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The Forum > Article Comments > Saudi oil strategy: brilliant or suicide? > Comments

Saudi oil strategy: brilliant or suicide? : Comments

By Dalan McEndree, published 14/8/2015

Their GDP and national budgets depend significantly on the revenues from their oil exports. As a result, the revenue shortfalls incentivize them to produce as much oil as possible to mitigate the shortfall.

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I think their strategy is positively brilliant; given their new refining capacity and where the real money is made!

And given they're able to undercut most oil refinery supply,to eventually control/manipulate that market!? [And they clearly have the capital capacity to do just that!?]

I mean if it costs a dollar a barrel to get it out of the ground; and about that much again to refine? And given the return from fully refined petroleum is well over five hundred dollars a barrel?

It has to be in their ultimate interests as principle refiners, to keep the wholesale price of crude as low as the market will tolerate?

So they can also become bulk buyers exercising even more control of the total market of finished products!

A far more profitable venture than selling oil as price takers to the price gouging refining industry.

Eventually Edmonton will come on line forcing raw crude prices further down!

leaving refiners like the Saudis, laughing all the way to the bank; and able to make big bucks long after their wells run dry?

We for our part could do worse than locate some of our petrol supply from the Saudis, given the current lack of real competition and patent price gouging that appears to go on in this country.

Someone as wealthy as Clive Palmer, e.g., could see the writing on the wall, purchase a tanker or two; and start supplying the independants with low cost fuel?

And make a bigger quid than that from coal with all the inherent problems and delays that presents!

And make it two ways, one as a bulk transport operator and the other as a wholesale fuel supplier.

He would do well to purchase a former mainland refinery, currently on the market, to utilize it as a bulk storage depot.

And win huge local kudos as a patriot for increasing our current reserve beyond just a couple of weeks?
Rhrosty.
Posted by Rhrosty, Friday, 14 August 2015 10:34:02 AM
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The real reason is the U.S. Is colluding with the Saudis to flood the market to attempt to bankrupt Russia, another stupid US foray in it's hegemonic plans,

As usual it has backfired and is now sending US shale and other fracking production into well deserved bankruptcy, it was always a Ponzi scheme anyway.

If the Iran nuclear deal is "sold" you can then add their oil production into the mix, talk about a mess of epic proportions.
Posted by Geoff of Perth, Saturday, 15 August 2015 1:41:17 AM
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Good grief, US policy, Obama's left wing conspiracy opposes cheap oil! Fortunately his incompetence prevented him preventing the only thing keeping the US above water. Remember Obama is blocking Canadian oil to Texas.
Posted by McCackie, Saturday, 15 August 2015 9:14:48 AM
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Try this on for size:
"According to Wood Mackenzie, an oil-industry consultancy, the top firms have already shelved $200 billion worth of spending on new projects, including 46 major oil and natural gas ventures containing an estimated 20 billion barrels of oil or its equivalent. Most of these are in Canada’s Athabasca tar sands (also called oil sands) or in deep waters off the west coast of Africa. Royal Dutch Shell has postponed its Bonga South West project, a proposed $12 billion development in the Atlantic Ocean off the coast of Nigeria, while the French company Total has delayed a final investment decision on Zinia 2, a field it had planned to exploit off the coast of Angola. “The upstream industry is winding back its investment in big pre-final investment decision developments as fast as it can,” Wood Mackenzie reported in July."

Then there is this:
"The initial near collapse of oil prices caused considerable pain and disarray in the oil industry. If this second rout continues for any length of time, it will undoubtedly produce even more severe and unpredictable consequences. Some outcomes already appear likely: energy companies that cannot lower their costs will be driven out of business or absorbed by other firms, while investment in costly, “unconventional” projects like Canadian tar sands, ultra-deep Atlantic fields, and Arctic oil will largely disappear. Most of the giant oil companies will undoubtedly survive, but possibly in downsized form or as part of merged enterprises."
Posted by Geoff of Perth, Saturday, 15 August 2015 1:36:36 PM
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I heard that Afec Oil and Gas (in Golan Heights) is trying to deep drill into an oil layer that sits beneath the Saudi's oil and the Saudis oil might be drained.
I heard this info on a radio talk show, so I haven't confirmed how true the info is.
Posted by Armchair Critic, Monday, 17 August 2015 7:53:09 AM
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