 You don't need to be an 'investor' to invest in Singletrack: 6 days left: 95% of target - Find out more
Interesting article in the Guardian about oil prices/OPEC and the countries that rely heavily on oil.
[url= http://www.theguardian.com/news/datablog/2014/oct/16/datablog-low-oil-prices-chill-producer-economies ]Linky[/url]
Was pondering today the worldwide implications of what is effectively the Saudis lowering the price of crude. I'd love to know what goes on behind closed doors at these OPEC (ran by the Saudis it seems) meetings. Must go something like "which country should we put out of business today?"
I'm under the impression that the Saudis aren't so happy that the western nations are now plucking new oil/shale gas out of the ground. Lowering the price of crude effectively makes it financially inefficient to now do so hence pissing quite a fair few people of in the process. Ah well, cheap fuel for the while at least.
If the Americans have got a brain, they'll carry on extracting.
Not really.
Shale isn't that difficult, in general the pattern over the last decade has been to look for and extract harder to reach reserves (deep water etc). Shale is a new market entirely, at the cheap end it's $25 per barrel equivalent.
If anything the USA is behind these moves as they're far more effective than sanctions at bringing down governments.
Russian or Iranian oil isn't necessarily expensive to extract, but their economies are built on that balancing the budget (a bit like the argument behind Sottish devolution). Typically the less you're able to trade other goods/services with the rest of the world (i.e. we/'the west' imposed sanctions) the more dependent you are on oil exports. Hence why you see numbers like Russia/Iran needing $110/$130 per barrel, it's not the cost of extraction (which is probably $20-$30), it's the ~$90 they need on top of that to keep the governments running, taxes low and populations happy.
I can't see the USA's drilling for shale affecting much more than there own non efficiency for oil production in the Gulf of Mexico. As the biggest exporter I'm sure Saudi have much more clout than the USA does it terms of setting prices/sanctions. Although I have to admit it doesn't take a conspiracy theorist to see that the countries that suffer the most are hardly on the USA's Xmas card list!
They don't set the price, just the supply, OPEC announce that they're ramping up production and the price falls in response.
This is really hurting Russia, the Rouble fell 9% yesterday, the reason it didn't crash further is it's suspected the Russian central bank started buying up the currency. Their economy is going to go through the wringer.
The Ukranian adventure is costing the Russian people dear. If Europe gets an alternate natural gas supply the Russians will really be up a creek without a paddle.
They may not be able to set the price, but they can easily manipulate it to suit there own needs. It would appear that other OPEC nations believe SA effectively 'manages' OPEC. For obvious reasons the USA don't give a toss so won't get involved.
Nowt in it for Saudi though other than pissing off Iran, they need oil prices as high as anyone, not as high as Iran and Russia, but higher than they are.