Posted on 08/05/2015 9:06:58 PM PDT by ckilmer
If the oil futures market is correct, Saudi Arabia will start running into trouble within two years. It will be in existential crisis by the end of the decade.
The contract price of US crude oil for delivery in December 2020 is currently $62.05, implying a drastic change in the economic landscape for the Middle East and the petro-rentier states.
(Excerpt) Read more at telegraph.co.uk ...
Bwahahaha. Good. Eat sand.
Glass Mecca.
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"Hige sceal þe heardra, heorte þe cenre / mod sceal þe mare, þe ure mægen lytlað." "Thought must be the harder, heart be the keener / mind must be the greater, as our might lessens." |
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Couldn’t happen to a “nicer” bunch of islamic a-holes....
To h*** with those moving tea towels! Let them eat sand! Bloody savages!
Good news.
I long for the day when an energy technology breakthrough makes crude oil nearly worthless. The income from oil is fueling terrorist states and I want to see them made destitute!
I just hope and pray it’s a Jewish scientist that makes the discovery that bankrupts the oil sheikdoms..
I echo your sentiments in this matter my FRiend!
The Saudis make plenty of money off $60 barrel oil.
Ohhhhhhhhh. I see what's going on. Saudi Arabia is setting the stage for a last minute bailout as Ayatollah Obola is walking out the door.
They make money....but, in terms of meeting their normal yearly budget, they got a problem. Remember, other than airline hubs, there’s no industry in Saudi Arabia...so the profits of oil business is what pays for education, infrastructure, and lifestyles in the kingdom.
I should add, Russia is in the same boat, along with Nigeria and Iran. In the case of Russia....they will have to ease off defense spending and find creative ways to meet their yearly budget plan. All of these countries have one remarkable connection...no real industry beyond oil. In the case of Russia....they might be able to sell military hardware but the buyers have to have some cash to make this work.
19 plane hijackers on 9-11-2001, 17 were Saudis.
Yep. They shot themselves in the foot.
bad for us. They will all be here trying to kill us by that time.
I know people in the oil and gas biz in Texas. They planned for this. Diversified. Paid for long term infrastructure when the price of oil was high.
Did I mention diversified? Mostly into tech. Dallas is about to becmoe the new Silicon Valley....
I have read that their fixed costs mat be as low as $9.00 per barrel. It’s not a matter of just price but of revenue. If they get $50.00 per they make less but the real issue is their percentage of total demand.
If they sell 2 barrels at $50 or 1 at $100 they get the same revenue. They need to increase market share to get rid of their deficit. At the higher price they could lose market share and be okay but not at the lower one. The article completely misses the point of them letting prices fall by not cutting production. That was to recapture market share. Prices didn’t fall because of gravity but because of over supply.
And yes the end game is vastly different depending on price. How much they’ve garnered when they run dry will be meaningful but it has nothing to do with the article. If it was a simple matter of price they would just cut production but it’s not. It’s gross revenues.
Russia is far more diverse. Natural resources in general and oil is important but they have lots of natural resources. Iran though is spot on.
What will happen here, and i predict this with great confidence, is the majors will gobble up the great majority of the smaller outfits and shutter wells. Less supply will generate higher prices. The big guys here are pretty much flush with cash and debt free so this will be easy for them.
The issue is very few smaller ones have filed for bankruptcy so while there is currently a glut of assets for sale they’re not yet as cheap as they will get.
Currently if you take over one of these smaller debt laden companies you have to assume their debt and if they have one thing besides oil and gas it’s plenty of debt. Once they file chapter and sell off assets the bondholders will be paid out of those proceeds at pennies on the dollar. The big companies have no need for buying entire companies. They wait and will buy only the assets they need. Thats why there aren’t as many sales as one would think. The smaller ones are reluctant to sell until they’re totally without recourse. Once they have to file they have no recourse.
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