2019.

    Many companies are already reporting substantial losses, and experts said businesses across the oil patch will have to seek bankruptcy protection in the coming months.

    Halliburton, the giant provider of equipment, workers and services to oil companies, on Monday reported a $1 billion loss in the first quarter, in contrast to net income of $152 million in the same period a year earlier.

    Gary Ross, chief executive of Black Gold investors, an oil trading firm, said demand was falling so fast that U.S. companies that recently were exporting oil are now cutting production.

    “It doesn’t matter whether it is $15, $10 or $8, you are still going to” stop production, Mr. Ross said. ConocoPhillips, one of the largest U.S. oil companies, said last Thursday that it would temporarily curtail about 225,000 barrels a day of production.

    Such cuts should help stabilize the markets, but it might take months. The U.S. contract for oil delivered in May 2021 was trading on Monday at about $35 a barrel, hinting at how long it might take for prices to reach levels they were at just a few weeks ago.

    The oil industry’s plight is forcing policymakers to consider intervening more forcefully.

    And on Tuesday, the Texas Railroad Commission, which regulates oil and gas drilling, will take up a proposal for a 20 percent statewide production cut on Tuesday. The commission used to regularly manage oil production but hasn’t done so since the early 1970s.

    Exxon Mobil and other large companies have opposed mandated cuts but some smaller companies want the commission to act.

    Scott Sheffield, chief executive of Pioneer Natural Resources, told the commission at a hearing last week that if the oil price stayed around $20 a barrel for a while, 80 percent of the hundreds of independent oil companies in the state would be forced into bankruptcy and 250,000 workers would lose their jobs.

    At $30 a barrel, many companies would be “crippled,” Mr. Sheffield said. “But at least the industry will survive.”

    https://www.nytimes.com/2020/04/20/b...il-prices.html

  61. #61
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    Trump will consider blocking Saudi oil imports as US prices crash


    Hours after United States benchmark crude prices stunned even hardened oil veterans with a sudden, sharp crash into negative territory, President Donald Trump said his administration will look at a proposal to block Saudi Arabian oil shipments to the US to help buoy the US shale oil industry against an unprecedented rout that threatens its survival.

    "Well, I'll look at it," Trump told reporters at a daily news conference after he was asked about requests by some Republican legislators to block the shipments under his executive authority.

    The May contract for West Texas Intermediate (WTI) crude went into a death spiral on Monday, plunging more than 300 percent with prices turning negative. At its lowest point, the May WTI contract touched -$40.32 before settling at -$37.63.

    The contract is due to expire on Tuesday. Negative prices signals that traders are willing to pay to have oil taken off their hands.

    Trump described the historic fall in oil prices as more of a short term financial squeeze on traders and said his administration would like to take advantage of historically low prices to top up the nation's Strategic Petroleum Reserves.

    The Department of Energy is in the process of leasing some of the roughly 77 million barrels of available space in the Reserve to US oil companies to help them deal with the dearth of commercial storage as the coronavirus outbreak crushes domestic energy demand.

    The coronavirus pandemic has decimated oil demand globally as businesses shutter, borders close, travel is disrupted and consumers go into lockdown. Into this maelstrom, Saudi Arabia unleashed an oil-price war last month after it failed to convince Russia to join it in an aggressive output cut.

    Despite an intervention by Trump that paved the way for an historic production-cut agreement of 9.7 million barrel a day between Saudi Arabia-led OPEC (The Organization of the Petroleum Exporting Countries) and its allies led by Russia, a tsunami of crude continues to overwhelm markets.

    This is acutely felt by higher-cost US shale oil producers who are running out of places to store crude with oil storage tanks at the hub in Cushing, Oklahoma nearing capacity.

    On Monday, US Senator Kevin Cramer of North Dakota - a state highly dependent on revenues from oil production - called on Trump to stop Saudi oil tankers from unloading crude on US shores.

    In a statement, Cramer said: "We cannot allow Saudi Arabia to flood the market, especially given our storage capacity dwindling. Right now, the highest number of Saudi oil tankers in years is on its way to our shores."

    https://www.aljazeera.com/ajimpact/t...230918731.html


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  62. #62
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    Saudi Arabia will be best positioned to weather the impact of an unprecedented collapse in U.S. oil prices, energy analysts told CNBC on Tuesday.

    It comes at a time when the market is awash with crude, storage tanks are being filled and the coronavirus crisis continues to ravage global demand.

    On Monday, the May contract for U.S. West Texas Intermediate futures tumbled into negative territory for the first time ever.

    The contract, which expires on Tuesday, traded at negative $4 a barrel during afternoon deals. Remarkably, this means traders would effectively have to pay to get the oil taken off their hands. The May contract of WTI had settled at a discount of $37.63 on Monday.

    The historic collapse in the market for crude oil futures was thought to have been exaggerated by the contract’s imminent expiration. The June contract for WTI, which is much more actively traded and tends to be more indicative of how Wall Street views the price of oil, stood at $15.75 a barrel on Tuesday, around 22% lower.

    International benchmark Brent crude traded at $20.64 a barrel Tuesday morning, over 19% lower.

    “Saudi Arabia and Russia have both won here, but it’s a very pyrrhic victory,” Dave Ernsberger, global head of commodities pricing at S&P Global Platts, told CNBC’s “Squawk Box Europe” on Tuesday.

    Riyadh and Moscow have long had U.S. shale output “in their sights,” Ernsberger continued, but “they need to look over their shoulder because Brent is not far behind, other crude benchmarks are not far behind, and the world is running out of storage.”

    Celebrations should be ‘brief’

    The Covid-19 pandemic has meant countries around the world have effectively had to shut down, with many governments imposing restrictive measures on the daily lives of billions of people.

    It has created an extreme demand shock in energy markets, with storage space — both onshore and offshore — quickly filling up.

    In the U.S., the situation is thought to be particularly acute, with storage facilities at the country’s main delivery point in Cushing, Oklahoma expected to be full within weeks.

    “So, what we saw in Oklahoma yesterday, not unlike the virus in Wuhan, we can see the oil market virus spread to the rest of the world very quickly here,” Ernsberger said.

    “Our estimates are the total inventory in the world could be exceeded by the end of May (or the) beginning of June,” he predicted, before warning Saudi Arabia and Russia should keep their celebrations “short and brief.”

    Deeper production cuts are the ‘only way out’

    An energy alliance between OPEC kingpin Saudi Arabia and non-OPEC leader Russia, sometimes referred to as OPEC+, agreed earlier this month to take 9.7 million barrels per day of crude off the market from May 1.

    It is the largest single output cut in the group’s history, but analysts still do not expect it to comprehensively alleviate oversupply concerns.

    “Ultimately, Saudi is a winner,” Christian Malek, the head of EMEA oil and gas equity research at J.P. Morgan, told CNBC’s “Squawk Box Europe” on Tuesday.

    “They have managed to get out the door early selling oil while there was demand and then retracted that in their latest cut — which we view as a weak deal,” he added.

    Malek argued the “only way out” for oil markets was for OPEC+ to negotiate a much deeper output cut, suggesting Riyadh should consider production levels as low as 6 million barrels per day.

    The next OPEC+ meeting is scheduled to take place on June 10.

    “I think the situation is as follows, the Saudis recognize that they have one last big cycle coming, they want to make sure they position for that but equally they have a very important relationship with the U.S. — and particularly Trump,” Malek said.

    “On balance, I would argue that their relationship is a critical path to this negotiation around oil but ultimately it is not the holy grail. I think Saudi will look to negotiate and if it doesn’t work and Trump’s not re-elected, they do win on the oil side,” he added.

    https://www.cnbc.com/2020/04/21/oil-...ource=Facebook


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  63. #63
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    The WTI june contract is down to around $10 and brent is $16 now.

  64. #64
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    im expecting it to go negative again


    If you want to destroy a country, just create enmity between its people and their army - Salahuddin

  65. #65
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    Quote Originally Posted by PetroDollars View Post
    i was watching this in real time, it was the most crazy day in oil markets since John Rockefellar first refined oil.

    For those people who arnt knolagble about financial markets this day was akin to someone staring out there window and seeing a ufo land and aliens coming out on earth. Crazy day.

    However with contracts expiring it will be back above 0 tmrw, but what does this mean for the petrodollar?
    This is inevitable. The quicker the petrodollar ends, the better for humanity. USA will be on the road to economic destruction. If others dont need $ to buy oil, it has no value left in reality.


    Lions don't lose sleep over the opinions of Sheep

  66. #66
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    Oil prices look to be facing yet another harrowing Monday, with the price of WTI sliding by more than 20 percent in early morning trading.

    Global oil storage is inching closer and closer to reaching its capacity, and worse, the problem is being exacerbated as more local governments across the world extending COVID-19 lockdown recommendations, weighing on crude demand.

    According to Goldman Sachs, global oil storage could be completely full within the next three weeks, and another dramatic crash could follow.

    Bjornar Tonhaugen, head of oil markets, Rystad Energy also sees storage reaching a critical level in a matter of weeks. “Actions are needed now as the problem stopped being theoretical and far away. The storage clock is ticking for producers and we are approaching the final countdown if no further action is taken," he explained.

    The perfect storm for oil markets has left Brent crude oil prices down 68 percent on the year, while WTI has fallen by 72 percent. The low crude prices have left domestic shale producers fighting for survival.

    While once shining-U.S. Shale producer Whiting Petroleum was the first company to file for Chapter 11 bankruptcy, it surely won't be the last, with the shale patch looking particularly vulnerable due in large part to their high breakevens and history of taking on debt.

    Noble Energy (NBL), Halliburton (HAL), Marathon Oil (MRO) and Occidental (OXY) have all lost more than 66 percent of their market cap in just a few short months. Even majors such as Exxon (XOM) have lost as much as 40 percent of their value.

    Buddy Clark, co-chair of the energy practice at Houston law firm Haynes and Boone, noted, "It's hard to believe that 100 bankruptcies is the optimistic view. That just shows you where we are," adding "I don't think I've seen anything like it in my lifetime. It's unprecedented."

    https://oilprice.com/Energy/Oil-Pric...ars-Mount.html


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  67. #67
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    I think Pakistan should avail this opportunity to build huge storage capacity and fill up reserves with cheap oil. Even if we have to borrow money to buy it will save billions in the long run.

  68. #68
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    Quote Originally Posted by treker747 View Post
    I think Pakistan should avail this opportunity to build huge storage capacity and fill up reserves with cheap oil. Even if we have to borrow money to buy it will save billions in the long run.
    Building storage capacity takes years. Very few countries apart from China and the US (US nearing full tho) have lot of excess storage capacity.

    This was great time for countries such as Pakistan or even India but storage too low. For eg India has 1/4th the capacity of China

  69. #69
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    Quote Originally Posted by Slog View Post
    Building storage capacity takes years. Very few countries apart from China and the US (US nearing full tho) have lot of excess storage capacity.

    This was great time for countries such as Pakistan or even India but storage too low. For eg India has 1/4th the capacity of China
    India's daily oil consumption is also between 1/3rd and 1/4th of China. So they have similar storage capacity compared to their daily usage

  70. #70
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    Quote Originally Posted by SportsWarrior View Post
    India's daily oil consumption is also between 1/3rd and 1/4th of China. So they have similar storage capacity compared to their daily usage
    My apologies. Yes India has 1/3rd to 1/4th consumption of China.

    However storage capacity is 1/14th
    While India has a storage capacity of 39 million barrels, China’s total capacity is at 550 million barrels and Japan’s at 528 million barrels,


    #MPGA

  71. #71
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    Quote Originally Posted by treker747 View Post
    I think Pakistan should avail this opportunity to build huge storage capacity and fill up reserves with cheap oil. Even if we have to borrow money to buy it will save billions in the long run.
    The days of expensive oil are over, theres no way oil is going above $50/barrel in the near future, its hovering around $10 right now and will be under $20 for quite a while, even places like US which use the petrodollar to rule the world are moving away from oil and with 5G networks, AI, automation taking over which rely on clean energy you are better off using your money right now in moving away from oil rather then invest all you have and take more loans for a dying industry which will be suicidal.

    Like technocrats say data is the new oil and like USA used oil to control and rule over the world, the future will be ruled through data and the future is now, those that invest in it will be powerful whereas those that stick to oil will be flowed away into poverty.


    If you want to destroy a country, just create enmity between its people and their army - Salahuddin

  72. #72
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    Quote Originally Posted by PetroDollars View Post
    The days of expensive oil are over, theres no way oil is going above $50/barrel in the near future, its hovering around $10 right now and will be under $20 for quite a while, even places like US which use the petrodollar to rule the world are moving away from oil and with 5G networks, AI, automation taking over which rely on clean energy you are better off using your money right now in moving away from oil rather then invest all you have and take more loans for a dying industry which will be suicidal.

    Like technocrats say data is the new oil and like USA used oil to control and rule over the world, the future will be ruled through data and the future is now, those that invest in it will be powerful whereas those that stick to oil will be flowed away into poverty.
    We are decades away from electric or clean energy cars. Not to forget planes and other forms of transport. Oil is still the most important commodity, only reason for the downturn is nobody is using it. End the lockdown around the world, oil will rise again very very quickly, much above $50 imo.


    Lions don't lose sleep over the opinions of Sheep

  73. #73
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    Quote Originally Posted by KingKhanWC View Post
    We are decades away from electric or clean energy cars. Not to forget planes and other forms of transport. Oil is still the most important commodity, only reason for the downturn is nobody is using it. End the lockdown around the world, oil will rise again very very quickly, much above $50 imo.
    nobody is using it now, but everyone was before the pandemic, yet its gone down from $100 in 2014 to hovering around $50 and hitting $25 - so it was always in a down trend even when the economy was expanding in its fastest growth ever with the dow and s&p500 hitting new record highs every week, this pandemic has just accelerated its crash which was going to happen anyway.

    And no we are not decades away from electric cars, most countries in the west are now making plans to make fuel engines illegal on the roads by 2025, when the technology is ready why delay it? its coming because its ready.

    other forms of transport will not make it the most important commodity, the use of oil will still be there till everything moves away and more tech gets developed but now that its kicking in, it will happen so fast. So expensive oil is long gone, it will stay under $50 for sure.


    If you want to destroy a country, just create enmity between its people and their army - Salahuddin

  74. #74
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    Quote Originally Posted by KingKhanWC View Post
    We are decades away from electric or clean energy cars. Not to forget planes and other forms of transport. Oil is still the most important commodity, only reason for the downturn is nobody is using it. End the lockdown around the world, oil will rise again very very quickly, much above $50 imo.
    I completely agree. We are decades away from a switch to electric cars. For electric cars to become become widespread oil has to be expensive. Also to mention how bad an electric car manufacturing is for the environment when compared with ICE manufacturing. Lithium batteries mining and production is very carbon intensive, so if you purchase a brand new electric car it already had 8 years worth of emissions behind it.

    Besides, airplanes and billion other products industry that is derived from gasoline is going nowhere with increasing world population.


    The decline in oil prices since 2014 was all because of ramped production in shale oil. With shale oil industry in US in decline, we again are going to see $100 oil making a comeback soon. May take 6-8 years but it will happen.

    Alternate energy development isn’t so promising at the moment and low efficiency Wont make people fall on it anytime soon. Infact, most oil companies are trying to go carbon free by 2030 by CO2 capture type projects. I don’t see oil industry dying a slow death, I see them rise even further.

  75. #75
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    Quote Originally Posted by KingKhanWC View Post
    We are decades away from electric or clean energy cars. Not to forget planes and other forms of transport. Oil is still the most important commodity, only reason for the downturn is nobody is using it. End the lockdown around the world, oil will rise again very very quickly, much above $50 imo.
    We are closer than that to electric cars - right now there are 200 miles range jobs available, some very nice ones. We could switch to all-electric trains and buses immediately.

    Planes and ships are more problematic. I can see the age of sail returning with the sails and superstructure coated in PV panels and diesel engines only for tight manoeuvres in port.

  76. #76
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    Special Report: Trump told Saudis: Cut oil supply or lose U.S. military support - sources

    WASHINGTON/LONDON/DUBAI (Reuters) - As the United States pressed Saudi Arabia to end its oil price war with Russia, President Donald Trump gave Saudi leaders an ultimatum.

    In an April 2 phone call, Trump told Saudi Crown Prince Mohammed bin Salman that unless the Organization of the Petroleum Exporting Countries (OPEC) started cutting oil production, he would be powerless to stop lawmakers from passing legislation to withdraw U.S. troops from the kingdom, four sources familiar with the matter told Reuters.

    The threat to upend a 75-year strategic alliance, which has not been previously reported, was central to the U.S. pressure campaign that led to a landmark global deal to slash oil supply as demand collapsed in the coronavirus pandemic - scoring a diplomatic victory for the White House.

    Trump delivered the message to the crown prince 10 days before the announcement of production cuts. The kingdom’s de facto leader was so taken aback by the threat that he ordered his aides out of the room so he could continue the discussion in private, according to a U.S. source who was briefed on the discussion by senior administration officials.

    The effort illustrated Trump’s strong desire to protect the U.S. oil industry from a historic price meltdown as governments shut down economies worldwide to fight the virus. It also reflected a telling reversal of Trump’s longstanding criticism of the oil cartel, which he has blasted for raising energy costs for Americans with supply cuts that usually lead to higher gasoline prices. Now, Trump was asking OPEC to slash output.

    A senior U.S. official told Reuters that the administration notified Saudi leaders that, without production cuts, “there would be no way to stop the U.S. Congress from imposing restrictions that could lead to a withdrawal of U.S. forces.” The official summed up the argument, made through various diplomatic channels, as telling Saudi leaders: “We are defending your industry while you’re destroying ours.”

    Reuters asked Trump about the talks in an interview Wednesday evening at the White House, at which the president addressed a range of topics involving the pandemic. Asked if he told the crown prince that the U.S. might pull forces out of Saudi Arabia, Trump said, “I didn’t have to tell him.”

    “I thought he and President Putin, Vladimir Putin, were very reasonable,” Trump said. “They knew they had a problem, and then this happened.”

    Asked what he told the Crown Prince Mohammed, Trump said: “They were having a hard time making a deal. And I met telephonically with him, and we were able to reach a deal” for production cuts, Trump said.

    Saudi Arabia’s government media office did not respond to a request for comment. A Saudi official who asked not to be named stressed that the agreement represented the will of all countries in the so-called OPEC+ group of oil-producing nations, which includes OPEC plus a coalition led by Russia.

    “Saudi Arabia, the United States and Russia have played an important role in the OPEC+ oil cut agreement, but without the cooperation of the 23 countries who took part in the agreement, it would not have happened,” said the Saudi official, who declined to comment on the discussions between U.S. and Saudi leaders.

    The week before Trump’s phone call with Crown Prince Mohammed, U.S. Republican Senators Kevin Cramer and Dan Sullivan had introduced legislation to remove all U.S. troops, Patriot missiles and anti-missile defense systems from the kingdom unless Saudi Arabia cut oil output. Support for the measure was gaining momentum amid Congressional anger over the ill-timed Saudi-Russia oil price war. The kingdom had opened up the taps in April, unleashing a flood of crude into the global supply after Russia refused to deepen production cuts in line with an earlier OPEC supply pact.

    On April 12, under pressure from Trump, the world’s biggest oil-producing nations outside the United States agreed to the largest production cut ever negotiated. OPEC, Russia and other allied producers slashed production by 9.7 million barrels per day (bpd), or about 10% of global output. Half that volume came from cuts of 2.5 million bpd each by Saudi Arabia and Russia, whose budgets depend on high oil-and-gas revenues.

    Despite the agreement to cut a tenth of global production, oil prices continued to fall to historic lows. U.S. oil futures dropped below $0 last week as sellers paid buyers to avoid taking delivery of oil they had no place to store. Brent futures, the global oil benchmark, fell towards $15 per barrel - a level not seen since the 1999 oil price crash – from as high as $70 at the start of the year.

    The deal for supply cuts could eventually boost prices, however, as governments worldwide start to open their economies and fuel demand rises with increased travel. Whatever the impact, the negotiations mark an extraordinary display of U.S. influence over global oil output.

    Cramer, the Republican senator from North Dakota, told Reuters he spoke to Trump about the legislation to withdraw U.S. military protection from Saudi Arabia on March 30, three days before the president called Crown Prince Mohammed.

    Asked whether Trump told Saudi Arabia it could lose U.S. military support, U.S. Energy Secretary Dan Brouillette told Reuters the president reserved the right to use every tool to protect U.S. producers, including “our support for their defense needs.”

    The strategic partnership dates back to 1945, when President Franklin D. Roosevelt met with Saudi King Abdul Aziz Ibn Saud on the USS Quincy, a Navy cruiser. They reached a deal: U.S. military protection in exchange for access to Saudi oil reserves. Today, the United States has about three thousand troops in the country, and the U.S. Navy’s Fifth Fleet protects oil exports from the region.

    Saudi Arabia relies on the United States for weapons and protection against regional rivals such as Iran. The kingdom’s vulnerabilities, however, were exposed late last year in an attack by 18 drones and three missiles on key Saudi oil facilities. Washington blamed Iran; Tehran denied it.

    https://www.reuters.com/article/us-g...-idUSKBN22C1V4


    Arsenal all the way!! (and Pakistan, of course!)

  77. #77
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    Quote Originally Posted by Robert View Post
    We are closer than that to electric cars - right now there are 200 miles range jobs available, some very nice ones. We could switch to all-electric trains and buses immediately.

    Planes and ships are more problematic. I can see the age of sail returning with the sails and superstructure coated in PV panels and diesel engines only for tight manoeuvres in port.
    Some can go up to 300 miles but even that isnt enough. The price is expensive, the cheapest cars arent too bad but they are average motors. For something decent you need to pay over £50k, the same car in diesel/petrol is 10-20k cheaper.

    We need charging while driving technology, such as charging terminals on the actual roads, self re-charging is again weak and largely untested tech.


    Lions don't lose sleep over the opinions of Sheep

  78. #78
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    Quote Originally Posted by KingKhanWC View Post
    Some can go up to 300 miles but even that isnt enough. The price is expensive, the cheapest cars arent too bad but they are average motors. For something decent you need to pay over £50k, the same car in diesel/petrol is 10-20k cheaper.

    We need charging while driving technology, such as charging terminals on the actual roads, self re-charging is again weak and largely untested tech.

    Add to that, lithium batteries and rate earth metals that goes in electric car batteries are worse for environment as per quite a few studies. Finally it is Showing in the mainstream media. If oil companies can become carbon neutral, I don’t see why anyone would even think of low efficiency electric cars.

  79. #79
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    Quote Originally Posted by ahmedzee View Post
    Add to that, lithium batteries and rate earth metals that goes in electric car batteries are worse for environment as per quite a few studies. Finally it is Showing in the mainstream media. If oil companies can become carbon neutral, I don’t see why anyone would even think of low efficiency electric cars.
    Also need to mention the human cost. Yanks have invaded Afghanistan which has the worlds biggest reserves of lithium, it was certainly one of the many reasons. The batteries are expensive which is why the cars are too. Cobalt is the most expensive element and the damage they are doing to the Congo is dangerous, along with the slave labour.


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  80. #80
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    Quote Originally Posted by KingKhanWC View Post
    Also need to mention the human cost. Yanks have invaded Afghanistan which has the worlds biggest reserves of lithium, it was certainly one of the many reasons. The batteries are expensive which is why the cars are too. Cobalt is the most expensive element and the damage they are doing to the Congo is dangerous, along with the slave labour.
    Exactly. And a lot of people don’t know that they use a lot of bombs in such mining operations. Anything to do with battery is actually very bad. Yes we have batteries in small quantities in phones and computers. But damn, the size of batteries that goes in cars is insane. Human cost and environment cost is massive. People don’t understand this. Those in energy business definitely do.


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