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Page added on April 22, 2018
Market to absorb higher oil prices, says Saudi Arabia
The global market has the capacity to absorb higher oil prices, Minister of Energy, Industry and Mineral Resources Khaled Al-Faleh has said.
Faleh’s statement at a meeting of oil producers in Jeddah on Friday came as crude hit the highest level in more than three years.
The statement drew a swift reaction from US President Donald Trump who accused OPEC of inflating prices. “Looks like OPEC is at it again,” Trump tweeted.
Oil has rebounded to over $70 a barrel, after prices crashed to as low as $26 in January 2016.
“I have not seen any impact on demand with current prices,” Faleh told reporters, ahead of a ministerial committee for OPEC and non-OPEC producers.
“Reduced energy intensity and higher productivity globally of energy input leads me to think that there is the capacity to absorb higher prices,” he said.
The ministerial committee said Friday that crude inventory levels have been reduced but were still higher than desired.
Stockpiles were at 2.83 billion barrels, down from their peak of 3.12 billion barrels two years ago, it said in a statement.
Gunning for $80bln
Analysts believe Saudi Arabia, the world’s top crude exporter, aims to see much higher oil prices to overcome its domestic financial difficulties and raise the valuation of state oil giant Aramco ahead of a planned five-percent IPO.
After prices hit $70 a barrel, the Kingdom “is thought to be unofficially gunning for $80 a barrel, with some even suggesting that it favors a return to $100 (a barrel) oil”, Stephen Brennock of PVM Oil Associates said.
“As well as helping to reduce the Saudi government balance sheet, a further spike in prices would act as a boon for the impending Aramco IPO,” Brennock said.
“This is why Saudi Arabia is keeping the supply of oil tight,” Commerzbank said.
Faleh on Friday insisted the Organization of Petroleum Exporting Countries does not have a price target for oil.
“We never have a price target … Prices are determined by the market,” said Faleh who warned against the danger of price fluctuations, saying “volatility is our enemy.”
Saudi-Russia ‘consensus’
Russia, the world’s top oil producer, on Friday gave its backing to the idea of establishing an enduring alliance for producers to continue their control of the market.
“We have created a very solid foundation for cooperation between OPEC and non-OPEC countries in the future even beyond the declaration of cooperation,” Russia Energy Minister Alexander Novak told reporters in Jeddah.
Saudi Arabia said a “consensus” was emerging for a long-term cooperation agreement.
OPEC and non-OPEC producers struck a deal in late 2016 to trim production by 1.8 million barrels per day to reduce a global glut that sent prices crashing.
The deal, which is due to run out at the end of this year, has helped boost oil prices to above $70 a barrel from below $30 in early 2016.
The recovery has also been fueled by geopolitical tensions, Trump’s threat to reimpose sanctions on Iran and production problems in Venezuela, Nigeria and Libya. — With inputs from AFP
85 Comments on "Market to absorb higher oil prices, says Saudi Arabia"
Davy on Sun, 22nd Apr 2018 7:41 am
Markets will absorb these prices with consequences. There will be a shift in benefits and costs to different nations and sectors. The important point is these higher prices have been relatively gradual and have not yet broke technical levels that are problematic with the global economy. Remember Goldilocks has many friends and enemies. Her enemies lurk in the Black Forest of higher prices with a corresponding unhealthy global economy of stagflation and zombie debt.
twocats on Sun, 22nd Apr 2018 8:00 am
Well put Davy.
We are so late into this current (and first zombie) business cycle its really hard to tell what the roadmap to any downturn would look like.
So if oil prices are destined to go up from here (which looks very likely). Then of course it will help shale oil (though if they don’t turn at least have free cash flow from operations that will be a nail in that coffin) and other commodity producers. But it will hurt anything further downstream reliant on input prices.
We can assume that the average consumer is pretty much tapped out. There was a report circulating the other day that millenials aged 24 to 35 now have a negative net worth when they have student debt.
https://nypost.com/2018/04/19/college-graduates-with-student-debt-have-depressing-net-worth/
at some point those (mostly white) baby boomers that have generational wealth are going to run dry and then the serfdom is complete.
marmico on Sun, 22nd Apr 2018 8:00 am
Wow, in March 2018 JoeSixPack or Jane Chardonnay will work for 1.15 hours to buy 10 gallons of gasoline to drive 240 miles. The world is on the precipice of collapse. Idiots.
https://fred.stlouisfed.org/graph/?g=jxCe
Take me back to the 1995-2000 Clinton boom.
Davy on Sun, 22nd Apr 2018 8:43 am
Hey, marmi, where have you been lately?
kanon on Sun, 22nd Apr 2018 8:45 am
“Wow, in March 2018 JoeSixPack or Jane Chardonnay will work for 1.15 hours to buy 10 gallons of gasoline to drive 240 miles.”
If you add travel time and the work hours to earn car payments, insurance, repairs, and fuel, the average speed of the automobile is about 13 miles per hour. Faster than walking, but slower than a bicycle.
Davy on Sun, 22nd Apr 2018 8:49 am
Thanks for the perspective that governs reality Kanon. Marmi prefers Freddie fluff graphs. Somethings never change.
marmico on Sun, 22nd Apr 2018 9:02 am
I came on line at peakoil.com 4 years ago to celebrate, with bloviating, blathering blowhardedness and a little word salad tossed in, the oil bear market. Times have changed. The bull is in charge. Joe and Jane have to pay up until they buy an EV.
A tidbit: US per capita energy consumption is the same as it was 50 years ago, 3 million Btu per year.
https://www.eia.gov/totalenergy/data/monthly/pdf/sec1_17.pdf
kanon on Sun, 22nd Apr 2018 9:12 am
I just want to emphasize that the peak oil topic of this site is a result of choices that we make or which are made for us. Gasoline consumption is the product of eliminating competing transportation modes. We are stuck paying the price because we deliberately have no choice. The lifestyle of the U.S. ruling class is non-negotiable. (D. Cheney) If, as marmico says, per capita energy consumption has remained constant, it is because we have had a choice to reduce electricity which offsets gasoline increases.
joe on Sun, 22nd Apr 2018 9:21 am
I saw this movie in 2013. All those worthless unproductive areas of tight oil become valuable and people will drill like mad until opec has to cut production again even more, and next time there is no Venezuela to save their butts.
marmico on Sun, 22nd Apr 2018 9:21 am
If you add travel time…
Thanks for the heads up. More bloviating, OMG. A one way commute was 24 minutes during the Clinton 1995-2000 boom and 26 minutes in the Obama 2012-2016 boom. Joe’s fuel efficiency in 2014 is 20% higher than Jane’s in 1997.
https://preview.tinyurl.com/y7zzek2k
Boat on Sun, 22nd Apr 2018 9:52 am
Welcome back marmico. Always enjoyed your charts.
JuanP on Sun, 22nd Apr 2018 9:55 am
Oil prices are likely to hold their ground and even increase until the next global financial crisis comes along. They have bottomed out for this business cycle and any dips will be temporary. “Peak Oil Demand” is nowhere to be seen! LOL! There is no new production anywhere in sight and investment in future production capacity has been inadequate for years. Where will oil prices peak and how bad will it be this time? It is anyone’s guess.
Boat on Sun, 22nd Apr 2018 9:59 am
marmico
Your one of the very few that understand just how far tech and efficiency have come. To bad they are wasted on the largest group of non reading chart readers ever assembled. Lol
MASTERMIND on Sun, 22nd Apr 2018 10:07 am
Marmico
Here I made something for you..You little cocksucker you!
https://imgur.com/a/pYxKa
MASTERMIND on Sun, 22nd Apr 2018 10:09 am
Boat
I didn’t know spooks worked on Sundays? Shouldn’t you be bowing down on your knees to your king in funny hat who sits on his ass in Rome? In Jebus name!
kanon on Sun, 22nd Apr 2018 10:22 am
It is not bloviating. You are ignoring increases in car payments and insurance and emphasizing a piddling savings. I think it is basically accurate to say that the average U.S. worker spends around 35 hours a month either driving or earning the money to be able to drive. You can divide into total monthly miles or total monthly commute miles. “The next largest cost is transportation at 17.6 percent (of the monthly budget)” average-american-household-budget. So 13 miles per hour is for the lower paid and slower people, but it does show that glossy factoids are often misleading. Also consider that transportation statistics are generally skewed to under-report driving costs. For instance, taxes for roads, the MIC, and expenses for car wrecks are not included.
Boat on Sun, 22nd Apr 2018 10:24 am
When you live in the energy capital of the world, you control the world. Are the center of the world. The world comes here. Break out your wallet and pay tribute.
MASTERMIND on Sun, 22nd Apr 2018 10:36 am
In my parents and grandparents generations a man could go to work and earn enough to both buy a house and comfortably sustain his family, with two or three children.
Now a man and woman can be married and not earn enough to own their own property or afford to even have a child, even if living a frugal life.
This destruction of families and the creation of circumstances in which people cannot afford to have children should be thought of as genocide.
MASTERMIND on Sun, 22nd Apr 2018 10:37 am
Boat
You mean the energy bankruptcy capital of the world! The energy ponzi captial of the world! There I fixed it for ya1
GregT on Sun, 22nd Apr 2018 10:43 am
“When you live in the energy capital of the world, you control the world.”
When you become reliant on the lifestyle of the energy capital of the world, you are in for an entire world of hurt when that source of energy becomes too expensive to maintain your economy, or when the amount of energy that you have become so completely reliant on, is no longer available.
Davy on Sun, 22nd Apr 2018 10:49 am
Kanon, don’t mind marmi, he talks tough but he is really just a pussy cat. I tend to agree with you but I will
acknowledge the cornucopians techno optimist made us doomers eat crow for our extremism of a few years ago. Yet, how hard is it to claim to be right when you never face the fact that we were at a very dangerous juncture post 08 crisis. Just imagine the economy didn’t recover where would these cheerleaders be then IMA I remember them disappearing when times were scary only to return under a cover of optimism. Most cornucopians here don’t have very big balls or brains. They just got lucky.
GregT on Sun, 22nd Apr 2018 10:51 am
“You mean the energy bankruptcy capital of the world! The energy ponzi captial of the world!”
Boat is a linear kind of guy. He doesn’t do exponential.
Davy on Sun, 22nd Apr 2018 10:52 am
Greggie, the whole world is in a world of hurt when this day comes you talk about. Your emotions blind you from the fact the world is in food overshoot minus fossil fuels so your noble subsistence types face the same consequences.
marmico on Sun, 22nd Apr 2018 10:53 am
Here I made something for you..You little cocksucker you!
Go suck Turdburger’s dry clit, baby doomer.
__________________
I think it is basically accurate to say that the average U.S. worker spends around 35 hours a month either driving or earning the money to be able to drive.
You are right. The average “new” car drives ~12500 miles per year which is not all commuting. At an average of 24 miles per gallon, the annual consumption is 520 gallons x 0.15 hour per work per gallon or 70 hours work per year. The collapse is nigh, kanon. ROTFLMFAO.
Oh, Joe bought a $20 plastic organizer made in China to hold his phone, notebook and mistress’ undergarments. When he is stopped in line at a red light, he can talk, keyboard or sniff. Back in 1997, Jane’s only choice was to sniff. Multitasking.
Boat on Sun, 22nd Apr 2018 10:54 am
Mm
What kind of piss poor jobs do you have. It’s easy to earn a living if you enjoy hard work. If you work out, stay in shape and eat right even hard work is easy.
Antius on Sun, 22nd Apr 2018 10:55 am
“This destruction of families and the creation of circumstances in which people cannot afford to have children should be thought of as genocide.”
Wow. MM actually said something I agree with.
Another part of the problem is that people are different now. They are more selfish, have a higher sense of entitlement, yet are less prepared to give. For a lot of people, life is all about satisfying short-term carnal desires for food, sex and entertainment. Too many are looking for the right person, rather than being the right person. Men do not have the aptitude of their forebears and women are shallow tarts, who start having sex in their early teens. Many people just aren’t marriage material and they are too selfish and too interested in self-gratification to sacrifice their time producing children.
GregT on Sun, 22nd Apr 2018 10:56 am
“Just imagine the economy didn’t recover where would these cheerleaders be”
Hmmm, when did the economy ever recover? Last time I checked, they were still talking about it being in recovery mode.
Davy on Sun, 22nd Apr 2018 10:56 am
Boat made you eat crow greggie a few years back with your extreme doom. He did the same to me but I am honest about it unlike you. You are an emotional kind of guy that pricks Americans exclusively. Boat has shown you the door many times despite your personality disorder.
Davy on Sun, 22nd Apr 2018 10:58 am
Greggie, there is a big difference from 08 and now but your economic understanding and emotional attachments won’t allow you to see the difference.
GregT on Sun, 22nd Apr 2018 11:13 am
It’s rather difficult to ignore exponentially growing mountains of unrepayable debt Davy, but with your vast understanding of economics, and your complete lack of serious emotional issues, I’m sure that you will continue to do so.
Boat on Sun, 22nd Apr 2018 11:17 am
greggiet
Recovery? Son, the world has passed you by. Even 4 years ago the world was in great shape and has been improving dramatically ever since.
These cycles take years to happen. Electricity cost has underpinned the stability of economies and Nat gas with renewables will continue to do so.
Embrace these best of times.
kanon on Sun, 22nd Apr 2018 11:31 am
marmico LOL. Davy is right, you have only one point and repeat it along with ad hominem. Fuel efficiency is a small part of the picture. The cost of fossil fuels is stupendous and “efficiency” can be a cargo cult distraction. Is fuel efficiency metered out? Are cars limited in how efficient they can be? There are physical limits, but there is also the limit that a certain amount of oil is produced and refined and it must be consumed or the pipelines back up and overflow into a “glut.” This is not about doom and gloom, but about being manipulated in the “free” market.
GregT on Sun, 22nd Apr 2018 11:34 am
Updates on the US Economy
20/04/18 12:40 PM
“On Wednesday the president of the St. Louis Federal Reserve James Bullard spoke about a somewhat unsettling development with US treasury bonds. With each previous hike the treasury yields have flattened little by little, and now the trend is nearly flat. Bullard explained that after flattening, the trend could dip downward, which is a signal of poor economic health and an early sign of a recession.”
“Essentially, what Bullard is trying to say is that based on economic practice and experience, raising interest rates too quickly could harm the American economy and bring about a recession. We need to remember that despite the stellar statistics, the United States (and the rest of the world, for that matter) is still in recovery mode after the 2008 global economic crisis.”
https://superforex.com/economy-articles/updates-on-the-us-economy/?x=FORUMS
If the world’s economies are still in recovery mode from the ’08 Global Financial Crisis (which originated in the US), then it hasn’t recovered yet, now has it.
GregT on Sun, 22nd Apr 2018 11:38 am
IMA, the world’s economies are never going to recover from the Global Financial Crisis. It will be a continuous series of steps downward from here on end.
joe on Sun, 22nd Apr 2018 11:48 am
Agreed with Greg, society can’t sustain the cost of peak oil forever with electric cars and magic money.
Davy on Sun, 22nd Apr 2018 11:49 am
Greggie, answer the question is there a difference between 08 and now? The underlying state of the global economy may be horrible which I highlight here routinely but there is a huge difference in the state of economic activity and confidence now and then. You just chirp your exponential meets linear vagueness. I give actionable comments and you, emotional desires.
GregT on Sun, 22nd Apr 2018 12:02 pm
“Greggie, answer the question is there a difference between 08 and now?”
Yes Davy there is. In the US for example, all time historical federal debt alone, has over doubled in the past 9 years.
Debt is a claim on future production. Production requires energy. In a ponzi schemed based economic system, the future must always be more productive than today, and requires exponentially growing amounts of energy. Instead, we are now experiencing exponential growing mountains of unrepayable best.
Confidence does not equate to growth. Confidence does not pay down claims on future production, and it does not increase the energy required to grow that same said future production.
Lose the emotionally driven America-centric chip on your shoulder Davy. It is clouding your ability to carry on a considerate and rational conversation.
GregT on Sun, 22nd Apr 2018 12:03 pm
“unrepayable best.”
unrepayable debt.
GregT on Sun, 22nd Apr 2018 12:19 pm
IMA,
The USA, for example, no longer has a healthy productive economy. It has now become a largely wholesale/retail, service based economy. It is hanging on the threads of cheap offshore labour. Trump’s promise of ‘Making America Great Again’ by bringing industry, manufacturing, and jobs back to the US, will never work.
That cat is already out of the bag.
marmico on Sun, 22nd Apr 2018 12:22 pm
marmico LOL. Davy is right, you have only one point and repeat it along with ad hominem
Some 12 year old minority kid in inner city Baltimore with access to the web at a public library knows more about arithmetic than you do.
_____________________________
Davy on Sun, 22nd Apr 2018 12:22 pm
“Yes Davy there is. In the US for example, all time historical federal debt alone, has over doubled in the past 9 years.”
No arguments with the debt but that does not mean we have not recovered from a near collapse. More than half of US debt is owned by Americans much of it being the Social Security trust fund. https://tinyurl.com/zfr99uf. So it is a matter of robbing peter to pay paul.
“Debt is a claim on future production.”
It is also the other side of the balance sheet.
Production requires energy.
Much of the notional global debt is digital no productive debt that has little to do with energy.
In a ponzi schemed based economic system, the future must always be more productive than today?
Where did you learn that? Did you study Ponzi schemes in high school?
“and requires exponentially growing amounts of energy. Instead, we are now experiencing exponential growing mountains of unrepayable best.”
Sorry, you are off track trying to piece together a Puzzle that is incomplete. You mix up the real economy and the digital one.
“Confidence does not equate to growth.”
Never said it did…did I, nope. Confidence is liquidity and very important to growth.
“Confidence does not pay down claims on future production, and it does not increase the energy required to grow that same said future production.”
Confidence is required to allow economic activity to generate growth.
“Lose the emotionally driven America-centric chip on your shoulder Davy. It is clouding your ability to carry on a considerate and rational conversation.”
Shut up greggie and quit pricking Americans and quit acting like you are an economics professor.
Davy on Sun, 22nd Apr 2018 12:35 pm
“The USA, for example, no longer has a healthy productive economy.”
Who says anti-American professor of economics, greggie the T. You have little understanding of modern finance and economics. You are an emotionally driven anti-American Canadian. There is no objectivity or balance with you so sure, you will cherry pick the worst and ignore bright spots just like your buddy billy 3rd world.
“It has now become a largely wholesale/retail, service based economy.”
It is still one of the largest manufacturing economies in the world.
“China Solidifies Its Position as the World’s Largest Manufacturer”
https://tinyurl.com/y8zdlt9y
“China became the largest manufacturing economy in the world (with a 23.2% share of manufacturing activity) through extremely fast growth in the physical volume of value-added and modest inflation. The U.S. is in second place with a 17.2% share. China has more than four times the population of the United States, and though its manufacturing intensity of $1,978 per capita value-added in 2013 is high for a developing economy, it is well behind advanced countries such as the United States ($6,338).”
Also see competitiveness:
“2016 Global Manufacturing Competitiveness Index”
https://tinyurl.com/ybtkzx7e
Report highlights
“China and the United States jockey for top honors while Germany holds firm China is the most competitive manufacturing nation…for now: Consistent with the previous 2010 and 2013 Global Manufacturing Competitiveness Index studies, China is again ranked as the most competitive manufacturing nation in 2016, but is expected to slip to second position as global executives provide their perspective on how the next five years will play out. The United States is expected to take over the number one position from China by the end of the decade while Germany holds firm at number three: The US continues to improve its ranking from 4th in 2010 to 3rd in 2013 to 2nd in this year’s study. Moreover, executives expect the US to assume the top position before the end of the decade while Germany holds strong and steady at the number three position now through the end of the decade.”
“It is hanging on the threads of cheap offshore labour.”
Nonsense
“Trump’s promise of ‘Making America Great Again’ by bringing industry, manufacturing, and jobs back to the US, will never work.”
An example of your rabid Canadian ant-Americanism that you promote here.
“That cat is already out of the bag.”
Yea, you totally described yourself as an ultra nationalistic anti-American Canadian that stalks and pricks American exclusively and repetitively IOW emotionally disturbed.
Boat on Sun, 22nd Apr 2018 12:59 pm
Davy, greggiet,
Manufacturing as a percentage of GDP has dropped just like agriculture. What is much more important is the output.
https://fred.stlouisfed.org/series/INDPRO
As you can see, a dramatic rise. That’s what tech and efficiency does. In a world of competition, kicking out more production at the same time being a smaller percentage is called kicking ass.
Davy this is why over the years I have argued that a stagnent/shrinking GDP is ok as long as efficiency and tech trends continue.
MASTERMIND on Sun, 22nd Apr 2018 1:03 pm
marmico
Just wait till the oil runs out! Ill just tell the rich man NO..One time..Then watch him stroke out while I breed his daughters! I’m going to have more kids than Stanford!
https://imgur.com/a/pYxKa
MASTERMIND on Sun, 22nd Apr 2018 1:07 pm
Here are the facts about this recovery debate.
The US economy has grown at 1.5% average over the last decade. It grew at 3% average the prior 50 years before the great recession. The word recovery means “to return to a normal state”..So until we reach 3% growth we haven’t statically recovered yet.
https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locati
GregT on Sun, 22nd Apr 2018 1:24 pm
“Confidence is required to allow economic activity to generate growth.”
Without energy, there can be no growth. Confidence does not generate energy, and it does not generate growth.
Back to your original assertion Davy: (which is incorrect IMA)
“Just imagine the economy didn’t recover where would these cheerleaders be then”
The economy is still in recovery, therefore, it has still not recovered yet. The rest of your above emotional America-centric blather, is based on false pretences, ZOM distortions, and downright lies.
Boat on Sun, 22nd Apr 2018 1:25 pm
Mm,
Stats are funny things. Since 1950 the average oil consumption had grown 1.3 mbpd per year. This year it’s projected to be 1.6. The world is booming!
GregT on Sun, 22nd Apr 2018 1:30 pm
One more thing,
China and Russia are not threats to the US of A. They are threats to the privately owned Federal Reserve Bank, which is a much larger threat to America, than both China and Russia combined.
GregT on Sun, 22nd Apr 2018 1:48 pm
“Since 1950 the average oil consumption had grown 1.3 mbpd per year. This year it’s projected to be 1.6.”
The number of barrels of oil are irrelevant. It is the nominal cost per barrel (affordability), and the amount of energy available to our economies, that matter.
MASTERMIND on Sun, 22nd Apr 2018 1:49 pm
Boat
That is because of China and India and increased world population. . The entire OECD economies are in a depression. Global and OECD GDP have been contracting for forty years.
https://imgur.com/a/pYxKa