Crashing oil prices could crush Vladimir Putin

42 Comments on "Crashing oil prices could crush Vladimir Putin"

armandob on Wed, 15th Oct 2014 7:20 pm 



I tough I read ;
Crashing oil prices could crush US shale oil operations. Yeah those will be bankrupted faster then Russia. Bye bye American oil renaissance.

Always a CNN/Reuters propaganda piece.

Davy on Wed, 15th Oct 2014 8:30 pm 



Czar Putt is playing a dangerous geopolitical game no doubt. He is doing Chavez economics but Russia is no Venezuela. Putt is highly capable and if his gamble succeeds it will pay off handsomely for Russia. Personally I don’t think there is the time needed for Russia to pivot to the east and rearrange global balance of power. I also believe his actions and the wests reactions will play a central part in the destruction of BAU. Trade and finance wars are anathema to a complex integrated global system. This system is loaded up on debt everywhere. Growth is essential to maintain this system and its debt. Trade and finance wars do not promote growth. Russia is playing a dangerous game with the military buildup and the foreign adventures. If Putt wants his gamble to succeed he has to stay strong but not overweight with the military. His growth in military spending is going to sap his economic strength when he needs it the most. He may succeed and this may paradoxically be a eureka moment for Russia. Now may be the time to break from the west and put in place something to replace the current global system. The whole BAU ship is flying apart. Putt is planting the seed for a new beginning for Russia. I am just not sure what Putt thinks will shake out of BAU’s collapse is what he is going to get. Russia could easily break apart is big as it is.

Makati1 on Wed, 15th Oct 2014 10:13 pm 



And then there is this:

http://www.globalresearch.ca/pardon-us-for-our-countrys-existence-in-the-middle-of-your-military-bases-russian-foreign-minister-lavrovs-speech-at-the-un/5407937

http://www.globalresearch.ca/us-army-drafts-blueprint-for-world-war-iii/5407869

http://www.reuters.com/article/2014/10/13/russia-china-banks-idUSL6N0S82EJ20141013?feedType=RSS&feedName=utilitiesSector

http://www.reuters.com/article/2014/10/13/russia-china-banks-idUSL6N0S82EJ20141013?feedType=RSS&feedName=utilitiesSector

http://thebricspost.com/wests-sanctions-on-russia-erroneous-china/#.VD83VckwDz0

And on and on…

Makati1 on Wed, 15th Oct 2014 10:14 pm 



Oops. Wish you could edit comments here.

Nony on Wed, 15th Oct 2014 11:02 pm 



lowest price in 4 years.

http://www.thestar.com.my/Business/Business-News/2014/10/15/US-crude-oil-falls-to-US$80-lowest-since-Sept-2009/?style=biz

GregT on Thu, 16th Oct 2014 12:39 am 



lowest price in 4 years.

Pretty scary isn’t it. Glad most of my assets were already out of the markets.

A small taste of things to come. Started preparing yet NOo, or are you going to keep ignoring reality?

Perk Earl on Thu, 16th Oct 2014 4:49 am 



https://www.youtube.com/watch?v=N6pMCqsOs04

That link will give you a flavor what we will miss when the oil age is over.

JuanP on Thu, 16th Oct 2014 8:29 am 



More mental masturbation and anti Russia propaganda on the part of delusional Americans. I find it very sad that so many Americans, particularly in the government, have this obsession with power, wars and violence.
Anyone who thinks Russia will fall before the USA falls is living in an alternative reality world. Russia is stronger and more united that it has ever been, at least since I was born. The US is closest to a brutal economic crash than any other country in the world. And, when considering the corrupted antisocial psychopaths that rule over us in the USA, I can’t help but think the USA is done.
I am in the process of changing my mind about staying in the USA. This is not a place for people like me. I am so pissed with the US government, all I ever wanted was to live and die in the USA.

Nony on Thu, 16th Oct 2014 8:29 am 



Low prices are good. You can’t complain about them being both high AND low. Now if you kvetch about not low enough…that’s a much stronger argument.

JuanP on Thu, 16th Oct 2014 8:37 am 



I read yesterday reports that Russia started negotiating permanent military bases in Argentina, Nicaragua, Venezuela, and Cuba. What a flash back. I hope it doesn’t happen. The last thing I want is for the USA and Russia to fight another proxy war in Latin America like the one that ruined my childhood and adolescence.
I wish the US and Russia would just fight and kill each other and leave the rest of us alone.
Humanity is getting very, very tired of this crap!

MSN Fanboy on Thu, 16th Oct 2014 9:33 am 



Nony dont be stupid. The peeps here love complaining. High, Low, Middle, etc. just complaints.

Feemer on Thu, 16th Oct 2014 10:11 am 



Well put Davy. I agree that if russia plays its cards right it will emerge as the leader of “the east”. The west’s power is diminishing. Europe knows this, and the US is finding it out. I don’t agree with the west on everything, but we do have good environmental regulations and human rights, so I’d like the west to maintain its influence. Europe could not only save money, but also lessen its dependence on Russian gas by increasing the efficiency of its buildings 30-40%. It saves ghgs, hurts russia, and saves people money.

JuanP on Thu, 16th Oct 2014 10:21 am 



Russia’s military spending is an insignificant fraction of US military spending, and one of the main reasons why Russia can outlast us in this war we are fighting. They can produce all the energy, food, and water they need to get by for a very long time.
The rest of the world needs Russia’s oil more than they need our money. Without Russia’s oil and gas exports the world would experience an instantaneous economic and financial collapse.

GregT on Thu, 16th Oct 2014 10:29 am 



“Low prices are good.”

Oil itself is not “good”. It matters little what price it is selling for.

“Ten years from now, twenty years from now, you will see: oil will bring us ruin… Oil is the Devil’s excrement.”

Juan Pablo Pérez Alfonzo: Venezuelan diplomat, politician and lawyer primarily responsible for the inception and creation of OPEC.

Northwest Resident on Thu, 16th Oct 2014 10:47 am 



“Low prices are good.”

Except when caused by demand destruction.

Except when those low prices put producers of a critical “commodity” out of business.

But for the temporary, feel good, to hell with the future burst of immediate satisfaction, in this case, low prices ARE good!

louis wu on Thu, 16th Oct 2014 12:21 pm 



Oil prices better drop a whole lot real fast to “crush” Russia because that country’s oldest and greatest ally, old man winter, will be here soon.We will see how much support we have for sanctions then from the cold Europeans.

shortonoil on Thu, 16th Oct 2014 1:20 pm 



Another MSM article written to placate the moronic masses. $90 oil will not only crush the Russians, it will crush the entire world’s petroleum industry. It is already at a level that will shut-in bitumen, ultra deep water, shale, and high sulfur extra heavy. $80 oil will bring E&D to a haul, and once the legacy fields go into steep decline it will be all over.

This has nothing to do with “Secret Saudi Deals”, punishing Russians, or taking out Assad. It is the mere fact that the world economy can no longer function on $100 plus oil. Petroleum can no longer supply the increasing quantities of energy needed by the economy to justify an ever increasing price. Depletion is raising its ugly head, and production costs are increasing while the price is going down. This is not about a price war with the Russians, it is about the coming end of the oil age. Plan accordingly, and don’t expect the truth from those who have the most to lose by it being spoken!

http://www.thehillsgroup.org/

Northwest Resident on Thu, 16th Oct 2014 1:36 pm 



I agree, shortonoil. The whole “manipulating oil prices lower to hurt Russia” theory is a load of rubbish.

When we have constantly rising prices for a product that is constantly decreasing in value, what should we expect? People simply stop buying it — “demand” goes down. Simple.

The fact that we are seeing this now shouldn’t surprise anybody. We all knew it was coming. The fact that it is here now, maybe a little sooner than most expected, could be taking some of us a little bit by surprise. But come on guys, this point in time has long been approaching, and was forecast long ago. With the SA price cut announcement, I think we can all just pour a little cold water on ourselves and do a reality check. Yes, we ARE on the edge of oblivion, we have arrived, just like we knew we would be. The next step forward could end up being a real doozy. How’s 2015 looking guys?

Feemer on Thu, 16th Oct 2014 1:53 pm 



NWR, I don’t think we are going to have a really big problem until 2020 or so. When the shale bubble pops and all the wells are dry (probably around 2020 or so) then we are going to have problems. We could buy a little more time if we immediately implemented higher efficiency, renewable energy, and hemp (for plastics, biofuel, food, etc.) If we don’t get our shit together in these next 5 years, then there is no hope. And the republicans will probably win the senate and prevent any progress on renewable energy and climate

GregT on Thu, 16th Oct 2014 1:57 pm 



If this is truly about supply and demand, why not just cut production? Surely OPEC would rather sell less of their remaining reserves for higher prices, no?

Given the current state of global geopolitics, I find it very hard to believe in such a simple explanation. Call me a conspiracy theorist, but conspiracies are as old as man himself. It’s just good business.

rockman on Thu, 16th Oct 2014 1:58 pm 



Let’s try some perspective again. Russia is currently producing about 10.2 million bopd and just 5 years ago they were producing 9.3 million bopd. But 5 years ago they were selling thy oil for $45/bbl compared to the current price of $80/bbl.

So they are currently producing about 9% more oil priced about 75% higher then it was then. I don’t seem to recall anyone predicting the doom of the Russian economy just 5 years ago. And now they are producing more oil that’s worth a sh*t load more then it was then.

I don’t get the conversation. And please don’t try to BS about Russia not meeting their budget requirements. Russia, just like the KSA and most other oil exporters, project budgets based upon future oil revenue expectations. If Russia had anticipated the oil price drop their budget projection would have been lower ND they would have met it.

Fact: Today Russia is receiving less revenue from its hydrocarbon sales then a month ago. Fact: Today Russia is receiving a sh*t load of revenue from its hydrocarbon sales. Just like the Rockman. LOL

And the asinine cheerleading by the likes of Bloomberg that thinks it’s time to bankrupt Russia. To what ends: cripple an economy that the EU is dependent upon for much of their energy supplies as well as a significant amount of other trade? A Russian society in disarray is going to produce more oil/NG? Russian energy companies will go bell up AND spend more capex to maintain production levels.

It’s like that silly old joke about the guy wishing his bitchy mother-in-law would drive off a cliff…while sitting in the passenger seat. LOL.

penury on Thu, 16th Oct 2014 2:07 pm 



I see a lot of conjecture that low oil prices will hurt the economy of Russia. However, the greatest amount of conjecture is that the American economy will benefit from low oil prices. Where I come from selling a product below the production cost is not considered to be a viable business. If one considers the amounts of capital which has been borrowed to finance the shale plays and really does the math, the U.S. has a greater problem than most other countries. Remember, Russia needs to sell, but there are other countries that need to buy. Which country will blink first if the seller says 100 per barrel or I walk. And the buyer says O.K. Walk.

Northwest Resident on Thu, 16th Oct 2014 2:07 pm 



Feemer — I hope you’re right about 2020, I really do. If these lower oil prices hold, the shale bubble will pop long before 2020 however, and in fact I think I hear a big hissing noise coming from that bubble right now. I can’t predict the future, but logic seems to be dictating that we’ll never make it to 2020 without a major crash of BAU. When you say “there is no hope”, what are you hoping for? Continuation of some scaled down version of BAU? I know it is a brutal and depressing thing to contemplate, but I think your and my and our best “hope” is that our individual preparations combined with those of the local community where we reside will be adequate to survive the financial collapse and climate changes that are about to hit us hard. That’s my hope, anyway. I’ve given up completely on BAU — BAU is a dead man walking.

Northwest Resident on Thu, 16th Oct 2014 2:18 pm 



“If this is truly about supply and demand, why not just cut production?”

I’m no expert, but here’s my answer.

Because, the world needs a basic minimum of oil to keep the fragile shell of BAU from completely imploding. And the global economy has reached a limit on how much debt it can sustain. And the sad fact is that the global economy cannot bear a higher price for the minimum quantity of oil that it needs to keep stumbling along. If producers cut their output to raise prices, BAU would go belly up in an instant, and that would not serve the immediate short-term interests of producers at all.

Anybody else want to take a crack at that question?

nemteck on Thu, 16th Oct 2014 3:50 pm 



NWR:”People simply stop buying it — “demand” goes down. Simple.”…. AND the oil price goes down AND producers go down AND oil shortage arise AND oil price goes up.

NWR:”If producers cut their output to raise prices, BAU would go belly up in an instant …..” Didn’t we read that some producers urge the Saudis to cut production to raise the oil price? There was no fear that this would get the world belly up. From $80/barrel to $100 is just to get operations back as they were in the a few month before. Why would that crash us now in an instant?

GregT on Thu, 16th Oct 2014 4:03 pm 



The reason given for price decline is a glut of oil available in the market. Supply exceeding demand. Why keep overproducing only to sell oil for less, when a simple cut in production would keep supply and demand constant? I can understand oil prices rising due to supply not keeping up with demand, but the other way around makes no sense. Without an agreement to oversupply ( conspiracy), why oversupply the market? It’s not like oil sitting in the ground goes bad.

Northwest Resident on Thu, 16th Oct 2014 4:07 pm 



“Didn’t we read that some producers urge the Saudis to cut production to raise the oil price?”

Yeah, we read that. And what was the conclusion? I believe the answer went something like “no, we’re not raising prices”. Maybe because it is a really bad idea.

You know what is kind of funny. And that is, we’ve been reading all along that unconventional oil producers need $100 per barrel to make money. So, we have a long run of $100 per barrel, and what is the result? Unconventional producers, on average, NEVER turned a profit at that price — instead, they just keep going deeper and deeper into debt, their cash flow is not good and now it is coming out that all along they have been telling the SEC one thing but investors some other vastly inflated predictions. Unconventional oil production was a huge loser at $100 per barrel, and at $80 per barrel they’ll be even bigger losers. They’ve run on debt the whole time. The world cannot afford unconventional oil production any longer, the global economy is on the verge of collapsing already.

But the global economy still needs its daily fix, doesn’t it.

Big trouble. No money, gotta have the fix, credit run dry, nothing left to steal. What’s an addict going to do to keep that bad habit going?

I could be wrong on all this. Let’s hope so.

GregT on Thu, 16th Oct 2014 4:19 pm 



So either the KSA is trying to collapse unconventional oil production,(Conspiracy) or Venezuela, Iran, and Russia are being targeted for trading oil in other currencies (conspiracy). Which given global geopolitics of the last decade, makes complete sense.

Is this the answer to climate change, to end BAU? Any other theories?

Perk Earl on Thu, 16th Oct 2014 5:12 pm 



“Any other theories?”

– QE tapering to zero late Oct.
– Dollar goes up vs. other currencies
– Price of oil goes down in dollars
– Oil trader fear of rising int. rates causing recession when QE bonds start selling in early in 05.
– Deflation of oil price

jmb on Thu, 16th Oct 2014 5:52 pm 



“…Venezuela, Iran, and Russia are being targeted for trading oil in other currencies. Which given global geopolitics of the last decade, makes complete sense.”

I agree. All the other oil producing countries will also be hurt and their governments damaged – more so than the US and the other OECD countries, which are mainly consumers, and not producers. This may cause the producer’s economies to “re-set” and they may need to accept lower oil prices in the end.

This whole business of oil prices is not physics. It’s geopolitics, finance and currencies. It’s so complicated hardly anyone understands it, and any predictions about it are likely to be wrong.

bobinget on Thu, 16th Oct 2014 6:31 pm 



Make no mistake. Russia and Saudi Arabia are in this
fight to the death. V. Putin is as determined as the Kingdom’s Royals to control world oil wealth.

Add the complication of every Muslim OPEC member
is in contention with one or more other OPEC members.

Egypt (not OPEC) is bombing Libya.
Yemen (not OPEC) is a constant threat to bordering KSA.
Qatar OPEC, has designs on Libya’s oil wealth, as does Egypt.
Kuwait OPEC, is financing along with Saudi Arabia, ISIS.
Iran, OPEC, along with Russia (not OPEC) equips and finances Syrian (not OPEC) government.

ISIS is all over OPEC member Algeria. Recently an IS
member group beheaded a Frenchman for another sensational Video in Algeria. In fact IS has a stronger
physical presence in Algeria than any other Muslim
OPEC member nation besides Iraq.

The US no longer imports oil from MEMBER Nigeria but does from Ecuador and Venezuela. Both are considered
to side with Russia in a new OPEC.

In point of FACT Iraq is being besieged by the so called
Islamic State whose early financing can be directly traced to KSA and Kuwait citizens.

Now, I ask you.. what could go wrong?

Anyone expecting oil prices to remain low in what
must be considered a new world oil war is delusional .

At the end of the day Russia will ‘win’ this battle to the last Libyan and Syrian.

James on Thu, 16th Oct 2014 10:39 pm 



Now, now, now, you all know that the low gas prices are just a fluke. The oil industries in various countries can’t afford to drill and sell their oil at those prices. So, they will soon start to cut production which will make prices go up. No need to keep pumping at these prices until they go up. A little sacrifice now will yield big dividends later. Just be patient.

Perk Earl on Fri, 17th Oct 2014 1:26 am 



Below is a fascinating discussion on QE, in which Bullard advocates the QE program should not be ended due to DEFLATION fears. He wants to keep it open ended so the monthly QE amount can be raised or lowered as needed. Wow, things are getting very desperate indeed and his concerns reflect my reasons listed higher up in the thread for what is happening here at the conclusion of QE. We are now having a bout of oil deflation and I think that’s why he suddenly wants to keep QE open ended.

http://www.bloomberg.com/news/2014-10-16/bullard-says-fed-should-consider-delay-in-ending-qe-transcript-.html

However, I also think that inflation expectations are dropping in the U.S. And that is something that a central bank cannot abide. We have to make sure that inflation and inflation expectations remain near our target. And for that reason I think a reasonable response of the Fed in this situation would be to invoke the clause on the taper that said that the taper was data dependent. And we could go on pause on the taper at this juncture and wait until we see how the data shakes out into December. So –
MCKEE: In other words continue with QE.

BULLARD: Continue with QE at a very low level as we have it right now. And then assess our options going forward. So I think if it was just me on the committee I’m just one person, but if it was just me that’s one of the things I’d think about at the October, upcoming October meeting.

MCKEE: Well, you’re at $15 billion. You’d keep that level? That wouldn’t add very much stimulus to the economy.

BULLARD: No. But it would keep the program alive. And it would keep it, keep the optionality for the committee open as to what we want to do going forward. If the economy is still is as robust as I’m describing it, then I think we could just end the program in December, but if the market is right and it’s portending something more serious for the U.S. economy then the committee would have an option of ramping up QE at that point.

So I’ve been a – I’ve a long time been one that says that the QE program would be open ended, and that we would be able to adjust it in response to macroeconomic development. This is a serious macroeconomic development. It’s primarily coming out of Europe. It’s just that Europe was expected to have a good year and they’re not. And so growth prospects there are looking bleaker than they were. And the disinflation and even inflation outlook for Europe is not looking good. So this is a development that’s occurring in Europe, but it’s affecting U.S. markets.

GregT on Fri, 17th Oct 2014 1:52 am 



Perk,

One question.

Have you watched Albert Bartlett’s talk on the exponential function?

I

Makati1 on Fri, 17th Oct 2014 3:08 am 



For your consideration:

“Obama Misrepresents the Russian Economy”

http://www.washingtonsblog.com/2014/10/obama-misrepresents-russian-economy.html

What? No rebuttals? The truth hurts.

Perk Earl on Fri, 17th Oct 2014 4:34 am 



Greg T, yes, but I’m not advocating continuing QE, Bullard is. You’d have to know the thread from yesterday to know how that fit in & I’m too tired now to rehash it.

Fascinating development though, the drop in oil price with so many people with different ideas as to why. Guess my ‘deflation idea due to QE tapering to zero’ hit the skids as no one chimed in. Nothing like the feedback of silence to let one know they may not be right – LOL.

Davy on Fri, 17th Oct 2014 7:33 am 



Perk, the debt bubble is hitting the level of diminishing returns and unintended consequences with one of those being deflation. I have been following what you posted above. Here are some points from a good post on ZH:

http://www.zerohedge.com/news/2014-10-15/what-happens-janet-when-you-take-punchbowl-away

1. Deficits are shrinking and the Fed has less and less room for its buying

2. Under the surface, various non-mainstream technicalities are breaking in the markets due to the size of the Fed’s position (repo markets, bond specialness, and fail-to-delivers among them).

3. Sentiment is critical; if the public starts to believe (as Kyle Bass warned) that the central bank is monetizing the government’s debt (which it clearly is), then the game accelerates away from them very quickly – and we suspect they fear we are close to that tipping point

4. The rest of the world is not happy. As Canada noted early in the year, and US monetary policy was discussed at the G-20

I have also read that as the market bubble increases in size the effects of the QE stimulus decrease. We now have the situation with deflation rearing its ugly head. This is a central bank fear. I welcome deflation as a tool of economic degrowth that can begin to lower our economic activity in line with the onslaught of PO, PF (peak food), and PG (peak globalism). Increasing complexity of globalism and increasing productive levels of food and energy are needed to maintain our delocalized locals. In globalism the complexity losses are from a financial system in dysfunction requiring market repression. Our political cooperative level is fracturing in trade and finance wars lowering complexity. PO is stressing globalism and compressing growth. Globalism must grow because populations are growing and consumption trends must grow to support economic growth. Food is the next growth issue on horizon. PO will put the hammer down on food production. Short argues that oil is losing its ability drive modern society because of its net energy drop from effects of increasing cost of production so too QE and its decreasing ability to deliver economic activity.

JuanP on Fri, 17th Oct 2014 11:06 am 



RT Article, ‘Oversupply and weakening demand growth behind oil price fall’
http://rt.com/op-edge/196912-oil-prices-opec-economy/

Northwest Resident on Fri, 17th Oct 2014 11:30 am 



JuanP — Interesting article. A quote from that article:

“So when there is too much supply on the market they (OPEC) tend to meet and decide that they need to take some supply off the market which would of course then bring the price back up.”

But they can’t really do that anymore, is my guess. And the reason why they can’t do that is because global BAU is skating on razor-thin ice. Populations are exploding, real oil demand (not the economist’s definition of “demand”) is constantly growing, as in, they just gotta have that oil. So, in a world where a) conventional oil is pumping at 100% or very close to it, and b) unconventional oil is breaking the bank and producing lots of barrels of “oil” but very little (to zero) net energy, the global economy needs every single drop of oil it can get. Cutting oil production might just be the straw that breaks the camel’s back. Not only that, but a number of the oil exporting countries are in desperate need of oil sales revenue — their natives are restless and only oil sales revenue can keep them appeased.

Short story: Cutting oil production to raise demand used to be a neat little trick that worked. These days, in this environment, cutting oil production to raise oil prices to a level that the global economy can no longer afford would be too much like cutting off your own nose — too risky, too much at stake. I’ll be shocked if OPEC decides to cut production.

Perk Earl on Fri, 17th Oct 2014 1:48 pm 



“Perk, the debt bubble is hitting the level of diminishing returns and unintended consequences with one of those being deflation.”

Agreed, and very interesting list from the zero hedge article.

“I have also read that as the market bubble increases in size the effects of the QE stimulus decrease. We now have the situation with deflation rearing its ugly head. This is a central bank fear. I welcome deflation as a tool of economic degrowth that can begin to lower our economic activity in line with the onslaught of PO, PF (peak food), and PG (peak globalism).”

Yeah, the old growth meme is something TPTB just will not back away from, and deflation is the thing they recognize to fight the hardest. Just amazing how they do not seem to get that diminishing returns of extraction from a finite resource.

I’ve noticed oil price seems to have bottomed out in the last two days, coming back up just slightly off the low and now the stock market is pumping back up some. But now oil price is lower it should be interesting to see how much if any it rebounds to previous high. my expectation is it will continually spiral down to lower prices, which will nix expensive marginal sources.

I did a lung test to determine air capacity in my 20’s and the sleeved canister rose up and then maxed out, but as I continued to exhale it bobbed around at the peak. That’s how I see what is happening now, that things are bobbing around – not appreciably going higher, except maybe debt, as every effort gets used to keep BAU at any cost.

As this untenable situation is pushed forward, it will keep ratcheting into more inane efforts and absurd results that will on the one hand be entertaining to us in the know, but ever more frustrating for those trying to remain on the treadmill.

Northwest Resident on Fri, 17th Oct 2014 1:59 pm 



Perk Earl said: “my expectation is it will continually spiral down to lower prices, which will nix expensive marginal sources”

Perk, that seems to be a very accurate expectation IMO. And it seems to be in line with what the Saudi’s are expecting too. Didn’t they come out and tell the world that they’re expecting to keep their lowered price for a couple of years or so? That would indicate to me that they know something about where oil prices are going, and that does not include a price “rebound” back to the $100-or-so mark.

Colin Welch on Fri, 17th Oct 2014 8:45 pm 



Putin’s Boss. ‘Aint nothing gonna crush that dude.