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The Saudis Have a High-Stakes Plan to Win the Global Oil War

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Re: The Saudis Have a High-Stakes Plan to Win the Global Oil War

#51

Post by dmurray »

cinquemb wrote: post #44
dmurray wrote: post #40

Earlier quoted context omitted.

Is the CDS market big enough to do that? It's big, but the oil market is massive.

Hard for me to say, a lot stuff is traded over the counter, and one can get short exposure alot of different ways. Blackrock[0] has about $10 trillion notional for the single name cds market in 2016, estimated in 2017 that there was about ~$15,000 million avg daily volume in HY, and ~$26,000 million in IG (cash traded bonds, etfs, and cdx) and that's not considering the notional on the derivatives (swaps/options) on…

By comparison, Saudi Arabia produces 12 million barrels of oil a day: if the price drops $30 they need to make $360 million per day to cover that, or $30 billion if they carried out the trade over a three-month period.

If the total single-name CDS market is $10t and $1t of that is in oil and gas firms...it doesn't seem out of the question you could get a $30b position. Not that I really believe this is what's going on.

Re: The Saudis Have a High-Stakes Plan to Win the Global Oil War

#54

Post by aussiegreenie »

MSB has already lost. It is only a matter of time before he gets the Khashoggi treatment.

He personally stole $100 Billion from his extended family and other Saudis.

https://www.nytimes.com/2018/03/11/world/middleeast/saudi-ar...

Saudi Aramco is only $101 Billion or half the "required" market cap of $200 Billion MSB needs to fund Saudi Arabia.

He is a deadman walking but so it Saudi Arabia.

"My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a came"

Re: The Saudis Have a High-Stakes Plan to Win the Global Oil War

#55

Post by davidf18 »

_0w8t wrote: post #45
look_lookatme wrote: post #31

Earlier quoted context omitted.

But when the cost recovers we'll be back at it again. US shale has seen booms and busts for a hundred years.

Saudi Arabia oil is the cheapest in the world. They have massive oil fields. So in principle they can bankrupt anybody unless somebody can come up with a cheaper way to get oil.

It takes several years (I can't recall how many) and $100 billion per 1 million barrel increase in production and as far as I can recall the Saudis are pumping their maximum at his moment.

Re: The Saudis Have a High-Stakes Plan to Win the Global Oil War

#56

Post by woodandsteel »

aliswe wrote: post #13
siscia wrote: post #8

I don't get it. It is estimated that below 50$/barrel Saudi Arabia is basically pushing wealth out of their country. (Balance of payment in negative, it is right?.) And below 80$/barrel they are running the country at a deficit. They are now selling to 30$/barrel. What is the strategy here? Push all "high-tech" producers out of the market and shut up the price again? How long can they last? And how much it will cost?

FWIW, I don't like the statement "KSA needs 80USD per barrel to break even". It's too blunt, and obscures lots of variables, including their bond market, their megaprojects that aren't really being paid for (yet) as they haven't started at full scale, fluctuations of external work forces, the operations in Yemen, etc etc ... were these parameters included or not? Were they compensated for in any way? I don't know the…

Ok, 80USD is only approximate. But in the context of a discussion of the government's pricing strategy, that is probably good enough.

Re: The Saudis Have a High-Stakes Plan to Win the Global Oil War

#57

Post by woodandsteel »

"Aramco, on the prospectus for its 2019 initial public offering, warned that oil demand might peak within 20 years."

From what I read, it's going to be more like ten years from now. That because in a another two or three years, battery prices will be low enough that ev sticker prices will match ice ones, and that plus public policies will lead to ev sales skyrocketing and ice sales plunging.

Saudi Arabia knows the big transition is coming, and is working as fast as it can go get its economy out of oil. I don't see how it is going to be able to do this fast enough to avoid financial disaster.

Re: The Saudis Have a High-Stakes Plan to Win the Global Oil War

#58

Post by aliswe »

woodandsteel wrote: post #56
aliswe wrote: post #13

Earlier quoted context omitted.

FWIW, I don't like the statement "KSA needs 80USD per barrel to break even". It's too blunt, and obscures lots of variables, including their bond market, their megaprojects that aren't really being paid for (yet) as they haven't started at full scale, fluctuations of external work forces, the operations in Yemen, etc etc ... were these parameters included or not? Were they compensated for in any way? I don't know the…

Ok, 80USD is only approximate. But in the context of a discussion of the government's pricing strategy, that is probably good enough.

Is the figure from before or after the Yemen offensive winded down?

Re: The Saudis Have a High-Stakes Plan to Win the Global Oil War

#59

Post by edmundsauto »

aliswe wrote: post #25
PopeDotNinja wrote: post #21

Earlier quoted context omitted.

They're building a bunch of new cities: https://www.index-saudi.com/more-info/saudi-mega-projects/

Please note that these projects are not all governmentally funded and thus do not burden the state budget (affecting the x-usd-per-barrel-or-bust number) per se - Jeddah Tower is built "privately" by prince Waleed and his company if I'm not mistaken. But, the list does match the OP title "The Saudis ..." ... hehe ...

It was my understanding there isn't much difference between the prince and the company and the country. Is that inaccurate?

Re: The Saudis Have a High-Stakes Plan to Win the Global Oil War

#60

Post by PopeDotNinja »

edmundsauto wrote: post #59
aliswe wrote: post #25

Earlier quoted context omitted.

Please note that these projects are not all governmentally funded and thus do not burden the state budget (affecting the x-usd-per-barrel-or-bust number) per se - Jeddah Tower is built "privately" by prince Waleed and his company if I'm not mistaken. But, the list does match the OP title "The Saudis ..." ... hehe ...

It was my understanding there isn't much difference between the prince and the company and the country. Is that inaccurate?

If the state owned oil companies pay a lot to the royal family, that's kind of like you owning the company and setting your own salary to whatever you want. There's a difference on paper, but not in spirit (to me anyway).
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