{"id":38354,"date":"2020-03-09T12:27:07","date_gmt":"2020-03-09T16:27:07","guid":{"rendered":"http:\/\/www.rightwinggranny.com\/?p=38354"},"modified":"2020-03-09T12:27:07","modified_gmt":"2020-03-09T16:27:07","slug":"a-very-mixed-blessing","status":"publish","type":"post","link":"https:\/\/www.rightwinggranny.com\/?p=38354","title":{"rendered":"A Very Mixed Blessing"},"content":{"rendered":"

CNBC<\/a> posted an article yesterday (updated today) that because OPEC has not been able to reach an agreement about oil prices with its allies (led by Russia), Saudi Arabia has cut its oil prices and increased its production. A price war is expected to follow. This is great news for consumers, but horrible news for American oil production.<\/p>\n

The article reports:<\/p>\n

U.S. West Texas Intermediate (WTI) crude<\/strong><\/a>\u00a0and international benchmark Brent crude<\/a> are both pacing for their worst day since 1991.<\/strong><\/p>\n

WTI<\/strong><\/a> plunged 18%, or $7.36, to trade at $33.92 per barrel. WTI is on pace for its second worst day on record.\u00a0International benchmark Brent crude<\/a>\u00a0was down $8.44, or 18.7%, to trade at $36.80 per barrel. Earlier in the session WTI dropped to $30 while Brent traded as low as $31.02, both of which are the lowest levels since Feb. 2016.\u00a0<\/strong><\/p>\n

\u201cThis has turned into a scorched Earth approach by Saudi Arabia, in particular, to deal with the problem of chronic overproduction,\u201d Again Capital\u2019s John Kilduff said. \u201cThe Saudis are the lowest cost producer by far. There is a reckoning ahead for all other producers, especially those companies operating in the U.S shale patch.\u201d<\/strong><\/p>\n

On Saturday, Saudi Arabia announced massive discounts to its official selling prices for April, and the nation is reportedly preparing to increase its production above the 10 million barrel per day mark, according to a Reuters report. The kingdom currently pumps 9.7 million barrels per day, but has the capacity to ramp up to 12.5 million barrels per day.<\/strong><\/p>\n

The article concludes:<\/p>\n

“$20 oil in 2020 is coming,\u201d Ali Khedery, formerly Exxon\u2019s senior Middle East advisor and now CEO of U.S.-based strategy firm Dragoman Ventures, wrote Sunday on Twitter. \u201cHuge geopolitical implications. Timely stimulus for net consumers. Catastrophic for failed\/failing petro-kleptocracies Iraq, Iran, etc – may prove existential 1-2 punch when paired with COVID19.\u201d<\/strong><\/p>\n

But others, including Eurasia Group, believe that Saudi Arabia and Russia will eventually come to an agreement.<\/strong><\/p>\n

\u201cThe most likely outcome of the failure of the Vienna talks is a limited oil price war before the two sides agree on a new deal,\u201d analysts led by Ayham Kamel said in a note to clients Sunday. The firm puts the chances of an eventual agreement at 60%.<\/strong><\/p>\n

Vital Knowledge founder Adam Crisafulli said Sunday that oil \u201chas become a bigger problem for markets than the coronavirus,\u201d but also said that he does not foresee prices falling to the Jan. 2016 lows.<\/strong><\/p>\n

\u201cSaudi Arabia can\u2019t tolerate an oil depression \u2013 the country\u2019s fiscal breakeven oil prices remain very high, Saudi Aramco is now a public company, and MBS\u2019s grip on power isn\u2019t yet absolute. As a result, the [government] won\u2019t be so cavalier in sending oil back into the $30s (or even lower),\u201d he said in a note to clients Sunday.<\/strong><\/p>\n

OPEC has played this game before. In the 1970’s oil crisis, OPEC boycotted America because of our support of Israel. When American energy companies responded by drilling wells to meet the need, OPEC dropped the boycott and lowered the price to put those companies out of business. I suspect there may be an attempt to do that again, but I am not sure we are as vulnerable as we were then. If America continues on the path to energy independence, our oil prices will be less vulnerable to foreign manipulation. We may have to pay a little more than the price the Saudis will drop to for our oil, but it would be worth it in the long run. Hopefully we have people currently in charge that are looking long term rather than short term.<\/p>\n","protected":false},"excerpt":{"rendered":"

CNBC posted an article yesterday (updated today) that because OPEC has not been able to reach an agreement about oil prices with its allies (led by Russia), Saudi Arabia has cut its oil prices and increased its production. A price … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[9053,684,2194,1886,8316,689,1083,342,12121,9054],"class_list":["post-38354","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-brent-crude","tag-cnbc","tag-energy-independence","tag-oil-prices","tag-oil-production","tag-opec","tag-russia","tag-saudi-arabia","tag-trade","tag-west-texas-intermediate"],"_links":{"self":[{"href":"https:\/\/www.rightwinggranny.com\/index.php?rest_route=\/wp\/v2\/posts\/38354","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.rightwinggranny.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.rightwinggranny.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.rightwinggranny.com\/index.php?rest_route=\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.rightwinggranny.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=38354"}],"version-history":[{"count":1,"href":"https:\/\/www.rightwinggranny.com\/index.php?rest_route=\/wp\/v2\/posts\/38354\/revisions"}],"predecessor-version":[{"id":38355,"href":"https:\/\/www.rightwinggranny.com\/index.php?rest_route=\/wp\/v2\/posts\/38354\/revisions\/38355"}],"wp:attachment":[{"href":"https:\/\/www.rightwinggranny.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=38354"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.rightwinggranny.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=38354"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.rightwinggranny.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=38354"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}