Saudi Arabia Goes All-In In Oil War, Increases Its “Maximum Sustainable” Output To 13 Million Barrels Per Day

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Saudi Arabia Goes All-In In Oil War, Increases Its "Maximum Sustainable" Output To 13 Million Barrels Per Day

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On March 11, oil prices continued falling as Saudi Arabia doubled-down on its threat to flood the world market with own oil crushing other oil producers.

State oil giant Saudi Aramco announced that it would increase its “maximum sustainable” production capacity by to 13 million barrels per day. This move will mean that the Kingdom is jacking up its production by about 3.5 million barrels per day.

The announcement triggered another round of panic on the energy market. Brent crude futures, the global oil benchmark, was trading 3% lower (about $35.75 per barrel). Since March 5, Brent prices have fallen by about 28%, and 48% since a peak in early January.

If Saudi Arabia turns all these promises into reality, in April its oil production will increase by over 30% in comparison to the level of the OPEC+ deal that recently collapsed.

While Western mainstream media outlest are already accusing Russia of the ongoing oil prices fall (like Russia was the side that went offensive on the market), in fact the Saudi oil campaign is mainly aimed against Russia and Iran. The goal of the campaign (apaprently coordinated with the United States) is to deliver a powerful blow to US geopolitical opponents in the economic sphere simultaneously increasing diplomatic and clandestine pressure on them.

Washington already promised more sactions against Moscow over the conflict in Syria, while pro-US forces inside Russia are actively working to destabilize the country from inside.

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Ricky Miller

That doesn’t hurt Russia. What part of using reserves to cover the budget is hard to understand? When Russia, who will live up to the production quota until the last day of the agreement, begins to increase it’s output in April by a half a million barrels a day it might drive the price down to $18. It’s not how this fight begins that’s important, it’s how it ends. And the combination of the Saudi push and the Russian increase will drive shale from the market and hurt big money brokers in the United States, who went all out on a limb in investing in a dirty way of extracting hydrocarbons, and a method that was always too inefficient to be profitable. I mean who can spend $1.15 to drill and recover fuel that they then sell for $1.00? How long could they do this? If the price of oil collapses from $55 Brent to $35 Brent (surprise!) then suddenly they’re spending $1.15 to extract and market, while only earning 78 cents. No wonder the bankers are freaking out. So, pump house of Saud, pump. You’re actually rowing in Russia’s direction, regardless of intent.

Informbiro

Why is it then such a big news for Russia? Nothing in any other worlds media about it.

Shia man

Seriously Where do you come from? is the new Zionist game to lie the biggest most obvious lie possible?

Vitex

You got it!

Concrete Mike

Thats not true, canadian media talks about the oil situation quite alot.

And just because media dont talk about does not mean its not happening.

Example, Israel has around 200 nukes, does the media talk about that? Never!!!

You see in the media what the oligarchs want you to see.

occupybacon

You don’t see in the media how many nukes has Pakistan, India or NK either

good american

Not quite. I’ve occasionally heard the media talk about the nukes that Pakistan, India, and NK have, but I’ve NEVER heard the media talk about the nukes Israel has.

Jake321

So what? As long as their enemies like you know they have them.

Concrete Mike

Yes you would have if your old enough.
What a stupid comment, almost as stupid as your solution to the soon to be bankrupt frackers is to borrow more money.

occupybacon

Like they listened me when they borrowed them :)

Bobo Voxar

the best part is that Saudis pay for their death by their own oil…guess who is wining on this situation…

Vitex

Can’t eat or drink oil.

Kananda

it hurts. the budget was calculated for 40-45 usd/barrel

Ricky Miller

Russia has hundreds of billions in currency reserves to balance out the budget, so not so much. The timing helps Russia in that regard too because $46 barrel average balances Russia’s budget for the year. There have already been ten weeks of the year with averages more that $10 a barrel above that. So Russia can go for several months with limited budgetary losses for themselves whilst inflicting pain on others.

Kananda

if use reserves, already lost the financial war

Ricky Miller

Only in your own mind. They held off on this confrontation for years in order to arm themselves with the resources to withstand the storm. It was a strategic move to prepare for the tactics required to force a showdown. And they are not using any reserves from previous years, not yet. If they sold oil for $56 Brent for the first ten weeks of the year (and they did) and if they break even budgetarily at $46 Brent (which they do) then they can sell at $36 a barrel for ten weeks and still meet the average for the year in terms of balancing the budget. Brent closed at $36.21 today. They could sell at $25 a barrel for six weeks and only have to dip into reserves a wee bit to break even. But $25 a barrel will destroy some other sellers on the market, right into production shut downs and even bankruptcy. I believe the Kremlin when they say that they have saved money to fill in the gaps for years if necessary. Russia could take $70 billion out of reserves to fill in the budget holes and sell oil at $20 for two years. The idea is that any shale producers left will want to be a part of quota negotiations, finally. When Russia returns to selling oil at $70 a barrel in a few years they want to sell 7 and a half billion bpd, not 6. Fourteen months of a stable market like that and Russia would recoup both all the reserve losses from two years and recover also her pre-shale market share. Now that’s a plan.

Ricky Miller

What’s more is that all of these contracts are for three months down the road. Which means the oil last week that Russia contracted to sell in the mid 50’s$ a barrel won’t actually be delivered and paid for until June. Which means Russia sold oil above $50 a barrel for half the year, not ten weeks. That means Russia could just destroy the oil market for months and still balance her own budget. $18 oil, anyone?

Kananda

we will see. but ve sure, within 1 month moscow will sign pact with OPEC.

Ricky Miller

Not without American shale producers sharing in production caps.

Vitex

I’m not sure that the Norwegians will cope very well with this either. Suddenly that “retirement nest egg” of theirs is looking a bit vulnerable

Vitex

I agree – I think Russia and Iran are both much better placed to survive such a “war” than the US is. Perhaps the US population will now also grow tired of the parasite state that lives on their backs?

Xoli Xoli

Foolish Saudi Arabia kingdom economy will fall just as USA,Turkey and Britain. The whole of EU.Yes on short term it will have great effect on Russian and Iran.But if Russia and Iran can reduce price and flood the market just as Saudi then.USA and E U will perish forever.

Shia man

That’s exactly my thought time to destroy the petro-dollar shale is cutting oil output to try to fix oil market price US is looking like
The biggest loser in this oil war. Time for Putin to put the peddle to the metal and increase oil output they wanted Russia to decrease oil output so Saudi can fill the gap. Let’s see what Putin never move will be
Interesting times were living in.

Xoli Xoli

I hope Putin flood the market to USA and Israel hard.Plus Britain,France and puppets

ypovalkanios_katimas

Saudis have invested trillions in other sectors and have billions in banks. I arent think they will get hungry… Islam forbids revolution anyway

Shia man

Smarty pants majority of Saudi Arabian income is from oil so cutting the price of oil will result in less income
Btw Saudi Arabia has more debt then gdp ?
And the US weapons industry keeps squeezing the saudis and over charging these dumb wahabbis.

ypovalkanios_katimas

where did you see that debt is larger than gdp? all stats I saw say about 28% . Cutting oil price will result less income but I arent think that they are as dumb as Venezuelans . They have invested trillions in other economy sectors around the world to get profits .

ypovalkanios_katimas

dude the gdp of 2017 was 683bn and 780 bn at 2019. The site you posted if the GDP FOR NOW. Its still counting

Shia man

That’s why I said Saudi Arabia CURRENTLY has more debt then gdp
469 Billion in debt and counting
Btw total gdp doesn’t mean profit just so you know.

Kananda

you are so stupid :)))))

Shia man

If I’m stupid you must be mentally handicapped

JIMI JAMES

Which sectors is that,fake x,fake zeros bezos or us debts?

ypovalkanios_katimas

real estate,ports,companies,gold,brands. As fake x you mean spaceX? xD

Kananda

Islam forbids revolution anyway

so, the iranian regime is from satan?

ypovalkanios_katimas

they are shia with democratic background. Saudis are hardcore

Kananda

de-mo-ca-tic? :DDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDD

Jesus

Whoever has exposure for loss because of lower oil prices, will try to mitigate the situation to the best of their ability.
Saudi economy is one dimensional without much diversification, yes they can pump more oil trying to recapture market share from frackers.
US frackers are in deep debt as a result of easy money policy instituted by the Fed, their break even cost is around 50$. Banks and other financial institution hold about 1 trillion of this debt, without derivatives taken into consideration.
Frackers going out of business and affecting the financial well being of banks will cause a domino effect in the financial markets leading US into a economic downturn, followed by a gradual loss of production of 5 to 6 million barrels of oil.

Russia can sell cheap oil and marginally increase production, it has ample reserves to make up the diffence in the state budget because of lower prices
This is a Russian counterstroke using a US ally to unwittingly do its bidding against the empire, kicking it in its most vulnerable spot, the financial markets.

occupybacon

Frakers/Shale are sold mainly in US, they have their own internal market. SA is selling to China, India and Japan. Russia is selling to EU, China and Japan.

Jesus

Have you noticed the financial markets in the US since last Friday? Friday when it was announced the Dow Jones dropped almost 7%.

occupybacon

this is a long term shot, we have a lot to see

Jesus

Short term the US stock market is going down, the Fed is limited on tools, easy money has created an asset bubble, that is being burst. A trillion dollar default plus derivatives by fracker loans is going to have an impact that will hurt badly.
Easy money to fuel the economy is like dope, you get addicted to it and can’t live without it.

occupybacon

For some strange reason the poverty in USA didn’t surpass yet the poverty in Russia

Jesus

What do you define poverty in the US? There is a minimal middle class, many fall in the working poor category, heavily in debt working from paycheck to paycheck.
At least Russian poor own their homes or apartments and make do with home grown gardens and other means to make ends meet. American poor are not that resourceful except in some minor cases, they are dependent on the government for everything …..and feel rather entitled and want more.

occupybacon

Yeah but how an American home looks and how a Russian home looks? It’s 10 times more expensive.

occupybacon

I really don’t care about the frackers, if they die they die, rocky reference.

But I enjoy Saudi – Russian competition. Let them fight, godzilla ref :)

Jesus

There is no contest, SA one dimensional economy is at stake without any other industrial help, they have a lot of useless overhead taking care of the Royal parasitical family.

occupybacon

They can still make money at $10/baril, the production cost is $5

Jesus

At 10$ a barrel they have to pump 50 million barrels of oil to produce the previous income levels. Yes they can burn through the forex reserves at 150 -200 billion a year …..and then what?

occupybacon

I think Russians care more about SA economy than their own country

Tudor Miron

Don’t interrupt this fake kingdom while they’re destroying themselves :) Let them sink.

Vitex

Want some popcorn, Tudor?

Tudor Miron

What is also happening is that some Russian companies such as Lookoil and some others that were appointed by US embassy in 90’s will also go down the drain. This oil thingy is only part of large operation aimed at regaining full sovereignty that Putin started about a month ago. Many aspects and many facets to that move. All was thoroughly planned and started at a precise moment. When dust settles it will be interesting to observe the results.

BMWA1

In other news, Ak. Cherskiy will be in Baltic in 2-3 weeks to finish NS2 after refit, it might take a month to ready and will proceed at less than 50% pace of Allseas as it is a small ship, but last 6% of NS2 will be completed late this year. It was dispatched from Far East several weeks ago.

Kananda

lookoil :))) look :DDDD

the moldavian migrand does not know, the name is Lukoil. :))) hahah toodor meeron :)))))))))))

Ricky Miller

They can spell it however they want. I just care about the part where it is an American founded asset that was to be used to steal some of Russia’s resources but is now vulnerable to a final takedown. Good riddance.

Kananda

boy, do you know, who swteals russian money? the russian oligarchs. tho money needed in russia is thrown away by buying yachts, football clubs, etc. these are dozens ofbillions dollars. yearly.

Ricky Miller

The creation of the oligarchs was a Yeltsin thing, advised into it by Western advisors pretending to be Russia’s friends. They certainly are wasteful, just like those who helped create them. They are slowly being brought back to law and order, though. Capital has been repatriated to Russia because of sanctions fears and the Russian government is requiring that in order to keep their ill gotten gains they have to use a required percentage of their stored funds to create jobs in Russia. It’s a tax without being called a tax. Afraid of having their money frozen in the West, or even being detained for their shady business dealings the oligarchs are complying, albeit begrudgingly.

Kananda

no! this is in their mentality. unfortunately. 70 years of communism was not able to eliminate this disease.

otherwise, independently upon yeltsin putin could eliminate them completley. if he would wish. but he was put in his chair by oligarch in petersburg.

cechas vodobenikov

http://www.sott.net/article/430561
an excellent summary that demonstrates the self defeating nature of US/saudi thinking