Register

Peak Oil is You


Donate Bitcoins ;-) or Paypal :-)


Page added on January 23, 2015

Bookmark and Share

The Saudi Succession: Its Impact On Oil, Markets And Politics

The Saudi Succession: Its Impact On Oil, Markets And Politics thumbnail

Here, courtesy of Ecstrat’s Emad Mostaque, is an initial take at succession, the likely impact on oil, then the Saudi market & currency and finally regional politics.

Succession

The process of succession appears to have run smoothly with Prince Salman (79), Abdullah’s half-brother, being announced king and another half-brother and the youngest of his generation (at 69) Prince Muqrin being anointed the new Crown Prince as expected. King Salman has significant financial and power backing as one of 7 sons of Hassa al Sudairi (known as the “Sudairi Seven”) and King Abdulaziz and as such is unlikely to be challenged. Salman is commonly known for his charitable giving and conservative nature, please contact us for other details.

While Salman has the ability to change succession (indeed under Saudi Basic Law and given his family backing he has the power to do anything he wishes), it is likely that Muqrin will remain the next in line. After this, it will skip a generation, with the two main candidates for the throne still the defense minister Mohammad bin Nayef (55), the son of Salman’s full brother departed Crown Prince Nayef and head of the National Guard Mutaib (62), son of Abdullah. As with the announcement of Prince Muqrin as Deputy Crown Prince, we may see an announcement in this regard sooner rather than later to assuage fears of potential rapid succession, although we are in a period where any agreements made under King Abdullah’s reign may be put to the test

Oil

With oil prices under $50, the feeling on the ground in Saudi Arabia has been one of concern. After 19 years with of rule by Abdullah (9 as regent and 10 as King), there is significant pressure for the new King to secure the support of the populace through populist measures such as public sector wage increases with  90% of Saudis employed in the public sector (90% of the private sector is foreign) and additional handouts. These may well include expensive measures such as free housing for young married couples and a potential consumer debt jubilee, where the government takes over payments (billions have already been shifted in this manner over the last few years).

The current Saudi budget balances at around $63 (see here: http://www.ecstrat.com/research/balancing-budgets/)  and the Kingdom has ample cash assets of around $800bn and the ability to raise huge amounts of debt. It should also be noted that while the budget balances in the $60s, historical spending has been significantly above budget in the last few years, $30bn in excess in 2014. Additional spending may be similar to the Arab Spring, meaning we could see an overspend of $50bn or more this year depending on the measures taken.

Saudi Arabian rhetoric has been firmly guiding the oil price down since the OPEC meeting, with officials pointing out quite sensibly that it is up the market to set prices and not for Saudi to underwrite unconventional oil producers. I discussed why this made the market particularly vulnerable here: http://bit.ly/ecstrat4 and was one of the key reasons I was negative on oil prices (although I did see $70 as a floor as I thought OPEC would cut!).

In reality, rhetoric is about all Saudi has been doing to impact oil prices, with the latest figures for production and exports actually down 300kbpd YoY and price differentials to the US down versus the summer, but still at multi-year highs.

From comments at the WEF in Davos, the rhetoric is already calming with guidance that oil prices should correct over the next year, albeit not too high and moves to focus on the long-term potential for oil prices as unconventional sources come under continued pressure would increase local sentiment and potentially boost the oil price given the current structure.

The current structure of the oil curve is hugely overextended, with almost a 20% spread between 1m and 12m WTI, a scenario that is truly bizarre in a world of negative nominal Eurozone yields. To put this in context, this has only occurred twice in the last few decades, at which time storage was more expensive and interest rates much higher. Oil doubled in the following year both times.

This is also a key reason that inventories at Cushing are spiking and the Brent-WTI spread closed (as WTI is easy to store there), giving a false signal of oversupply when in fact demand figures are likely to be significantly higher (1.5-2mbpd by my estimation) over the last period than the market expects. In addition, 40mb of floating storage have been hired to take advantage of this arbitrage, further reducing the probability of it continuing.

The back end of the curve is where the real story is, having disconnected completely from spot oil prices in terms of correlation as it remains near $80. The super-contango we see now could continue for a period due to some curious structural details, but it is likely that into 2016 we will see a resumption of backwardation, with the spot price above the backend price, which will be higher due to the E of E&P being slashed.

In the medium term, there are several geopolitical events that the oil market may also respond to given the heavy net shorts, from the complex situation in Yemen, where Shia Houthis have ousted Saudi ally Hadi to impending violence in Nigeria, which typically loses 300kbpd of production during elections (due for Valentine’s day), with 1,000 dying in the violence last time around and likely many more this year given the sharp divisions that exist within the country (more here: http://bit.ly/ecstrat7). Libya remains a wreck with reconciliation unlikely absent a significant external force intervening and Iraq is coming under heavy pressure as it looks to run a 20-30% deficit due to lower oil prices.

On the flipside, we are likely ~2 months away from an Iran deal, which would cause the market to price in additional supply coming online rapidly.

Market length is resolutely short, having flipped hard from a record long position last summer and the possibility of a near-term squeeze is high, particularly as crude has consolidated just under $50. In the medium term the likely economic and “fundamental” news may cause the rally to fade, but the long-term outlook remains strong and I retain my view oil will be $130 in a few years absent China blowing up completely

Market & currency

The Tadawul has proved remarkably resilient in the face of lower oil prices – down just 4% over the last 12 months even as oil fell 55%. If you had put that scenario to any market observer a year ago, the likely response would have been that we would be 30-40% lower at least.

This increased resilience may have been aided by a patriotic hand, but the lack of significant downgrades in earnings are also indicative of the fact that the Saudi market may be driven by spending based on oil, but most stocks, petchems aside, aren’t beta to oil as in other markets. Even petchems run with fixed, below market price feedstock prices, meaning they are consistently profitable even at current levels of oil, although the offshore operations of companies such as SABIC do add an element of beta to oil.

The overall impact of the succession is likely to be positive for the Tadawul as wealth transfer to the populace is increased and spending maintained over the next few years no matter what the oil price is. Retail participation in the Saudi stock exchange remains above 90% as it trades billions of dollars each day as it remains one of the main sources of entertainment in the kingdom. It would not be surprising to see some favourable privatizations be introduced ahead of the market opening to foreigners in a few months to fulfil its other main role of wealth redistribution, with retail IPO participation remarkably high.

Credit conditions are likely to be loosed over the coming year to fill some of the gap from lower oil revenues and after banks were disintermediated in the spending boom following the Arab Spring. Capital adequacy ratios remain high with Tier 1 ratios in the teens and asset quality remains high, particularly as the government is likely to continue spending. This should increase overall monetary velocity and potentially stoke inflation, which should increase asset prices. We can also expect a focus on mortgage lending as part of the new policies, particularly to young Saudis. Given this is in effect lending to the government given the high level of public sector employment, this could expand faster than many have figured. It is also likely that the transition to an Islamic economy will be accelerated, building on the NCB experience..

As such, the trade is to buy retail-heavy Islamic banks, which also benefit from higher US interest rates due to their significant zero-cost deposits, leading to rapidly expanding NIMs, retail names, which although expensive match up well to EM peers and will benefit from increased discretionary spending power and real estate stocks, which will benefit from general asset inflation (which should also cause the Saudi market to rerate further despite current oil prices as monetary velocity picks up).

The downside appears limited here as it is difficult to see a scenario where the government wouldn’t step in should retail confidence be lost.

On the Saudi Rial, there has been interesting activity on forwards as a devaluation of the currency would be a quick and easy way to fix any budget issues, much as Russia has done in maintaining the Ruble oil price, hurting importers and consumers. In Saudi the elasticity of demand and ability to withstand inflation is very different to Russia, but it is likely that we would see other Gulf states move first to devalue, with Bahrain and Oman (where succession is not quite so clear cut per my recent note) prime candidates. The first stage is likely to be a move to a Kuwait Dinar-style basket, particularly given increase exports to Asia and the decreasing importance of US crude flows, but any move in this regard from Saudi is unlikely in the next 6 months as they look to stabilize things, but this will grow more likely the longer oil prices stay low.

We may see some debt issuance however to bridge near-term spending spikes, a key measure to developing a yield curve as part of the package of reforms I have suggested Gulf countries should carry out to take advantage of low oil prices here: http://blogs.ft.com/beyond-brics/2015/01/06/guest-post-the-gulf-must-take-advantage-of-low-oil-prices/

Regional geopolitics

The order of the day is stability after a tumultuous few years.

To the north there is the threat of ISIS, but significant strides seem to have been made in patching Iraq-Saudi relations under the rule of new PM Abadi after a somewhat tense relationship with Maliki. Iran looks to be coming out from the cold with Obama actively pushing for a peace deal and increasingly looking like he will accept Assad as an alternative to ISIS, but despite the historical acrimony, the interests of Iran and Saudi Arabia are somewhat more in alignment now than in previous years.

The key exception to this is Yemen, which is a terribly strange situation, but one in where the Shia Houthis (known as “fiver” Shias, closer to Sunnis than the “twelver” Iranians/Iraqis and more a tribe than religious group) who Saudi Arabia has fought for a number of years in north Yemen, have now effectively taken over with President Hadi resigning. Curiously the Houthis are the tribe of former President Saleh and virulently anti al-Qaeda, but it is quite a change on the southern border of Saudi Arabia.

Elsewhere the Arab Spring has turned into an Arab Winter with the challenge of Islamist groups soundly defeated, even if some more virulent forms have popped up but are now largely contained.

It is likely that Saudi may well pursue a less aggressive foreign policy in the near-term as it focuses on internal matters, particularly after certain initiatives did not work out quite as planned.

In conclusion the succession in Saudi Arabia may prove a filip to oil prices in the near-term, even if the medium term outlook looks challenging and should be overall positive for a market used as a barometer for popular feeling. We should expect the focus to be on internal consolidation versus external expansion, but the way that they treat the developing situation in Yemen should provide strong guidance to how foreign policy will be in the future.

zerohedge



31 Comments on "The Saudi Succession: Its Impact On Oil, Markets And Politics"

  1. rockman on Fri, 23rd Jan 2015 6:24 am 

    “As a reminder, it is Saudi Arabia whose insistence on not cutting oil production with the intent of hobbling the US shale industry…”.

    The same logic: “As a reminder, it is US shale producers whose insistence on not cutting oil production with the intent of hobbling OPEC…”.

  2. Davy on Fri, 23rd Jan 2015 6:45 am 

    Rock has you always say “it’s just business nothing personal..lol”. I don’t care where you go on this earth we all have bills to pay, responsibilities, and aspirations that require money. These have a way of getting in the way of cooperation. I will also mention I believe the oil sector would have to be careful of colluding on price in any way or an antitrust suit could be filed against those participants. Conspire to cut production to raise prices…hum sounds like the DOJ would love to hammer someone when the sheeples scream about pump prices.

  3. Makati1 on Fri, 23rd Jan 2015 7:36 am 

    So, the old despot is dead, and his successor is 79 and is supposed to be suffering from dementia … lol. Next in line is 69. Bodes well for the Saudi’s future. Guess we will be going back to just Arabia soon.

  4. buddavis on Fri, 23rd Jan 2015 7:41 am 

    Davy

    There is no one producer in the US that could cut production to increase prices. Way too many producers in the market and you would have an easier time herding 10,000 cats. The most effective way to curtail US production would be through the government regulatory bodies. By permitting and well allowables.

  5. bobinget on Fri, 23rd Jan 2015 7:46 am 

    This just in: Netanyahu NOT addressing joint session Congress. At least till after Iran sanctions
    bill goes for votes and vetoes.

    Here’s the story; http://www.huffingtonpost.com/2015/01/22/kerry-israel-boehner-_n_6527826.html

    We managed to dodge a nuclear shitstorm.

  6. bobinget on Fri, 23rd Jan 2015 7:52 am 

    buddavis:
    No need to cut production.
    Asian demand ALONE can soak up the tiny surplus of 600,000 extra barrels per day.

    US demand is up, double digits year over year.
    For the week ending 1/16/15 EIA

    Total products supplied over the last four-week period averaged 19.7 million barrels per day, up by 4.9% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged over 9.0 million barrels per day, up by 8.7% from the same period last year. Distillate fuel product supplied averaged 3.9 million barrels per day over the last four weeks, up by 12.5% from the same period last year. Jet fuel product supplied is up 7.6% compared to the same four-week period last year.

  7. buddavis on Fri, 23rd Jan 2015 7:57 am 

    bobinget

    I was referring to Davy speculating that the US producers could conspire to cut production to raise prices. My belief is that is impossible.

  8. bobinget on Fri, 23rd Jan 2015 8:07 am 

    Earmark this:
    By June 2015 the US will be over one million barrels
    P/D in Deficit.

    By August the US will be two millionB P/D in deficit.

    This overblown reaction to an easily repaired ‘problem’ was never properly thought through by the Saudis, played directly into V.Putin’s plans for Russian oil supremacy. Because KSA weaponized
    crude oil, it backfired.

    It wasn’t the Saudis who deflated those footballs.
    But, this story is almost as important.

  9. Makati1 on Fri, 23rd Jan 2015 8:17 am 

    Just read an article that says that the US fraking oil producers have to run full out to pay their bills or go belly up. They may not drill new wells, but they will finish those that are started and pump them as fast as possible to cover their debts. It seems that all of the oil producers are in the same situation. Not looking good for higher oil prices in the near future or the survival of the US economy.

  10. bobinget on Fri, 23rd Jan 2015 8:23 am 

    King Abdullah’s writ lasted all of 12 hours . Within that period the Sudairis, a rich and politically powerful clan within the House of Saud, which had been weakened by the late king, burst back into prominence. They produced a palace coup in all but name.

    Salman moved swiftly to undo the work of his half-brother. He decided not to change his crown prince Megren,who was picked by King Abdullah for him, but he may chose to deal with him later .However he swiftly appointed another leading figure from the Sudairi clan. Mohammed Bin Nayef, the interior minister is to be his deputy crown prince. It is no secret that Abdullah wanted his son Meteb for that position, but now he is out,

    More significantly, Salman, himself a Sudairi, attempted to secure the second generation by giving his 35- year old son Mohammed the powerful fiefdom of the defence ministry . The second post Mohammed got was arguably more important. He is now general secretary of the Royal Court. All these changes were announced before Abdullah was even buried.

    The general secretaryship was the position held by the Cardinal Richelieu of Abdullah’s royal court, Khalid al-Tuwaijri. It was a lucrative business handed down from father to son and started by Abdul Aziz al Tuwaijri. The Tuwaijris became the king’s gatekeepers and no royal audience could be held without their permission, involvement, or knowledge. Tuwaijri was the key player in foreign intrigues –to subvert the Egyptian revolution, to send in the troops to crush the uprising in Bahrain, to finance ISIL in Syria in the early stages of the civil war along his previous ally Prince Bandar bin Sultan.

    The link between Tuwaijri and the Gulf region’s fellow neo-con Mohammed bin Zayed, the crown prince of Abu Dhabi, was close. Tuwaijri is now out, and his long list of foreign clients , starting with the Egyptian President Abdel Fattah el-Sisi may well feel a cooler wind blowing from Riyadh. Sisi failed to attend the funeral on Friday. Just a question of bad weather?

    Salman’s state of health is cause for concern, which is why the power he has given his son is more significant than other appointments announced. Aged 79, Salman is known to have Alzheimers, but the exact state of his dementia is a source of speculation. He is known to have held cogent conversations as recently as last October. But he can also forget what he said minutes ago, or faces he has known all his life, according to other witnesses. This is typical of the disease. I understand the number of hospital visits in the last few months has increased, and that he did not walk around, as he did before.

    So his ability to steer the ship of state, in a centralised country where no institutions, political parties or even national politics exist, is open to question. But one indication of a change of direction may lie in two attempts recently to establish links with Egyptian opposition figures.

    I am told that senior advisers to Salman approached an Egyptian liberal opposition politician and had a separate meeting with a lawyer. Neither of them are members of the Muslim Brotherhood but have working contacts with it. Talks were held in Saudi Arabia in the last two months about how reconciliation could be managed. No initiative was agreed, but the talks themselves were an indication of a more pragmatic, or less belligerent, approach by Salman and his advisers. It was understood that these meetings were preparatory to a possible initiative Salman may announce once he was in power.

    The policy of the late King was to declare the Brotherhood terrorist organisation on a par with the Islamic State and al Qaeda.

    Even before the Sudairis made their move, a power struggle within the House of Saud was apparent. Early on Thursday evening, rumours on twitter that the king was dead flooded the internet, which is the primary source of political information in the kingdom. There were official denials, when a Saudi journalist on al Watan newspaper tweeted the information.

    The palace’s hand was forced when two emirs tweeted that the king was dead. MBC TV network cut broadcasting and put the Koran on screen ,a sign of mourning, while national television kept on with normal programming. This was a sign that one clan in the royal family wanted the news out quickly and the other clan was stalling for more negotiations.

    The need for a change of course is all too apparent. On the very night in which the royal drama was taking place, a political earthquake was taking place in Saudi Arabia’s backyard, Yemen. President Abd Rabu Monsour Hadi, his prime minister and government resigned after days of virtual house arrest by Houthi militia. Hadi’s resignation leaves two forces in control of the country both of them armed to the teeth : an Iranian backed militia which gets its training from Hezbollah, and al Qaeda, posing as the defender of Sunni muslims.

    It is a disaster for Saudi Arabia and what is left of the ability of the Gulf Cooperation Council to make any deal stick. Their foreign ministers met only the day before. Yemen’s former strongman Ali Abdullah Saleh, who was levered out of power three years ago and who according to leaked telephone calls, advised the Houthis on how to grab power, is now calling for fresh elections, and there were already calls on Thursday night for the south to split away from the North. Yemen,in other words, has officially become the Middle East’s fourth failed state.

    The meteoric rise of the Houthis in Yemen was not the result of spontaneous combustion. It was planned and plotted months ago by Saleh and the United Arab Emirates. Saleh’s son, the Yemeni ambassador to the UAE, was a key figure in this foreign intrigue, and as I reported before, he met an Iranian delegation in Rome. This was picked by US intelligence and communicated to Hadi. The year before, the then Saudi intelligence chief Prince Bandar flew a leading member of the Houthi delegation via London for a meeting. Incredible as it seemed, the Saudis were re-opening contact with an Iranian backed Zaydi or Shia sect with whom they had once fought bitter wars.

    The Saudi/Emirati plan was to use the Houthis to engage and destroy their real target which was Islah, the Islamist party and chief representative of the Sunni tribes in Yemen. As elsewhere in the Arab world, the entire focus of Abdullah foreign policy after 2011 , was to stop the Arab spring in its tracks in Tunisia and Egypt and crush all forces capable of mounting an effective opposition in the Gulf States. Everything else, including the rise of Saudi’s foremost regional rival Iran, became subservient to that paramount aim to crush democratic political Islam.

    The Yemen plan backfired when Islah refused to take up arms to resist the Houthi advance. As a result, the Houthis took more control than they were expected to , and the result is that Yemen stands on the brink of civil war. Al Qaeda’s claim to be the only fighters prepared to defend Sunni tribesmen, has just been given a major boost.

    It is too early to tell whether King Salman is capable of , or even is aware of the need for changing course. All one can say with any confidence is that some of the key figures who stagemanaged the Kingdom’s disastrous foreign intrigues are now out. Meteb’s influence is limited, while Tuwaijiri is out.

    It is in no-one’s interests for chaos to spread into the Kingdom itself. Maybe it is just co-incidence that Abdullah died almost on the eve of the anniversary of the January 25 revolution in Egypt. But the timing of his death is a symbol.The royal family should learn that the mood of change, that started on January 25 is unstoppable. The best defence against revolution is to lead genuine tangible political reform within the Kingdom. Allow it to modernise, to build national politics, political parties, real competitive elections, to let Saudis take a greater share of power, to free political prisoners.

    There are two theories about the slow train crash which the Middle East has become. One is that dictatorship, autocracy, and occupation are the bulwarks against the swirling chaos of civil war and population displacement. The other is that dictators are the cause of instability and extremism.

    Abdullah was evidence in chief for the second theory. His reign left Saudi Arabia weaker internally and surrounded by enemies as never before. Can Salman make a difference ? Its a big task, but there may be people around him who see the need for a fundamental change in course. It will be the only way a Saudi King will get the backing of his people. He may in the process turn himself into a figurehead, a constitutional monarch, but he will generate stability in the kingdom and the region.

    Follow David Hearst on Twitter: http://www.twitter.com/davidahearst
    MORE: King Abdu

  11. Davy on Fri, 23rd Jan 2015 8:25 am 

    Oh Bobby, you fail to understand dynamic systems and what happens when an ecosystem is forced into disequilibrium. Any major power that thinks they have a plan of advantage that will decouple them from a economic death spiral of a descending global BAU is foolhardy.

    One need only look at the Brics now and see desperation especially Russia. The developed powers are already desperate especially Europe and Japan. The U.S. will take the biggest fall soon enough but all will fall in lockstep.

    Demand and supply will be destroyed in a vicious cycle down. We are likely in the bumpy descent currently. It still resembles the bumpy plateau but the trend is established down. Once complexity trends down it is over no recovery is possible. The question is time frame and no one can know that.

  12. bobinget on Fri, 23rd Jan 2015 8:36 am 

    Makati,
    If there was ever an example of ‘Peak Oil’ fallout
    this fall’s ‘oil glut’ is a prime example.

    First and foremost.. This farce, orchestrated by the failing state of Saudi Arabia, has itself failed.

    A Strong Dollar is Lowering International break-even prices

    An article just published on WSJ on Statoil is highlighting the difficulty the company is facing to operate profitably in the current environment:

    “It’s challenging” to make such projects profitable in today’s low-price environment, said Statoil’s projects director, Anders Opedal. “We just have to work very hard” to cut costs, he said.

    Amid years of higher prices, companies pushed out into smaller, costlier fields to boost reserves. Statoil sat on plans to move ahead with Gudrun for years, until technological advances—and higher oil prices—made it worth the costs.

    The above is right in line with what has been discussed on the BRY board, smaller and more complex fields are leading to higher costs in the industry, and so beside the cost inflation for oil services.The strong dollar however is lowering the break-even costs for certain projects:

    The Gudrun field, discovered in 1975, is projected to produce for 20 years. At the time it was approved five years ago, Statoil estimated that the field would need oil prices of $56.70 per barrel to be profitable.

    Statoil declined to comment on the field’s current profitability. But a recently stronger dollar has pushed that so-called break-even price closer to $45 a barrel—just a few dollars below today’s prices.

    “Gudrun is a very deep reservoir,” said Arne Bjørndal, the field’s platform chief. “It’s a high-pressure, high-temperature field.”

    Amid gale-force winds and rain hammering the main deck of the platform, Mr. Bjørndal points in the direction of a nearby field. Gina Krog, another complicated project, which was approved in 2012, with a break-even price of $77 per barrel. That is now $61, adjusted for the stronger dollar. First production is set for 2017.

    It is not clear to what extend the weaker currency is helping Statoil overall, since they are not commenting on recent profitability for their projects, but there is no doubt that a weaker Krone is offsetting some of oil price weakness.

    Should the dollar continue to remain strong, this further argues for an oil equilibrium price that is lower than the price experienced from 2010 to 2014, thus further underpinning the thesis of a future price in the $70s/80s range rather than back to the $100s.

    In the above environment, US companies will be highly disadvantaged as they are taking the full brunt of the oil price collapse, and will only benefit partially from the rebound. Canadian tight oil producers are certainly advantaged in this regard, and especially so after Enbridge’s Line 9B reversal (250K light barrels/50k heavy barrels going to Eastern Canada) is put into service in Q2 which should shrink the Canadian light differentials. Assuming oil is trading at $75 in 2016, and assuming the Edmonton differential is $5, the Canadian producer would be netting $80.5 at $1.15 exchange rate and $84 at $1.2 exchange rate compared to $65 for a Bakken player with a $10 differential. Canadian tight oil producers may end up trading at a premium to their US peers in the next few years, which is quite a reversal from the situation experienced in the past few years.

  13. gamilon on Fri, 23rd Jan 2015 9:27 am 

    What does the phrase “the transition to an Islamic economy will be accelerated” mean? What the heck is an Islamic economy?

  14. Northwest Resident on Fri, 23rd Jan 2015 9:48 am 

    Looks like a modern day real-life version of Game Of Thrones shaping up in Saudi Arabia. Intrigue. Deceit. Lies. Plots. Dastardly schemes. Shifting loyalties. Greed, lust for wealth and power the driving motivations. Certainty of humiliation and/or death for those players who miscalculate or make a wrong move. In the balance hangs the relative stability of the world’s increasingly unstable oil/energy supply.

    A little treachery in the Saudi royal family could be the spark that sets the entire Middle East and the whole world on fire. But all those royals love each other, see things the same way and just want to get along — right? (not)

  15. westexas on Fri, 23rd Jan 2015 10:01 am 

    I wonder what the rate of increase has been in high maintenance Saudi princes (and princesses) in the past 10 years?

  16. Plantagenet on Fri, 23rd Jan 2015 10:24 am 

    The big news is that the king intends to follow the same oil policy—that means no cut in KSA oil production and a continuation of the oil glut.

  17. Northwest Resident on Fri, 23rd Jan 2015 10:50 am 

    Oil glut. Repeat that phrase daily three or four times, day after day, every day. Say it repeatedly. Think about it constantly. If it makes you feel good, that is, or if you have some ulterior motivation for spouting it incessantly.

    Imagine a doctor with a patient who is dying from cancer, and the terminally ill cancerous patient’s legs are swelling. The stupid, idiotic, moronic doctor focuses ALL his attention on the swelling legs, constantly talking about the swelling in the legs, repeating daily how bad the legs are looking, worrying himself to death over the swelling legs — without EVER mentioning or paying any attention at all to the cause of the swollen legs.

    Plant proves his ability to be stupid beyond all recognition on this forum daily, multiple times, every time he mentally belches forth another “oil glut”. As if the oil glut is the cause of anything. It isn’t. It is just a symptom. But Plant is too dense or too focused on some secret agenda (or both), so he sticks with the “oil glut”.

    Plant, I don’t despise you, I just despise the idiocy and the obnoxious trollish distortion of truth that you constantly portray on this forum. If we were in the same tribe or on the same team, I would not tolerate your brand of stupid for even one minute.

  18. antaris on Fri, 23rd Jan 2015 11:15 am 

    Could Plant and Nony be the same person?
    No Nony here lately, but twice as much Plant.

  19. Plantagenet on Fri, 23rd Jan 2015 11:17 am 

    Nordent

    Why not just agree to disagree? In your fantasy world you can imagine there is no oil glut, while here in the real world there is an oil glut, with US oil inventories hitting new 30 year highs.

    The new KSA King isn’t going to decrease KSA oil production, so the oil gluts looks set to continue. Meanwhile in your fantasy, tight oil supplies send oil prices to new highs, I suppose.

    Hahahahahahaahah!

  20. Northwest Resident on Fri, 23rd Jan 2015 11:37 am 

    Pant — What fantasy? Did I say there is no oil glut? NO. There you go again, Pant, just making crap up, same thing you do all the time. False accusations are your specialty. Stupid is your trademark. Obnoxious is your style. You frequently accuse posters who disagree with you of having “fantasies” — but the fantasies you accuse others of having are entirely of your own warped mental process. YOU are the only one having fantasies, Pant. Maniacal laughter is what we would expect from you, and what we often get. What a creep you are…

  21. Plantagenet on Fri, 23rd Jan 2015 11:42 am 

    Gosh…you sure are a sensitive flower.

  22. Davy on Fri, 23rd Jan 2015 11:45 am 

    Ant, the NOo made a new years resolution to stay away from PO. I believe he was starting to convert to doom and got scared and had to find a some other site with plenty of corn porn. I think this oil price drop along with Short’s Hills group message on ETP oil depletion spooked him. His Econ 101 with traditional text book applications was making him look ridiculous. The Marm is the hard core corn hold out occasionally blasting in to stir up shit. I am curious how long the NOo remains absent in comment. You can be sure he is checking the board.

    No Planter and the NOo are two distinct entities. Planter is going through a metamorphosis from a corn caterpillar to doom butterfly. It is just taking awhile.

  23. Plantagenet on Fri, 23rd Jan 2015 11:48 am 

    Hi Daver:

    You are a perceptive and observant person.

  24. Davy on Fri, 23rd Jan 2015 12:26 pm 

    Thanks Planter, either that comment was “you are full of poop daver or “yea I am coming around to the doom brigade”

  25. bobinget on Fri, 23rd Jan 2015 1:08 pm 

    Iranian officials repeatedly broadcast daily threats toward Israel following the attack carried out last week in Syria, which killed six Iranian soldiers, including commanders, as well as six members of Hezbollah.

    Gen. Hossein Salami, deputy commander of the Revolutionary Guards, said Israel should expect a strong reaction against it, as proven in the past by the Revolutionary Guards, and Israel will see the “destructive lightning” of the Islamic Republic.

    He said that Israel is a strategic component of Iran’s struggle against the United States, and therefore Iran is building military strength along Israel’s borders – areas from which it can launch missiles via Hezbollah and “Palestine,” as well as Shahab missiles from its own soil.

    Salami further claimed that the Israeli attack strategy in the airstrike reflects the failure of the US and Israel in Syria, Iraq, Lebanon, Yemen, Bahrain and other countries, and that reality shows that these two states are in decline, so they took actions which are only a sign of weakness.

    Mohsen Rafighdoost, Minister of the Revolutionary Guards, said during a memorial service held on Wednesday for the Hezbollah terrorists killed in the strike that it would pave the way for a war against Israel.

    Iran’s backlash follows reports Thursday that Israeli military intelligence meticulously coordinated the strike, despite earlier claims that the hit on the Iranian and Hezbollah generals were an “accident.”

    The strike killed Jihad Mughniyeh, son of the late Imad Mughniyeh who was Hezbollah’s former military commander, and Iranian general General Mohammad Ali Allahdadi.

    According to Kuwaiti sources, Israel ordered a specific assassination hit on Allahdadi as the general moved between Syrian outposts, through information gained via wiretapping.

  26. shortonoil on Fri, 23rd Jan 2015 1:39 pm 

    As a reminder, it is Saudi Arabia whose insistence on not cutting oil production with the intent of hobbling the US shale industry has led to the splinter of OPEC, and to a Brent price south of $50.

    This comment is one very big load of BS. The Saudis know very well that their maximum revenue will not come from cutting production! Cutting production will not be compensated for by enough price increase to make up the difference in lost sales revenues.

    http://www.thehillsgroup.org/depletion2_022.htm

    The Saudi could give two sh*** about US LTO. It is no competition to them; 37% of it won’t even produce transportation fuels. To bring prices back to the above curve will require that 4mb/d get shut in. That is going to happen regardless of who is shut in, and the Saudis don’t care who it is as long as it isn’t them. Looking at the gargantuan debt load the shale producers have piled up in the last few years, it won’t be a surprise if they turn out to be ground zero.

    http://www.thehillsgroup.org/

  27. bobinget on Fri, 23rd Jan 2015 1:46 pm 

    Iran is playing Israel’s game. Iranian Right wing generals are reacting exactly as anticipated.
    Israel needs proper casus belli before attempting to
    destroy Iran’s nuclear infrastructure.

    At this stage the US desperately needs Iran to
    do battle with ISIS outside Syria.. Israel, of course, sees any US/Iranian alliance as a threat.

    ISIS is growing by the hour. ISIS has a war-chest
    well over two billion dollars. ISIS forces are quickly moving on at least four fronts, counting Nigeria, and Libya, Africa’s largest economies. (yes, including Egypt)

    This puts President O, USA in a huge dilemma.
    The trick, for State now is to keep Iran’s retaliation’s
    on the same level as Israel’s provocations.

    I’ve predicted hit and run attacks on Saudi oil distribution choke points. This would accomplish
    several goals.
    1) A world suddenly deprived of sufficient oil will panic. Markets crash, the whole nine meters.
    2) Saudi decidente will demonstrate, be fired upon,
    throw the nation into civil war.
    3) Because Iran’s hit men, Hezbollah, doesn’t hit Israel directly, Israel’s deprived of Casus Belli.
    4)ISIS funding is now in peril. Despite highest oil prices, Saudi financing dries up.

    Peace talks ensue. Hezbollah lieutenants are blamed. Fighting in Nigeria, Libya, Syria, Iraq, goes on with half hearted Iranian support

    Nothing is solved. People are just as poor or poorer, just as uneducated, but escaped painful deaths by
    radio active fall-out from Israeli attacks.

  28. bobinget on Fri, 23rd Jan 2015 1:52 pm 

    ‘Proportional response’ were the words I should have used. (Iran/Hezbollah retaliations)

  29. GregT on Fri, 23rd Jan 2015 2:31 pm 

    I think that we all need to cut Plant some slack, and let him have his little oil glut fantasy if it makes hime feel more comfortable.

    I mean, imagine what it would be like to be holed up in a shack in the middle of nowhere for 8 1/2 months of the year, patiently awaiting the clouds of mosquitos and flies to return in the spring. Add to that being cut off from the mainland by a thousand miles of bush, all the time wondering when the spetsnaz were going to invade in the middle of the night. I know I would go bat shit crazy, and obviously I’m not alone, just look at what it did to Sarah Palin.

  30. GregT on Fri, 23rd Jan 2015 3:27 pm 

    Which also begs the question; Does anybody know if McCain served time north of Canada? If he did, it would certainly explain a lot.

  31. Keith_McClary on Fri, 23rd Jan 2015 5:05 pm 

    Israeli drone strike on Syria:
    “General Galant gave an interview in which he squarely accused the government of warming up the northern border for election purposes.

    Yoav Galant was the chief of the Southern Command during the cruel Molten Lead campaign. After that he was appointed by Netanyahu as the new army Chief of Staff.”
    http://www.counterpunch.org/2015/01/23/israels-treasonous-drone-strike/

Leave a Reply

Your email address will not be published. Required fields are marked *