Additional detail: The author was one of the architects for major pieces of the Iraq war, including the surge. https://en.wikipedia.org/wiki/Meghan_O%27Sullivan
What is your point?
Oil's Collapse Is a Geopolitical Reset in Disguise
11–20 of 221 posts
Re: Oil's Collapse Is a Geopolitical Reset in Disguise
#12I really appreciate this piece as there's a lot of the world of oil I don't understand. One thing I don't understand is, why is it favorable for OPEC not to cut supply? Is it they want to crush all non OPEC based producers? Or are their buyers forced to buy at a particular price so they don't care if they keep producing?
ArsTechnica / Wired has a good article out about just that question. One reason that isn’t economic (and there are many economic factors a play here too) is that if you stop pumping oil, you can potentially damage the well. This would make it more difficult to reopen the well in the future when the prices improve. This also tends to affect smaller producers with fewer wells and thus more risk of one of them is damage…
Isn't another solution to just let the oil go into the ground, and stop worrying about destroying earth? I can imagine Trump getting rid of all environmental regulations. How likely is that? (I'm on the environmental regulations side of course, but I'm quite worried that this will be the logical next step).
Re: Oil's Collapse Is a Geopolitical Reset in Disguise
#13I found this part really interesting:
"For dozens of oil producers, the plunge in oil prices is devastating. No major oil producer can balance its budget at prices below $40; according to the International Monetary Fund, with the exception of Qatar, every country in the Middle East requires at least $60, with Algeria at $157 and Iran at a whopping $390. The average Brent price of oil over the past month has been a hair above $20."
It's fascinating the cost of extracting oil is so high in Iran in particular, a country that is under constant sanction by the US. I wonder how much of the cost is due to the sanctions and disturbance in trade (ie Iran cannot import key technologies), and how much of it is because Iran's oil deposits is just "harder" to drill.
Re: Oil's Collapse Is a Geopolitical Reset in Disguise
#14the dollar is too strong, it means you get less for your production ( barrel of oil) than you used to. so little, that you might not be able to feed the people in your country that pump the oil.
a strong dollar creates problems for the entire rest of the world. this is how the king of the throne applies coercive force to the 'developing world'. because their own currencies are even that much shittier, so they CHOOSE to rely on the dollar. because...it's far more useful than trying bilateral trade ( oil for food) , which isn't so easy, using a currency is far better, and if you think it's not, try bilateral trade, see what happens. in the rare cases that it may work, you'll have the u.s. navy knocking at your door too!
Re: Oil's Collapse Is a Geopolitical Reset in Disguise
#15I really appreciate this piece as there's a lot of the world of oil I don't understand. One thing I don't understand is, why is it favorable for OPEC not to cut supply? Is it they want to crush all non OPEC based producers? Or are their buyers forced to buy at a particular price so they don't care if they keep producing?
From my understanding, over the last decade, shale has become a force to be reckoned with in North America (US, Canada). This is seen as a competitive threat to other global energy producers. Saudi Arabia and Russia both have sufficient cash reserves to be able to just dump a glut of crude oil on the market at "fair market value" and exist with the depressed prices and are ok with making no money to basically complet…
that's true but the oil is still there and the extraction tech perfected. Maybe the existing players go bankrupt today but when prices come back up someone else will get a loan and turn the wells right back on. Fracking and the other technological breakthroughs have put a price ceiling on oil below which OPEC can afford.
Re: Oil's Collapse Is a Geopolitical Reset in Disguise
#16I really appreciate this piece as there's a lot of the world of oil I don't understand. One thing I don't understand is, why is it favorable for OPEC not to cut supply? Is it they want to crush all non OPEC based producers? Or are their buyers forced to buy at a particular price so they don't care if they keep producing?
From my understanding, over the last decade, shale has become a force to be reckoned with in North America (US, Canada). This is seen as a competitive threat to other global energy producers. Saudi Arabia and Russia both have sufficient cash reserves to be able to just dump a glut of crude oil on the market at "fair market value" and exist with the depressed prices and are ok with making no money to basically complet…
I think that is possible but.... what is the end game?
The oil is still there, they ability to extract it exists... so company A goes out of business, but once the countries tire of shooting themselves in the foot and prices rise, Company B will just extract it.
At best they spite company A, but didn't change much.... maybe they make a few bucks while company B ramps up.
And that all assumes other nations play along... that is not common.
Re: Oil's Collapse Is a Geopolitical Reset in Disguise
#17Additional detail: The author was one of the architects for major pieces of the Iraq war, including the surge. https://en.wikipedia.org/wiki/Meghan_O%27Sullivan
What is your point?
You know the expression let the chips fall where they may? Well this is just stating "here are the chips." i.e the author is knowledgeable in the field and either is offering expert opinion or expert manipulation.
Re: Oil's Collapse Is a Geopolitical Reset in Disguise
#18Additional detail: The author was one of the architects for major pieces of the Iraq war, including the surge. https://en.wikipedia.org/wiki/Meghan_O%27Sullivan
What is your point?
It's useful to understand the biases of an author when reading an article. We all have them, and no media is free from them. It contextualizes a piece, and it's information I found useful to my understanding of the piece.
Re: Oil's Collapse Is a Geopolitical Reset in Disguise
#19I found this part really interesting: "For dozens of oil producers, the plunge in oil prices is devastating. No major oil producer can balance its budget at prices below $40; according to the International Monetary Fund, with the exception of Qatar, every country in the Middle East requires at least $60, with Algeria at $157 and Iran at a whopping $390. The average Brent price of oil over the past month has been a ha…
> the cost of extracting oil is so high in Iran
I think you might be reading that wrong. It isn’t that the cost of extracting the oil is so high, but that the budgets of these countries depends on the price of oil being high. When the price drops, they can no longer cover their entire budget and will need to borrow or reduce their spending.
These numbers aren’t related to the cost of extraction (which is a different issue but is also variable between different regions).
Re: Oil's Collapse Is a Geopolitical Reset in Disguise
#20given President Putin’s need to demonize the United States
I am curious how exactly Putin/Russia are demonizing the US?