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Oil's Collapse Is a Geopolitical Reset in Disguise

bloomberg.com

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Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#71

Post by Pfhreak »

1MachineElf wrote: post #69
0xddd wrote: post #35

Earlier quoted context omitted.

And what better way to find out who wrote it than to scan the comments after reading the article? In all seriousness, I don't see how wilful ignorance on the first-read through is some ideal analytic strategy.

Not knowing who the author is is actually a component of an ideal analytic strategy. Same principle behind why double-blind tests have high efficacy.

Reading an article is different than a double blind test. Reputation exists because it is critical shorthand when dealing with other humans. It's not always right. It's not always useful. But it shortcuts a lot of preamble.

Also, most geopolitical problems aren't simple analytical problems. There isn't a 'right answer' that one can divine by approaching the space with an emotionless evaluation.

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#72

Post by shkkmo »

person_of_color wrote: post #59
voz_ wrote: post #2

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

Interesting. So why is this person not shunned from her industry for being partly responsible for a geopolitical disaster? It's akin to taking business advice from Ken Lay and Jeffrey Skilling.

You seem to be not distinguishing between the effort to start that war and the effort to manage and end it. Specifically, Rumsfield's opposition to her involvement would seem to speak well of her in that regard.

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#73

Post by zeckalpha »

redis_mlc wrote: post #34
rckoepke wrote: post #29

Earlier quoted context omitted.

Indeed: https://commons.wikimedia.org/wiki/File:Islamic_Republic_of_... (edited to 2017) 79% of their exports is unrefined crude oil. While exports are not always the whole story, in this case it is extremely relevant. If Iran's economy was 99% domestic and 1% trade, (essentially autarkic) then it wouldn't really matter at all what the price of oil is, as Iran makes everything it needs for itself, whether that be aut…

All oil and gas exporters become dependant on that revenue. It's human nature to spend it all.

Or you can invest in energy alternatives like nuclear, like Iran has attempted.

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#74

Post by spicyramen »

Mexico is planning to build a new refinery, while oil is key it is also important to mention which countries have the technology to process this extra oil into products. Mexico depends on US technology to do this for their gas. Once they built the new refinery this no longer going to happen. Something important to consider for our balance sheet and American workers

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#75

Post by alextheparrot »

rckoepke wrote: post #63
alextheparrot wrote: post #57

What happened to Iran between 2018 and 2019? The author links to data [1], which states that Iran needs $319 / barrel oil to balance its budget. Between 2018 and 2019, this number jumped from $67 (In line with the rest of the region) to $244. I feel like this statistic was trotted out and means something different from what I'd casually read it as. Iranian exports fell significantly between 2018 and 2019 [2], it seem…

There are definitely some ideas worth talking about here. But at the end of the day, Iran will be facing a foreign-reserve crisis in three years if it can't find ways to balance the national budget. It probably has 3 years at current rates to improve the situation before it faces difficulty importing goods essential to its economy and welfare.

That's true in a global context, and I think warrants a discussion. I expect, however, in this article that the discussion would be accompanied with the obvious related fact: this statistic is mostly caused by US geopolitical policy by decreasing the number of barrels which can be exported.

A US writer supports the header "Prepare for more fragile, or even failed, states and the risks that can accompany them.", with these facts. I find it quite disingenuous, I'd be happy to discuss that if we disagree.

The language makes people (Some of them even in this thread) think that there is something intrinsic to Iran as a state, rather than just US geopolitical policy causing chaos for banana republics and oil adversaries of the US. Overall, the fact isn't linked at all to oil's current collapse (Which is the article's context), as Iran is still in a horrible spot even if the price doesn't collapse.

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#76

Post by lesdeuxmagots »

person_of_color wrote: post #59
voz_ wrote: post #2

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

Interesting. So why is this person not shunned from her industry for being partly responsible for a geopolitical disaster? It's akin to taking business advice from Ken Lay and Jeffrey Skilling.

Jeff Skilling could probably give some real fantastic advice on business and finance, particularly structured products, operating, etc. That's not to say you'd want to FOLLOW the advice, but it would likely increase your knowledge or insight into something.

His failure was in ethics. THAT might be something you'd not want to look towards him for.

It's very useful to separate the two.

In this instance, an expert's read on a situation is interesting and informative. You just might not want to take his policy recommendation.

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#77

Post by duxup »

nradov wrote: post #67
arthurcolle wrote: post #42

Earlier quoted context omitted.

Economic warfare - end game is causing economic harm to the US and its interests. If everyone loses their jobs in the energy industry in the US, that forces the US to buy oil from foreign entities. The US energy industry cannot exist beyond 3-6 months with sub 20 dollar oil prices.

The US oil industry has always been boom and bust. Occasionally everyone loses their job, but then everything comes back a few years later.

Yeah it ebbs and flows pretty dynamically.

I grew up in an area where oil had been found decades ago. There was mini oil rush and then ... it was discovered to be not as accessible as initially thought. Suddenly the rush was over.

It was a very fast boom and bust.

For a good 20 years I saw bumper stickers that said something like "Please God give us another chance, we won't screw it up this time." It was a very midwestern sort of self blame for a thing that wasn't anyone's fault.

Decades later... they got their shot again and the boom lasted quite a bit longer, until recently.

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#78

Post by sandworm101 »

mbreese wrote: post #19
xiaolingxiao wrote: post #13

I 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…

>> When the price drops, they can no longer cover their entire budget and will need to borrow or reduce their spending.

And there is another angle to these numbers. They are the prices based on recent exports of oil. Iran isn't a silly country that requires $300 oil to break even. Their oil exports have dropped in recent years. That drop (sanctions) is a separate factor than oil price. If oil exports a halved, the break-even price doubles. But if oil prices climbed Iran would probably find a way to export more oil, decreasing its break even price to something more reasonable.

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#79

Post by sadfklsjlkjwt »

opo wrote: post #50
redis_mlc wrote: post #34

Earlier quoted context omitted.

All oil and gas exporters become dependant on that revenue. It's human nature to spend it all.

People can choose to do that, or they can choose to save and invest the money. Norway's oil fund is around 1 trillion dollars. >...The Government Pension Fund Global, also known as the Oil Fund, was established in 1990 to invest the surplus revenues of the Norwegian petroleum sector. It has over US$1 trillion in assets, including 1.4% of global stocks and shares, making it the world’s largest sovereign wealth fund. h…

An increasing proportion of Norwegian spending is already covered by the revenues from the Oil Fund. This crisis has seen a near perfect storm of massive increase in welfare spending, massive fall in the value or the Oil Fund's assets and massive decrease in the price of oil (and hence the input for the Oil Fund). It will be very interesting to see what happens with the fund in the next 10-20 years.

EDIT: To be clear I am glad the fund exists. It has been and is a much better way of using the natural resource bonus. However, I strongly suspect that Norway will use the entire fund cushioning the transition away from being an oil producer.

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