'Unimaginable' oil prices, warns Saudi prince

[Eldorado]

"In a television interview, Saudi Crown Prince Mohammed bin Salman called for global action against Iran and warned that oil prices could otherwise rise astronomically."

 

""If the world does not take a strong and firm action to deter Iran, we will see further escalations that will threaten world interests," he told CBS program 60 Minutes.

""Oil supplies will be disrupted and oil prices will jump to unimaginably high numbers that we haven't seen in our lifetimes," he said in the program aired late on Sunday."

Full report at DW (Germany): https://www.dw.com/en/saudi-prince-warns-of-unimaginable-oil-prices/a-50636129

And at The Wire: https://thewire.in/world/saudi-prince-wants-action-against-iran-warns-of-unimaginable-oil-prices

[+Desertrat56]

Well, the U.S. and Canada don't have to worry about that.  U.S. buys most of it's oil from Canada and has such a huge reserve they could quit buying from anyone and remove themselves from OPEC. Or did they already do that?  No, we are still in the middle east so I guess we are still part of OPEC.  Who is buying oil from Saudi Arabia nowdays anyway?  South American countries  have plenty of their own oil as well.  Why is this still a thing?

[Space Commander Travis]

And you can hear good ol' IBS, Trustworthy Ally of the West, rubbing his hands and gloating as he says it can't you.

that "Iranian" attack on him was very good news for the Kigdom of Saudi Arabia, wasn't it. 

 

[Eldorado]

46 minutes ago, Desertrat56 said:

Well, the U.S. and Canada don't have to worry about that.  U.S. buys most of it's oil from Canada and has such a huge reserve they could quit buying from anyone and remove themselves from OPEC. Or did they already do that?  No, we are still in the middle east so I guess we are still part of OPEC.  Who is buying oil from Saudi Arabia nowdays anyway?  South American countries  have plenty of their own oil as well.  Why is this still a thing?

"World demand for oil is now about 92 million barrels a day. Altogether, including Saudi Arabia, OPEC can supply about 40 percent of this demand. By itself, the Kingdom can meet about 13-14 percent of it. Saudi Arabia is the only oil producer that can ramp up output to fill an immediate supply shortfall. On pretty short notice, it can add a couple of million barrels a day — about 2 percent — to global oil supplies.

"The Kingdom is also a very low-cost producer with reserves that will last for many decades. Many other OPEC members — like most non-OPEC countries — are high-cost producers whose costs per barrel are many times those in Saudi Arabia. Others are running out of oil.

"Oil is a globally traded commodity. Its prices are determined partly by the current balance between supply and demand and partly by hopes and fears about future shifts in that balance. Estimates of trends in the balance between supply and demand by traders and guesses by speculators about future prices determine current prices of oil and other commodities."

Ambassador Chas W. Freeman, Jr. (USFS, Ret.)

Washington, DC

"Saudi Arabia and the Oil Price Collapse", speech at the Middle East Policy Council: https://www.mepc.org/speeches/saudi-arabia-and-oil-price-collapse

Edited September 30, 2019 by Eldorado

[DarkHunter]

14 minutes ago, Desertrat56 said:

Well, the U.S. and Canada don't have to worry about that.  U.S. buys most of it's oil from Canada and has such a huge reserve they could quit buying from anyone and remove themselves from OPEC. Or did they already do that?  No, we are still in the middle east so I guess we are still part of OPEC.  Who is buying oil from Saudi Arabia nowdays anyway?  South American countries  have plenty of their own oil as well.  Why is this still a thing?

America and Canada was never in OPEC to begin with.  As for who buys middle east oil that is mostly Europe and Asis

[+Desertrat56]

Just now, DarkHunter said:

America and Canada was never in OPEC to begin with.  As for who buys middle east oil that is mostly Europe and Asis

Then why did we have to pay more for gasoline in the 70's?  It makes sense that the U.S. & Canada aren't members of OPEC, but why do they get to set the prices?

[Eldorado]

How much petroleum does the United States import and export?

https://www.eia.gov/tools/faqs/faq.php?id=727&t=6

In the third quarter of 2018, the U.S. imported roughly 10.2 million barrels of petroleum per day, with the largest amounts coming from Canada (41%) and Saudi Arabia (10%).

https://www.americangeosciences.org/critical-issues/faq/how-much-oil-does-us-export-and-import

[+Desertrat56]

I just looked up how much reserve the U.S. has and how much is used a day.  I am going to fix my fireplace before winter.  It is crazy. 

[DarkHunter]

44 minutes ago, Desertrat56 said:

Then why did we have to pay more for gasoline in the 70's?  It makes sense that the U.S. & Canada aren't members of OPEC, but why do they get to set the prices?

That is because essentially the fringe producer always sets the price.

To accurately explain why that is the case would require getting into decently advanced economic topics but a simple example will do, the example will really over simplify things and the numbers will be a bit extreme to make it really clear.

Imagine a country that can produce oil and this country sells the oil it produces internally for what it cost and it cant sell any oil internally at a loss.  Also imagine this country can produce oil at $1 per barrel, that it can only produce 70 barrels of oil a day, and that it always needs 100 barrels of oil a day.  Suppose another country sells oil to the first country and one day decides to start selling it for $20 a barrel.  Even though the first country produces the majority of it's own oil, and rather cheaply at $1, cause the fringe producer who sells only 30 barrels of oil a day to the country at $20 per barrel the first country has to sell its oil for $6.70 internally now.

Selling at a loss in that example would be a subsidy and the people would just have to pay it as higher taxes instead of buying the oil at a higher price.  

[+Desertrat56]

1 minute ago, DarkHunter said:

That is because essentially the fringe producer always sets the price.

To accurately explain why that is the case would require getting into decently advanced economic topics but a simple example will do, the example will really over simplify things and the numbers will be a bit extreme to make it really clear.

Imagine a country that can produce oil and this country sells the oil it produces internally for what it cost and it cant sell any oil internally at a loss.  Also imagine this country can produce oil at $1 per barrel, that it can only produce 70 barrels of oil a day, and that it always needs 100 barrels of oil a day.  Suppose another country sells oil to the first country and one day decides to start selling it for $20 a barrel.  Even though the first country produces the majority of it's own oil, and rather cheaply at $1, cause the fringe producer who sells only 30 barrels of oil a day to the country at $20 per barrel the first country has to sell its oil for $6.70 internally now.

Selling at a loss in that example would be a subsidy and the people would just have to pay it as higher taxes instead of buying the oil at a higher price.  

Maybe you over simplified it because it makes no sense to me.  It seems that the country needing 100 barrels a day would find someplace else to buy the other 30, OR figure out how to make do with 70.  So, it seems like you are saying that OPEC held the U.S. hostage by raising their prices in the 70's to exorbitant rates beyond what they had been charging and the U.S.paid it.  The  U.S. is probably the most wasteful country on the planet and that is what needs to change.

[DarkHunter]

42 minutes ago, Desertrat56 said:

Maybe you over simplified it because it makes no sense to me.  It seems that the country needing 100 barrels a day would find someplace else to buy the other 30, OR figure out how to make do with 70.  So, it seems like you are saying that OPEC held the U.S. hostage by raising their prices in the 70's to exorbitant rates beyond what they had been charging and the U.S.paid it.  The  U.S. is probably the most wasteful country on the planet and that is what needs to change.

Maybe this example will do better.

Imagine a world with only 5 countries, A, B, C, D, and E.  Same conditions as before, a country needs a certain amount of oil a day and produces a certain amount of oil a day and sells the oil internally for $1 a barrel.  A produces 70 barrels a day and needs 100, B produces 50 barrels a day and needs 70, C produces 75 barrels a day and only needs 60, while D and E produce significantly more oil then what they need.  Now suppose country A and country C are very friendly with each other and country C agrees to sell its excess oil to country A for $1 a barrel.  Country A still needs 15 more barrels of oil and Country B still needs 20 more.  Now suppose D and E did what OPEC has done and both agree they will only sell oil for $20 a barrel.  Basically as long as a country is not 100% self sufficient they are always at the mercy of the fringe producer/s.

Or to put it mathematically the world minus OPEC countries need X amount of oil, the world minus OPEC countries can only produce X - Y amount of oil.  As long as OPEC supplies the Y needed to meet the demand then OPEC gets to decide the price of oil.

As for your suggestion of the country finding a way to deal with only 70 barrels a day when it needs a 100 is not really possible.  It obviously can be done but not in a way anyone would find acceptable generally.  The problem is supply and demand, when supply is less then demand then the cost of the supply increases till they reach a new equilibrium point.  In the real world what the effect of your suggestion would be a increase in price of just about everything, how much everything jumps up in cost would depend on how much less of the demand is being met.  One can try to make things more efficient but that is extremely difficult normally along with also being far more expensive.

[+Desertrat56]

6 minutes ago, DarkHunter said:

Maybe this example will do better.

Imagine a world with only 5 countries, A, B, C, D, and E.  Same conditions as before, a country needs a certain amount of oil a day and produces a certain amount of oil a day and sells the oil internally for $1 a barrel.  A produces 70 barrels a day and needs 100, B produces 50 barrels a day and needs 70, C produces 75 barrels a day and only needs 60, while D and E produce significantly more oil then what they need.  Now suppose country A and country C are very friendly with each other and country C agrees to sell its excess oil to country A for $1 a barrel.  Country A still needs 15 more barrels of oil and Country B still needs 20 more.  Now suppose D and E did what OPEC has done and both agree they will only sell oil for $20 a barrel.  Basically as long as a country is not 100% self sufficient they are always at the mercy of the fringe producer/s.

Or to put it mathematically the world minus OPEC countries need X amount of oil, the world minus OPEC countries can only produce X - Y amount of oil.  As long as OPEC supplies the Y needed to meet the demand then OPEC gets to decide the price of oil.

As for your suggestion of the country finding a way to deal with only 70 barrels a day when it needs a 100 is not really possible.  It obviously can be done but not in a way anyone would find acceptable generally.  The problem is supply and demand, when supply is less then demand then the cost of the supply increases till they reach a new equilibrium point.  In the real world what the effect of your suggestion would be a increase in price of just about everything, how much everything jumps up in cost would depend on how much less of the demand is being met.  One can try to make things more efficient but that is extremely difficult normally along with also being far more expensive.

OK.  I understand you point now.  I would be one person and I am not alone, who would rather figure out to manage with the 70 we produce.  Especially since it is very evident that the U.S.  (country A in your example) is so wasteful.  If we had habits like a lot of eurpeans we would not be using 100 barrels of oil.

[Earl.Of.Trumps]

No matter how you cut the cake, if you stop the flow of 20% of world output, then the world has to come to grips with going with less.
And in a free market society (supply / demand) you can plan on prices sky rocketing.  Works!

[Black Red Devil]

4 hours ago, Desertrat56 said:

Then why did we have to pay more for gasoline in the 70's?  It makes sense that the U.S. & Canada aren't members of OPEC, but why do they get to set the prices?

Not Canada, but the US dollar is the currency used for oil transactions between OPEC and it's importers/exporters.  This makes the US dollar the world reserve currency, which basically means everything is converted using the US dollar as the benchmark and makes the US dollar a valuable commodity around the world.  Also, the US is rich in oil but mainly shale.  Which is more costly to extract so if the US had to rely on it's own oil you would be paying a lot more per gallon.

Edited October 1, 2019 by Black Red Devil

[Black Red Devil]

4 hours ago, Eldorado said:

"In a television interview, Saudi Crown Prince Mohammed bin Salman called for global action against Iran and warned that oil prices could otherwise rise astronomically."

 

""If the world does not take a strong and firm action to deter Iran, we will see further escalations that will threaten world interests," he told CBS program 60 Minutes.

""Oil supplies will be disrupted and oil prices will jump to unimaginably high numbers that we haven't seen in our lifetimes," he said in the program aired late on Sunday."

Full report at DW (Germany): https://www.dw.com/en/saudi-prince-warns-of-unimaginable-oil-prices/a-50636129

And at The Wire: https://thewire.in/world/saudi-prince-wants-action-against-iran-warns-of-unimaginable-oil-prices

What's the problem?  We might have to buy more oil from Iran and Venezuela. 

[SHaYap]

What happened to all those evil Saddam Iraqi oil reserves? 

Quote

According to the Oil and Gas Journal, Iraq's proven natural gas reserves are 112 trillion cubic feet (Tcf), the tenth largest in the world. An estimated 70 percent of these lie in Basra governorate in the south of Iraq.

https://en.m.wikipedia.org › wiki

Petroleum industry in Iraq - Wikipedia

~

[+and-then]

1 hour ago, Black Red Devil said:

Which is more costly to extract so if the US had to rely on it's own oil you would be paying a lot more per gallon.

Once the price reached a certain point, our shale producers would come on stream and that would drive the prices back down.  Iran and SA would suffer, not to mention Russia.  

[Gwynbleidd]

9 hours ago, Eldorado said:

"In a television interview, Saudi Crown Prince Mohammed bin Salman called for global action against Iran and warned that oil prices could otherwise rise astronomically."

Take action against Iran or I'll hike the oil prices up for your fuel.  Please.... this just makes you wanna go out and buy an electric car, just to spite them all...

Edited October 1, 2019 by Gwynbleidd

[+Hammerclaw]

3 hours ago, and then said:

Once the price reached a certain point, our shale producers would come on stream and that would drive the prices back down.  Iran and SA would suffer, not to mention Russia.  

The US is already a net fuel exporter.

https://www.bloomberg.com/news/articles/2018-12-06/u-s-becomes-a-net-oil-exporter-for-the-first-time-in-75-years

[Tatetopa]

5 hours ago, Black Red Devil said:

What's the problem?  We might have to buy more oil from Iran and Venezuela. 

Renewable is not only good for the environment, it is good military strategy.

[Space Commander Travis]

Meanwhile, I don't know how much this has been reported in the pro-Saudi media, but the devastatingly effective Saudi military has once again scored a stunning victory, so this can only make old IBS's position even stronger.

... or not.  

 

[Space Commander Travis]

(I don't know what Blofeld's doing there, that was from something else, but he can stay.  )

[+and-then]

1 hour ago, Tatetopa said:

Renewable is not only good for the environment, it is good military strategy.

It doesn't carry enough of the load yet to help with this issue.  The thing people seem to overlook about oil prices is that if the oil was THEIRS, they wouldn't sell it for less than the market value.  No one would.  America's oil is mostly owned by private entities and the global market will rule the prices, not patriotism or anything else.

[Phaeton80]

12 hours ago, Eldorado said:

"In a television interview, Saudi Crown Prince Mohammed bin Salman called for global action against Iran and warned that oil prices could otherwise rise astronomically."

 

""If the world does not take a strong and firm action to deter Iran, we will see further escalations that will threaten world interests," he told CBS program 60 Minutes.

""Oil supplies will be disrupted and oil prices will jump to unimaginably high numbers that we haven't seen in our lifetimes," he said in the program aired late on Sunday."

Full report at DW (Germany): https://www.dw.com/en/saudi-prince-warns-of-unimaginable-oil-prices/a-50636129

And at The Wire: https://thewire.in/world/saudi-prince-wants-action-against-iran-warns-of-unimaginable-oil-prices

Sounds like a threat..

Still, better than being cut up and disposed in an acid filled barrel after a consulate visit, while your newlywed wife is waiting for you outside. 

MBS and his American / Israeli friends would do good to offer some concrete proof of the Iranian 'acts of war' for a change, instead of floating all sorts of unsubstantiated, unproven demonizing allegations, wileding strong double measures. Would probably work better than voicing threats like this, things must not be going according to 'MBS and friends' plans.

 

[RoofGardener]

36 minutes ago, Phaeton80 said:

Sounds like a threat..

Still, better than being cut up and disposed in an acid filled barrel after a consulate visit, while your newlywed wife is waiting for you outside. 

MBS and his American / Israeli friends would do good to offer some concrete proof of the Iranian 'acts of war' for a change, instead of floating all sorts of unsubstantiated, unproven demonizing allegations, wileding strong double measures. Would probably work better than voicing threats like this, things must not be going according to 'MBS and friends' plans.

 

Well, the Saudi's are claiming that the detritus from the missile/drone attacks was from Iranian cruise missiles. They have put aforementioned detritus on display to the media, and the photographs have circulated EVERYWHERE... including to the eyes of multitudinous weapons experts worldwide. So far as I am aware, nobody has contradicted the Saudi analysis ? 

Proof enough ?