👉Oil Price War Explained : It is a Russian War against The Petrodollar.
The oil prices could continue to plummet and even drop below $ 10 a barrel; due to the slump in demand, and due to the crisis,
industry experts say.
Demand could drop by 20 million barrels per day or more in April.
This is going to be the biggest drop in demand in modern times.
If we run out of oil reserves and oil cannot be shipped as in 1988, we will see that prices will drop dramatically ito very low figures,
and, in some cases, to single digits.
Over the past month, two of the world's biggest oil producers, Saudi Arabia and Russia, have been in dispute about how to respond to the pandemic. As demand collapsed after airlines grounded their planes, factories shut their doors, and countries imposed travel bans. Crude prices fell further when these two major producers couldn't agree on cutting supplies to try and force prices higher.
Moscow’s decision to not deepen output cuts triggered an unexpected response in Riyadh, which decided to leave behind the OPEC deal and start pumping flat out.
The US pumps shale at a loss backed by the fed funding loss-making companies. The USA wants to manipulate the market. Trump's reality show meets reality.
Trump is practically saying: I am in favor of the free oil market, but I will put tariffs on you if you don't cut your production. Very consistent message. Congratulation, Mr. Trump.
All they need is to just stop selling their oil for the US dollar and let the US pump as much as they want.
The OPEC was arranged and is semi-controlled by the USA. The cartel was designed to protect US oil companies. And it still protects the US petrodollar.
Ramping up storage fast enough is a problem. The world is at tank top now. The reason prices have crashed obviously from production increases from Russia and the Saudis. The US used to be the Saudis largest customer, and now we are competing with them. This is a problem, and they aren't happy. The US went from a whiny victim to a muscle man over a decade with Shale and Fracking doubling our production, disrupting an already oversupplied market. The bigger problem for the Saudis is they foolishly took their state-owned oil company public last year, and even at $50 a barrel, they can't pay their welfare system, which is what keeps the Royal family in power or their shareholder dividends. It is a self-correcting problem for everyone involved. Simultaneously, it's been reported for a few years that the world is around peak oil now.
With the advent of electric cars, that may be the case!
One thing it seems is quite evident, referring to oil as fossil fuel is ludicrous, the earth produces oil at a sustainable rate. Are we running low? Apparently not. Commodity dependent countries like Saudi and Venezuela And the Middle East are feeling this price decline extremely hard. This is also crushing states that are heavy in oil production in the US. We are all in this together. Tariffs are a really bad idea at this point. Trump will have to concede as he has very little control in this matter. US demand is way down as well, obviously. That's the commodity markets, boom, and bust!
Furthermore , the US relies on countries like Saudia to buy US debt. China bailed the US out in2008 by buying US debt.
Russia also is not buying US debt anymore.
If Saudia decides to start selling in gold or Yuan, The US and its petrodollar are toast.
What nobody mentions is that the US and Canada oil fields are a long way away from sea tankers, unlike a number of other countries who may be able to keep going and fill tankers up. US Shale needs to be cut big time as they have caused this problem, Russia and Saudia don’t need to cut.
Saudi April loadings at 6-8 dollar discounts are easily supplied using their large reserves.
US producers have already hedged this year’s production at 55 dollars per barrel.
But due to lack of available storage, much production may come offline due to shut-ins.
Production cuts and cutbacks are quite likely this week.
As we are quickly running out of places to store crude AND refined products.
Plus Natural Gas heating season is virtually over.
To put it simply, Saudi Arabia is selling oil for around $8 a barrel, and it's difficult for the U.S to compete with Saudis prices. In the U.S, oil production could not operate when oil is at approximately $20 to $30 a barrel, let alone $8.
The Saudi Crown Prince, was almost deposed. Then all of a sudden, there's an oil price war with Russia.
Rather a coincidence that the oil - price drops.
Markets drop, this is one of the biggest cover-ups in the history of the world. This has nothing to do with the virus. This is the Russians bringing down the Americans. The Russians have just bankrupted the fracking companies in America and the world.
Russia did not break OPEC+ to attack anyone or for any external reasoning (that is not to say that they don't get a lot of secondary benefits). They stated that they would not agree to any more production cuts, because every time they do, US shale produces more to fill the production gap. The prices stay the same, but the producers get less because they are selling less. Ergo, they responded to market pressure placed upon OPEC+ countries by non-OPEC oil-exporting nations and not for any particularly nefarious reasons.
I really feel that the reason for the oil price “war” is twofold. Russia wants to sink the petrodollar. If they can keep the price of oil down far enough and long enough, demand for the Dollar will fall off enough that the demand for the dollar won’t be enough to keep its value.
I wouldn’t put it past the Saudis to conspire with the Russians to #1 Shut down the US Shale Industry, and, in turn, cripple the US banks that hold their debt.And #2 Eliminate the Petrodollar Hegemony.
And If the Saudis aren’t in it with Russia,It'll be interesting to see who will buy US debt now.
If this hits Iran very badly, the Saudis are pleased.
But those who truly benefit the most are India and China.
Russia has decided that a stagnant economy is better than being overtaken by the US.
They are not part of OPEC+ , and have extremely easy access to oil shipping routes. Bankrupting American domestic business will allow Russia to keep its hold for longer.
The US has a lot more debt than Russia.
When the investment banks can't meet their margins, even with bailouts, the Dollar goes poof.
Russia and the Saudi’s are seizing the moment to squeeze out competitors and kill the petrodollar. It's the perfect time.
Neither the Saudis or the Russians are in trouble with this oil price. This price action is aimed at smaller producers.
The funny thing is, I haven't seen US gas prices drop one cent. The lag in gas prices only happens when the price of oil goes down. When oil price rises, the gasoline prices go up almost immediately.
Big Oil Companies Getting Bailed Out. Wall Street Getting TRILLIONS, and everyone else is getting the Lube job.
This situation is beyond effed.
On the bright side, the CO2 emissions globally have dropped, and air quality around the world hasn't been this good in 50 years.
Welcome back to The Atlantis Report.
Today , there are 80 loaded supertankers who roam the oceans in search of a terminal, a buyer, for their load of millions and millions of barrels of crude oil. There are no more customers, for now. The prices are plummeting.
And the sheiks of the Persian Gulf are trembling because the worldwide blockade caused by the pandemic has grafted on the challenge between Russia and Saudi Arabia for the price of crude oil. Sixteen thousand flights to the Middle East have been canceled since the end of January.
Saudi Arabia lost 15.7 million passengers, and with them 3.1 billion dollars., The United Arab Emirates lost 2.8 billion. Each state has its own way of dealing with this collapse. The UAE is helping airlines with loans, postponing the payment of taxes and debts. In weak countries like Egypt, Lebanon, and Jordan, companies are likely to close down . This is endangering hundreds of thousands of jobs: crews, maintenance, marketing, travel agencies, hotels, travel guides, and so on.
In Abu Dhabi last week, they decided to inject 100 billion dollars into the economy, half to help large companies and a half for small and medium-sized enterprises and private citizens. All to try to revive the real estate sector that was already in deep crisis before the pandemic. The goal is to keep the economy running as much as possible and prevent alarmed people from rushing to withdraw their deposits from the banks. Life will become harder for all the inhabitants of the Gulf who have had an easy life so far, without taxes, guaranteed jobs, inflated services, and superb infrastructure.
The most notable plan to diversify the economy from oil is Saudi Arabia's "Vision 2030," which is, however, proving to be a half failure. Not only the wrists of the members of the super-rich Arab club are shaking - the countries of the Gulf Cooperation Council (Saudi Arabia, Kuwait, UAE, Qatar, Bahrain, and Oman) - but also those from all over the Middle East. Lebanon and Jordan were hoping to obtain aid for avoiding the default.
But as the IMF has revealed, the giant ATM machine in the Arab world that was the Gulf is running out of money. The huge oil deposits on the ground are overflowing with crude oil that nobody is currently buying. On March 10, Saudi Aramco - the Saudi Arabia oil company - pledged to increase daily production to 12.3 million barrels of oil. On the same day, Russia announced that it would increase production by half a million barrels per day. And the price immediately fell by 30%. The progressive freeze caused by the pandemic has further shattered the price, which according to many analysts, could drop to less than $ 10 a barrel.
This is a positive development for large energy consumers such as Turkey and for the "poor" small countries such as Jordan, Lebanon, Syria, Morocco, who now enjoy low prices. But for the club of sheiks, it is a serious threat because the Gulf States get 80 cents for every dollar of GDP from crude oil exports. To support economic contingency plans and prevent budgets from falling to dangerous deficits, Gulf states cannot afford the price to drop below $ 40 to 50 a barrel.
OPEC members are expected to reduce the quota by 1.5 million barrels per day to raise the price, but perhaps it is too late. Eventually, Gulf states may find themselves forced to sell off assets abroad to finance their survival.
The impact of a poorer Gulf will then extend to the Middle East. It is the petrodollars that play a role against Iran's regional ambitions and keep the economies of many countries up and running. The sheiks employ 25 million Egyptians, Lebanese, and Palestinians.
Saudi Arabia has been on the chopping block for years. The Aramco IPO was forced into existence by the west, twisting MBS's arm. If you actually look back, you will see that he tried to back out of it and probably would have been overthrown if he had. Saudi Aarabia is the ultimate puppet. Its elites are an abomination onto any sense of human decency, a ruling class of Gollums, twisted and dehumanized by mindless greed.
Eventually, Saudi Arabia too will be sacrificed c, though hardly anyone will mourn its passing.
So what happens to the Saudi-backed Petrodollar if the Saudis go bankrupt?
Nothing will happen. The Dollar has been just a beautiful piece of paper since 1913 as part of a grandiose worldwide scam, which it was after World War II in 1945, the way it was when Nixon untied the US dollar from gold. The Dollar was like paper, which cost nothing, so it remained. As long as there are fools who believe in the importance of the Dollar in the world, a zombie dollar will create the appearance of life. The rest of the paper money from other countries is the same paper. Only they do not position themselves as the world currency.
Russia's budget needs $40 oil. Somehow it can cope with $25 oil for ten years. How?
Anyway. Yes, Russia can probably last longer because of Saudi's soft and useless population that does nothing but make babies and demand more freebies.
Saudi Arabia's break-even includes the cost of buying peace internally.
If they get less than $80, a clock starts ticking on civil unrest.
But both Saudi and Russia can outlast US shale oil unless the government plans to bail them out year-after-year, which I suppose is also possible.
So, in summary, everyone loses except consumers. Being a consumer, I'm fine with that. Being a taxpayer, I hope our government doesn't play this game, but I know they will.
Global oil production is crashing, year-over-year, yet the major powers are doing their best to cover it up. The “price war” is part of that lie.
Oil prices fell 65 percent in the first quarter of the year, following the sharp drop in demand due to global trade and trafficking restrictions due to the pandemic. The clash between Riyadh and Moscow has further increased market pressure.
Oil is among the main causes that trigger the current armed conflicts between countries, within countries, and between ethnic groups.
The control of crude oil is almost always the root cause of the conflicts, especially in the Mena area and central-western Africa.
The collapse of the price blocks investments and creates instability.
This is the explosive mix in which we live immersed, aggravated by the social tensions caused by the increase in inequalities. The oil wars have followed one another steadily and continuously since 2003: Iraq, Libya, South Sudan, Nigeria, Yemen. At the center of all tensions in the Middle East, which owns 47.7% of the proven reserves of crude oil in the world.
What we said about playing chess. Here we go again.
What is the major advantage of Russia?
This billion of US? Not so much, because it could always block the usage of dollars.
The major advantage is Russia Self independence earned in a hard way in the last six years, which now allows Russia to gamble with anybody without reservation. Russia is now a big food producer, which The USSR never been and big arm producer.
As it was clearly seen with war with NATO member Turkey in Syria, Russia can now play its own game, and nobody can harm it in any meaningful way.
So Russia can sell its oil through dumping prices with some losses, while others will have much bigger losses.
In this club, only the US could cope with losses for a long time, but it is a problem that in the US, giving public money to private interest to have an expansion of oil against the world for a longer time could be a big problem.
America was finished years ago, and now it comes to the surface.
All this bullying, threatening, blackmailing its way in this world is being countered by the simple fact that the US has an Achilles heel, oil, the petrodollar and the economy, and that is going down the drain as we speak.
Will, the US take it lying down? What can they do? Send some thugs in warships out to threaten and bully some more?
Time will tell, but what a show.
We are making history here, and we are here to watch it and experience it ourselves. Fantastic.
Amazing times to be alive if you are not in fear but in grace.
This was The Atlantis Report.
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