Crude Price Will NOT Rise Anytime Soon

choi

Benoît Faucon and Summer Said, Saudi Grip on Oil Crown Skips. Wall Street Journal, Apr 11, 2015 (front page).
www.wsj.com/articles/saudi-arabi ... il-crown-1428707642

Quote:

"The Saudi kingdom’s oil exports declined 5.7% in 2014 compared with 2013. * * * China and the US are Saudi Arabia’s biggest importers, with 10% and 8%, respectively, of the kingdom’s production. * * * Saudi Arabia’s share of total world output of crude oil fell slightly in 2014 compared with 2013, from 10.3% to 10.2%, according to the International Energy Agency

"The situation also underscores the risks Saudi Arabia took last November when it persuaded fellow members of the Organization of the Petroleum Exporting Countries to forsake their traditional role of boosting prices when the market tanked. * * * The assumption: Saudi Arabia, with its vast reserves of inexpensive-to-produce crude, would be well-positioned to maintain market share and even get new customers * * * The competition [Saudis face] could intensify as Persian Gulf countries like Kuwait and the UAE move to boost production to keep market share

"The UAE and Kuwait can run their budgets at much lower prices than Saudi Arabia, at $77.3 a barrel and $54 a barrel, respectively, compared with $106 a barrel for the kingdom [in order to balance national budget, rather than needed to gauge profitability of Saudi Aramco], according to analysts. Despite lower prices, US shale-oil output hasn’t declined, underscoring its resilience to a Saudi price war despite its high production costs.

"In the long term, Saudi Arabia officials have said they are better off working for their share of the market now, than they would be cutting supplies to inflate prices[, losing market share in the process]. With the US producing more than nine million barrels a day, it isn’t clear whether a production cut from Saudi Arabia or OPEC would boost oil prices.  In a speech in Germany in March, Saudi Oil Minister Ali al-Naimi * * * said the kingdom had advantages, including some of the cheapest crude in the world to produce. 'It is an advantage which we will use, as any producer would, to help supply dependent global customers,' Mr Naimi said.  Ibrahim al-Muhanna, a senior adviser in Saudi Arabia’s oil ministry, defended OPEC’s decision to keep up production in a speech Thursday. Since the 1970s, he said, the cartel had decreased production 19 times and was successful in propping up prices only eight of those times.

"State-owned Saudi Arabian Oil Co, known as Saudi Aramco and the world’s largest oil producer * * * pumped about 10.3 million barrels a day in March, a record. Some of that crude, which would once have been exported, may have been sent instead to new refineries Saudi Arabia has built in recent years, giving it a hedge against prices, analysts said. Saudi Arabia plans to become the world’s second-largest exporter of refined oil products in 2017 behind the US as part of its drive to diversify its economy and increase its share of the global crude and petroleum-products markets.

"With a political framework in place to lift sanctions in Iran, that country’s oil reserves could eventually flood the market

Note:
(a) anytime (adv): "at any time"
www.learnersdictionary.com/definition/anytime
(example: "anytime soon")

(b) "Despite lower prices [for crude], US shale-oil output hasn’t declined, underscoring its [US shale oil's] resilience to a Saudi price war despite its [US shale oil's] high production costs.
(i) Shawn Tully, The Shale Oil Revolution Is in Danger. Fortune, Jan 9, 2015
fortune.com/2015/01/09/oil-prices-shale-fracking/
("On average, the 'all-in,' breakeven cost for U.S. hydraulic shale is $65 per barrel, according to a study by Rystad Energy and Morgan Stanley Commodity Research. So, with the current price at $48, the industry is under siege")
(ii)
(A) Tim Mullaney, Opinion: OPEC Is Wrong to Think It Can Outlast US on Oil Prices; Technology is cheaper and West doesn’t use oil to fund a welfare state. MarketWatch (a WSJ brand), Dec 2, 2014
www.marketwatch.com/story/opec-i ... l-prices-2014-12-02
("Yes, it costs Saudi Arabia only about $2 a barrel to get crude US:CLF5  out of the ground. But analysts insist the Saudis’ real pain point is more than $100 a barrel — more than $30 higher than its price now — because of what they do with the money once they have it. In 2010, for example, the Saudis spent $130 billion to combat the Arab Spring, the Persian Gulf Fund reports")
(B) Steve LeVine, The Real Reason Saudi Arabia Can Afford a Price War Against US Shale. Quartz, Dec 12, 2014
qz.com/311179/the-real-reason-why-saudi-arabia-can-afford-a-price-war-against-us-shale/
("Western experts say that Saudi production costs average $10-$20 a barrel, give or take a few dollars either way. Of course, there are no hard public numbers when it comes to most Saudi oil data, only estimates from industry experts")