Oil Price : News, Updates and Discussion

What geopolitical implications are there now that Russia, Saudi, Iran, Venezuela and all the other petro-states can no longer maintain their budgets? There is no way they planned for crude to go negative (even if temporary, it shows how much of a glut there is and as long as this virus remains I don't see it reducing over the next few months at least!). I don't think any of these countries have a diverse enough revenue stream to compensate.
the crude that went negative is WTI - which is essentially USA oil.
the OPEC oil is tied to another index called brent crude - which is at I thin about 25$ at 7:00 PM EST on april 20,2020

this is still very low for ME and russia.
this is absolutely devastating for US crude producers - but, US is not entirely dependent on crude oil extraction.
russia and ME are highly dependent on the price of oil!
 
the crude that went negative is WTI - which is essentially USA oil.
the OPEC oil is tied to another index called brent crude - which is at I thin about 25$ at 7:00 PM EST on april 20,2020

I get that WTI is focused more on the Western hemisphere, but Brent prices are not entirely independent of WTI. The main reason these two are popular grades is the relative ease to extract and refine them, not because of the primary markets they service. Refineries specialize on certain grades of crude which makes accepting other grades an expensive retooling operation.

The WTI crude that went negative was for May contracts. As of this post June contracts are hovering around $20, I expect them to further drop. WTI is usually lower than Brent anyway (inland pipeline capacity isn't enough to keep up with production so there are gluts - correct me if this is wrong, this is just how I always understood it).


this is still very low for ME and russia.
this is absolutely devastating for US crude producers - but, US is not entirely dependent on crude oil extraction.
russia and ME are highly dependent on the price of oil!

It is devastating for US crude producers in the short term, but I'm fairly confident our fracking industry will rebound or consolidate. Boom/Bust cycles are the name of the game, and small oil/gas companies come and go constantly. US shale is begging to be extracted, and the energy independence is too lucrative to shrug off. Naysayers have said domestic crude would not be able to compete since the early-mid 2000s. Yet, the technology and industry has constantly improved and reduced the cost to break even per barrel.

I know Russia and ME are highly dependent on the price of oil, I am wondering what steps (if any) they will take to mitigate the collapse of the budgets and potential conflicts that will arise from these nations being unable to service debt/maintain social spending.
 
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The WTI crude that went negative was for May contracts. As of this post June contracts are hovering around $20, I expect them to further drop. WTI is usually lower than Brent anyway (inland pipeline capacity isn't enough to keep up with production so there are gluts - correct me if this is wrong, this is just how I always understood it).

the reason inland crude is more expensive is because it costs more to get it to the ocean (And ocean is cheaper to move oil around to a lot more destinations - like china,India,europe).
in land oil is useful for within US/North america consumption. with the covid, that is LOW right now, and the next demand comes from startegic reserves. thats also full now.

It is devastating for US crude producers in the short term, but I'm fairly confident our fracking industry will rebound or consolidate. Boom/Bust cycles are the name of the game, and small oil/gas companies come and go constantly. US shale is begging to be extracted, and the energy independence is too lucrative to shrug off. Naysayers have said domestic crude would not be able to compete since the early-mid 2000s. Yet, the technology and industry has constantly improved and reduced the cost to break even per barrel.

technology has reduced the cost of fracking but ME/Russia are trying to put US producers out of demand by increasing supply of oil (and hence force lower prices).
Russia and ME are oligarchy and kingdoms, so they can force open the oil fields with subsidies/orders. US is on market driven economics, so it cannot command similar things out of its oil companies. this is not a straight win for US and a straight lose for ME/Russia.

the market driven forces need time to absorb the current glut and come up with solutions. in fact, this also dents the push to electrification. the major reason for electrified trains/cars was that fossil fuel is expensive (the environment effects are secondary reason). this maybe a last ditch effort by ME to stay relevant as an energy supplier to the world - else faster electrification will make the ME irrelevant.
 
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It is time for us to lease large oil tankers from across the world and fill them up with cheaper oil and store them as offshore floating oil reserves in the interim.
 
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What geopolitical implications are there now that Russia, Saudi, Iran, Venezuela and all the other petro-states can no longer maintain their budgets? There is no way they planned for crude to go negative (even if temporary, it shows how much of a glut there is and as long as this virus remains I don't see it reducing over the next few months at least!). I don't think any of these countries have a diverse enough revenue stream to compensate.
Brent Crude is around $20, not yet on full loss.

 
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Very good read.Thanks for sharing.

It made me wonder what if Modi is creating his own oligarchs in name of privatization of even profitable PSUs like BPCL and outsourcing many things like airports to his people ? Will we need a Putin 10 years down the line ?


 
It made me wonder what if Modi is creating his own oligarchs in name of privatization of even profitable PSUs like BPCL and outsourcing many things like airports to his people ?
Bureaucracy is being privatized too, even after significant shortage of civil servants (around 1500 for a cadre of 6700) every year less and less posts are being released to create intentional shortage (almost half posts are removed).

Now that shortage is used as an excuse to appoint Senior Bureaucrats from private sector, now Ambanis can have their own Cabinet Secretary along with minister that won't resist policy change infact guide the bureaucracy to work as per needs of cronies.

This is why systematic messaging from usual suspects to degrade bureaucrats. With legislature and bureaucracy in your pocket who will complain ;)
 
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Bureaucracy is being privatized too, even after significant shortage of civil servants (around 1500 for a cadre of 6700) every year less and less posts are being released to create intentional shortage (almost half posts are removed).

Now that shortage is used as an excuse to appoint Senior Bureaucrats from private sector, now Ambanis can have their own Cabinet Secretary along with minister that won't resist policy change infact guide the bureaucracy to work as per needs of cronies.

This is why systematic messaging from usual suspects to degrade bureaucrats. With legislature and bureaucracy in your pocket who will complain ;)

Shortage of civil servants is partly lobbied for, and hence created by civil servants themselves, since increasing the number of posts will see their own power diluted.Case in point, tiny Singapore has more diplomats than India, courtesy IFS association.

AFAIK number of Civil servant posts in India have not increased since independence even though our population and economy have grown many fold.

I support bringing outside specialists into bureaucracy since there is dire need for them.When we fall sick we go to specialist doctors like Orthopaedician or Cardiologist.Then why leave finance ministry in hands of a B.SC Botany guy who spent all his career shuffling between different ministries every 3 years?

And there is no proof bureaucrat Cabinet Secretary did not reach there by being someone's croony either.What we need is more transparency and scrutinization...
 
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