Oil-Price Poker: Why the Saudis Won’t Fold ‘Em

Wall Street Journal ^ | 31 jan 2016 | SPENCER JAKAB

[DUMBGRUNT]

Don’t underestimate the impact of Middle East politics... The game being played in the global oil market today bears more than a passing resemblance to poker. Nobody wants to quit while they’re losing... Russia, meanwhile, is pumping the most crude ever, hitting a post-Soviet Union peak. But it may have difficulty maintaining today’s pace given a lack of investment in its aging Siberian fields... In other words, Russia is holding weak cards and the Saudis know it... The newest players at the table are U.S. shale producers. They helped the U.S. to increase output by 80% between 2008 and 2014 and have the shortest stack of chips at the table... For now, politics, if not economics, suggests the Saudis will remain all-in. That alone could keep a lid on an immediate oil-price recovery.

[DUMBGRUNT]

A house of cards.

[glorgau]

Good. Let the Saudis keep pissing into the wind.

[Jack Hydrazine]

To try and bankrupt Russia...again!

[biff]

Do not count the U.S. petroleum industry out. We may be wobbly right now but we have been thru this before and as before we will come out stronger and stronger as majors and large independents buy the weaker independents out. Those that have borrowed way too much money will be sold at auction or privately thru creditors and Americas main concern should be that no foreigners(Saudi, Russian or Chinese) ponies up to the bar and does the purchasing.

The ‘oilfield trash’ that keeps you car running down the road, that fuels the airline industry, that keeps the lights and heats on in your house, that provides material for your plastics, and on and on is one of the industries left in America that still has the “git-er-done” attitude.

Control of your computer is being returned to you now.

[thackney]

In the past 5 years:
US production grew by 75% (4.1 mmbpd)
Russia Production grew by 13% (1.2 mmbpd)
Saudi Arabia Production grew by 5% (0.5 mmbpd)

http://www.eia.gov/beta/international/data/browser/#?ord=CR&cy=201506&v=H&vo=0&so=0&io=0&start=201006&end=201506&vs=INTL.57-1-RUS-TBPD.Q~INTL.57-1-SAU-TBPD.Q~INTL.57-1-USA-TBPD.Q&c=000000000000000000000000000000000000000500000002&pa=00000000000000000000000000000000002&f=Q&ug=g&ct=0&tl_type=p&tl_id=5-Q&s=

In the past 3 years:
US production grew by 51% (3.2 mmbpd)
Russia Production grew by 2% (0.2 mmbpd)
Saudi Arabia Production grew by 3% (0.3 mmbpd)

[Vince Ferrer]

Continuing with the poker analogy, both Saudi Arabia and Russia are professional poker players. All their income comes from poker. They have to play. The United States, with a diversified economy, is not. We can buy in with more money, we can sit out hands until the game is in our favor. Individual Americans and companies can be hurt or bankrupted, but America itself is playing with pocket change, not the rent money.

[DUMBGRUNT]

America itself is playing with pocket change, not the rent money.

A good observation! Very true.

A minor problem is the administration that that wants to bring America down, to prove we are mere equals.

[DUMBGRUNT]

Russia, meanwhile, is pumping the most crude ever, hitting a post-Soviet Union peak. But it may have difficulty maintaining today’s pace given a lack of investment in its aging Siberian fields. The chief executive of Russian oil giant Lukoil predicted that Russian output would drop in 2016 for the first time in several years.

The Russians need every ruble they can find to support their world wide adventures.

[Trumpinator]

There is always gold, platinum, silver, rare earth metals, gems and diamonds (natural and man made), timber, fur, grain, weapons sales, gas for Russia to fall back on if it needs some cash.