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Oil's Collapse Is a Geopolitical Reset in Disguise

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

#81

Post by rckoepke »

alextheparrot wrote: post #65
bsanr2 wrote: post #44

Earlier quoted context omitted.

But is their ability to produce or sell refined vs unrefined oil effected by the sanctions? Maybe not directly; maybe in how they're able to access funding for infrastructure, for example?

Iran had a 69% decrease in oil exports (In terms of barrels exported) between 2018 and 2019, as a result of US sanctions [1]. I don't think refined vs unrefined is the biggest issue, given that a reduction in quantity would be hard to recover in terms of quality. [1] https://fred.stlouisfed.org/series/IRNNXGOCMBD

Indeed, a 70% drop in exports would be difficult to recoup.

However, for sake of understanding: currently about 4-6% of global oil and gas is used to produce plastics. This represents about $600 Billion in total market value.

The total global crude oil market is about $1,800 Billion if oil is $50/bbl.

So it seems that you get roughly 5x higher revenue on a barrel of oil turned into plastic than sold in its unrefined state. Probably much more if oil is $20/bbl.

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

#82

Post by simonh »

irjustin wrote: post #3

I 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?

OPEC did try to strike a deal to reduce oil production earlier this year, but the deal was dependent on agreement with a Russia, the largest non-OPEC producer. However Russia refused to agree, because they want lower prices in order to kill the US shale oil industry. This would have meant that if OPEC had cut production Russia would have benefited hugely. As a result OPEC decided to increase production, to try and force Russia back to the negotiating table.

This was all just before the Pandemic hit.

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

#83

Post by dntbnmpls »

balladeer wrote: post #39
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

> endured some harrowing experiences while in Iraq, including escaping from a terrorist attack by scaling a building ledge ten stories up This is fascinating :) https://www.washingtonpost.com/wp-dyn/content/article/2007/0...

As fascinating as hillary, brian williams, jessica lynch, pat tillman, etc war time fiction peddled by the media. Pretty much every nonsense you read in the papers during war is bound to be a lie or highly exaggerated.

The first casualty of war is the truth after all. Last I checked we've been in a neverending period of war.

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

#84

Post by Scoundreller »

texasbigdata wrote: post #36
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…

Many basins or producers in the US don't "work" below $32 either.

But what happens when your opex and capex crater?

How much cheaper is a drilling rig now vs. 12 months ago? How about an electrician?

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

#85

Post by simonh »

rckoepke wrote: post #58
anthony_doan wrote: post #49

Earlier quoted context omitted.

Oil price is down because SA and Russia have a disagreement. Russia want to produce more barrel. On top of that, the Covid19 happened. Some theorized that SA and Russian pumping more oil was a plan to kill USA's fracking and shale industry. I'm just hoping it'll force us to move toward renewable so we won't be dependent on these countries.

I don't see this. Saudi Arabia has been producing around 10.5 million barrels per day fairly consistently-ish for the last 5 years. If anything it's a bit lower over the past 12 months vs the 60 month average: https://ycharts.com/indicators/saudi_arabia_crude_oil_produc... So that theory is right out, imo. Russia has increased production only 7-8% in the last 5 years. https://ycharts.com/indicators/russia_crude_oil_p…

The disagreement between Saudi (representing OPEC) and Russia which lead them to increase production was just a few months ago, so you won’t see it’s consequences in oil production numbers for the last few years. It was widely reported in the media.

https://en.m.wikipedia.org/wiki/2020_Russia–Saudi_Arabia_oil...

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

#86

Post by xxpor »

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

Between the Kennedy School and the law school, it seems like everyone I hear about coming out of Harvard these days is stupid and/or evil in some profound way.

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

#87

Post by corporateslave5 »

pmoriarty wrote: post #41

It's times like these that I really wonder where all the oil peak guys are who you used to see crawl out of the woodwork whenever anyone talked about oil. Now they're suddenly quiet. They used to predict doom and gloom due to an oil shortage, but what we got instead was doom and gloom and an oil glut. Where are they now?

Take this example and realize how many other beliefs it could apply to

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

#89

Post by dntbnmpls »

pmoriarty wrote: post #41

It's times like these that I really wonder where all the oil peak guys are who you used to see crawl out of the woodwork whenever anyone talked about oil. Now they're suddenly quiet. They used to predict doom and gloom due to an oil shortage, but what we got instead was doom and gloom and an oil glut. Where are they now?

> It's times like these that I really wonder where all the oil peak guys are who you used to see crawl out of the woodwork whenever anyone talked about oil

They are still around. Now they just rebranded themselves as "green energy advocates".

> They used to predict doom and gloom due to an oil shortage, but what we got instead was doom and gloom and an oil glut. Where are they now?

Check out yesterday's thread. A few of them there. Now, instead of saying high oil prices is good for green energy, now they are saying low oil prices are good for green energy. Don't bother pointing out the flaw in their logic or you'll get flagged.

https://news.ycombinator.com/item?id=23041286

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

#90

Post by core-questions »

aantix wrote: post #88

Time to buy oil stock. Tesla is the only real electric hope, and they have many many years before they supplant combustion based vehicles.

Pretty much. As soon as we all get moving again, the demand is going to ramp back up to previous levels; higher in some cases as industries work harder to fill backlogs. It's not like all the oil-consuming things have disappeared in two months.
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