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Page added on October 8, 2018

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Saudi-Russian Cooperation Marks New World Order For Oil

Production

Global oil prices are continuing their upward trajectory amid concerns that more Iranian barrels will be removed from the market once U.S. sanctions hit the country’s energy sector Nov. 4. Oil market jitters are also being exacerbated by supply disruption problems in Venezuela, Nigeria and Libya—all OPEC members. Additionally, geopolitical factors are putting upward pressure on oil prices since Saudi Arabia, the world’s largest oil exporter, and regional rival Iran, OPEC’s third largest producer, are on opposing sides in the ongoing civil war in Syria and fighting in Yemen.

As prices for both global oil benchmark Brent crude and U.S. Benchmark West Texas Intermediate (WTI) crude hit multi-year highs, President Trump has again pressed Saudi Arabia and OPEC for help. However, Trump’s insistence that a Saudi-led OPEC reign in oil prices by increasing output is short-sighted.

Saudi Arabia may simply be unable to ramp up production in order to help fill any upcoming oil supply gaps. It has never produced more than 10.7 million barrels per day (MMbpd), while its claim to have at least 1.5 MMbpd of spare capacity remains uncertain.

Lack of spare oil production capacity is likely the reason Saudi Crown Prince Mohammed bin Salman met with Kuwait’s Emir Sheikh Sabah Al-Ahmed Al-Sabah recently to discuss joint oil production in the so-called Neutral Zone between the two countries. Oil fields in the overlapping area have a significant amount of combined capacity per day. However, political differences between the two sides remain an obstacle over the possibility of resuming long-idled production in the area’s fields.

Moreover, doubt over Saudi Arabia’s ability to help OPEC fill a looming supply shortage marks the kingdom’s descent from global oil markets swing producer to one that now plays a contributing role. The kingdom lost its ability to sway oil markets due to its ill-fated market strategy implemented in December 2014. It opted to forgo years of market wisdom and actually ramp up production amid an oil supply overhang in order to both protect its market share, particularly in key Asian markets, as well as drive U.S. shale oil producers (which had much higher break-even production price points) out of business.

However, the strategy backfired and almost drove Saudi Arabia to economic collapse. While some U.S. producers were indeed forced into bankruptcy, others simply found ways to lower production costs and continued to pump oil, exacerbating the supply overhang with a continued downward trajectory in oil prices that bottomed out just below $30 per barrel in January 2016.

Saudi Arabia eventually threw in the towel on its pump-at-all-costs strategy by the end of 2016 and was forced to turn to Russia and other non-OPEC producers for help, creating the so-called OPEC+ group of producers. By late 2017, the ongoing supply overhang came to an end as OECD oil inventory levels were reduced to five-year averages with a new floor established for global oil prices. However, it was only a partial win for Saudi Arabia since it had to rely on other producers to restore oil market equilibrium.

Going forward, OPEC+ with Saudi-Russian oil production cooperation as its main driver, will retain its hold on global oil supply and continue to reshape the world order for oil. Saudi-Russian cooperation also has geopolitical ramifications, while also complicating ongoing U.S.-Saudi bilateral relations. Increased energy partnership between Riyadh and Moscow will allow Russia to play a larger role in Middle Eastern affairs as Washington’s influence in the region diminishes. Riyadh may also be counting on Moscow to help deal with Iran over several issues, including the country’s regional hegemony and nuclear development ambitions.

RIGZONE



12 Comments on "Saudi-Russian Cooperation Marks New World Order For Oil"

  1. I AM THE MOB on Mon, 8th Oct 2018 2:01 pm 

    The DaVos crowd wants Putin neutralized..

    And they always get what they want..

    The propaganda has already turned Putin into public enemy number one in the western world..

    Now all they need to do is set off a false flag to be used as justification for a nuclear first strike..

    Tick tock Vlad the bad

  2. Cloggie on Mon, 8th Oct 2018 3:38 pm 

    The DaVos crowd wants Putin neutralized..
    And they always get what they want..M/i>

    Yeah, like the Trump presidency and Kavanaughty and Brexit.

    OMG, I have to cry for laughter.

  3. I AM THE MOB on Mon, 8th Oct 2018 6:01 pm 

    Republicans, White Nationalists Fume Over Taylor Swift Endorsement

    https://www.rollingstone.com/politics/politics-news/taylor-swift-endorsement-733776/

    That is my girl!

  4. I AM THE MOB on Mon, 8th Oct 2018 6:02 pm 

    Clogg

    Trump went to DaVos last year..He is part of the crowd you bumbling imbecile..

  5. I AM THE MOB on Mon, 8th Oct 2018 6:05 pm 

    Renewable energy is growing too slow to meet climate goals, International Energy Agency warns

    https://www.cnbc.com/2018/10/07/renewable-energy-needs-to-speed-up-to-meet-climate-goals-iea-warns.html

  6. DerHundistLos on Mon, 8th Oct 2018 6:25 pm 

    NEW IPCC REPORTS CLIMATE TO HIT CATASTROPHIC TIPPING POINT IN JUST 12 YEARS

    http://www.latimes.com/science/sciencenow/la-sci-sn-climate-change-report-20181008-story.html

  7. I AM THE MOB on Mon, 8th Oct 2018 6:33 pm 

    The rich-poor gap is getting worse under Trump

    https://www.yahoo.com/finance/news/rich-poor-gap-getting-worse-trump-193238702.html

    Sucks to be Trump rustbelt losers!

    LMFAO!

  8. Weekly Star on Tue, 9th Oct 2018 7:11 am 

    When Donald Trump sings the well known 1950s tune “I love, I love, my calendar cat” he has modified a few of the words so that he sings (and those around him, including most vocally Vice president and Man Servant Mike Pence), “I love, I love, my scrotum sac.”

    I’m sure you are puzzled why substituted scrotum sac for calendar cat.

    We have this answer…..

    For some time now, intense speculation has circulated as to the origin of Donald Trump’s unique hair-doo. We finally broke the code. The Weekly Star paid a source “in excess of $1 million” to produce close-up photos that show a pubic hair transplant from Trump’s scrotum sac, anus area, armpits, and upper back to his head. The process occurred over a six month period and involved multiple procedures. The article and photos will be published in the Thursday edition (correction from earlier date of Tuesday) of the weekly newspaper.

    I am required to disclose I am employed by the Star.

  9. Sissyfuss on Tue, 9th Oct 2018 8:24 am 

    Weakly Star, I believe the phrase was ” I love my calendar girl.” And stealing from his groinal extremities would explain his mushroom shaped hair piece.

  10. Chrome Mags on Tue, 9th Oct 2018 12:13 pm 

    “The rich-poor gap is getting worse under Trump”

    Not surprising, and just wait until after the mid-term elections for an increase in retirement age and massive decline in entitlements to make up for recent tax cuts for the super wealthy.

  11. Richard Guenette on Wed, 10th Oct 2018 12:41 pm 

    The US is a mess. They are unprepared for disasters, have the highest incarceration rate in the world, have the highest obesity rates in the world. Socially inequality is widespread (the rich are getting richer and the poor are getting poorer).There are over 270 million firearms in the hands of civilians (including assault rifles). I don’t believe the mainstream media (example: FoxNews, CNN, Infowars etc.)

  12. Richard Guenette on Wed, 10th Oct 2018 12:45 pm 

    The US government (both Democrats and Republicans) needs to stop thinking that it is better than everyone else in the world. Arrogance, greed and ignorance are its weakness.

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