Saudi Arabia and Russia plan deep oil cuts in defiance of US

[ahaider97]

I think they will stop spares for the F-15s and somehow (and its not beneath them) engineer Yemen to lob a few more drones to put Saudi Arabia in its rightful place.

While i am joking about that, ultimately Saudi Arabia's entire future economic model is based on foreign investment and specifically western investment. Thats going to be the retribution to prevent free flow of capital to Saudi Arabia and essentially putting MBS vision at risk


There is already talk in congress of retaliation to start by relocating the 3000 military troops (symbolic) and up to control of arms parts going in.

Yeah man. America is still the superpower and have a lot of cards up their sleeve. The level of nefarious they can get is beyond what we can imagine.

 

[casual]

Let's see how the Americans will respond.

Apparently the plan is to file lawsuits, withdraw troops and limit military sells. Basically not much.

https://thehill.com/policy/energy-environment/overnights/3678577-energy-environment-schumer-eyes-nopec-bill-after-oil-cuts/

 

[ahaider97]

Apparently the plan is to file lawsuits, withdraw troops and limit military sells. Basically not much.

https://thehill.com/policy/energy-environment/overnights/3678577-energy-environment-schumer-eyes-nopec-bill-after-oil-cuts/

That's the apparent, on paper response.

 

[casual]

That's the apparent, on paper response.

The lawsuits will pave way to asset seizures. But the US needs OPEC and not the other way around. And Saudis are betting that the incoming Republican congress will be much more friendly.

 

[ahaider97]

The lawsuits will pave way to asset seizures. But the US needs OPEC and not the other way around. And Saudis are betting that the incoming Republican congress will be much more friendly.

If America pulls out of the Middle East, some regimes will fall. America has a lot of leverage there.

 

[jhungary]

The lawsuits will pave way to asset seizures. But the US needs OPEC and not the other way around. And Saudis are betting that the incoming Republican congress will be much more friendly.

First of all, this move is not because they align to Russia and China, Saudi has been talking about cutting oil production since China is not buying much since they swift to Russia Oil at the beginning of this war, the Saudi needs to lower production to protect the price.

Secondly, other than what US done on paper, US have increased the drilling capacity and increased by 2 million barrel a day, that's the reason why even with this news, Brent oil did not jump up to $100 + a barrel, if US has to, they can increase that amount by 4 million barrel a day. Which would completely negate the Saudi Output.

Brent Oil Price History - Brent Oil Prices Per Barrel

www.oilcrudeprice.com

On the other hand Saudi are almost completely depends on US for defence, either for Troop and Equipment support, withdrawing both is a major blow to Saudi Defence.

 

[casual]

If America pulls out of the Middle East, some regimes will fall. America has a lot of leverage there.

Saudi and UAE will be fine.

 

[Hydration]

Saudi and UAE will be fine.

Highly doubt that

 

[dbc]

On the other hand Saudi are almost completely depends on US for defence, either for Troop and Equipment support, withdrawing both is a major blow to Saudi Defence.

Not just defense, their entire O&G industry is dependent on access to western technology. Their capital is heavily invested in Europe and North America. To highlight their vulnerability destroying a handful of desalination plants in the UAE will cause a massive exodus from the country within a month the UAE will be unable to provide drinking water to its population. And you have to remember there are multiple pillars of power and internal fissures between members of the royal family in both countries such that the US could easily destabilize the power equation by shifting alliance from one brother or uncle to another. And most people forget, it is the same two nations that begged the US to stop Saddam, were it not for the US, Saddam would've marched his army unopposed and conquered all of the Arabian peninsula.Something Iran can also accomplish if it weren't for the US.

The US is the bedrock of stability and progress in UAE and Saudi. Sure these guys may not like Biden and may even conspire to shift public opinion in the US in time to affect the next US election. But both these countries can i'll afford US/Western public opinion turning hostile against their countries. As for oil, Saudi and UAE have historically sent most of its oil cargoes to China and India. Both China and India have significantly increased purchase from Russia in 2022 eroding Saudi and UAE market share in a market they have taken for granted. The only avenue to replace their lost market share is aggressive expansion into Western Europe to fill the vacuum left by Russia's exit from that market. Their main competitor in W.Europe is US O&G and the only way to fight the US is to either overproduce and bring down oil prices OR blackmail Europe through significant recession inducing cuts into a preferential deal by extracting a long term commitment from Europe with the aim of eating into US market share.

 

[epebble]

Saudi Arabia and Russia plan deep oil cuts in defiance of US​

Riyadh and Moscow seek reductions that would push prices higher at crucial Opec+ meeting

View attachment 884989
Opec headquarters in Vienna Opec members’ ministers and the cartel’s partners are rushing to Vienna for what analysts have billed as its most important gathering in years © Lisa Leutner/AP

David Sheppard in Vienna and Derek Brower in San Francisco
18 hours ago


Saudi Arabia is seeking to raise oil prices at a crucial meeting in Vienna, in a move set to anger the US and aid Russia.

Riyadh, Moscow and other producers are poised to announce deep cuts at a meeting of the Opec+ cartel on Wednesday, according to people with knowledge of the discussions.

The size of the cut is still to be agreed but Saudi Arabia and Russia are pushing for reductions of 1mn-2mn barrels a day or more, although these could be phased in over several months. The reductions would probably trigger US countermeasures, analysts said.

“This is not the Saudi Arabia of old and the US has maybe been a little slow or unwilling to acknowledge that in energy matters,” said Raad Alkadiri, an analyst at Eurasia Group.

“If they want a higher oil price, they’ve clearly indicated they’re going to pursue that, even if it results in a tit-for-tat response from the US.”

Wednesday’s meeting of Opec members plus other producers was hastily convened at the cartel’s headquarters in Vienna, with ministers rushing to the Austrian capital for what analysts have billed as the most important gathering in years.

Russia’s top energy official, Alexander Novak, is expected to attend and is understood to support a substantial production cut, with Russia’s oil already trading at a large discount as European buyers have turned away.

A person familiar with the discussions said the cuts would be made from existing production, not quota levels that some Opec+ member countries have been unable to fulfil after years of mismanagement and under-investment.

Such a cut is likely to have a big impact on prices, which fell over the summer in a fillip to the electoral chances of President Joe Biden’s Democrats in US midterm elections next month.

Prices remain high by historical standards and, with the likelihood of a large production cut becoming clear, Brent crude, the international benchmark, rose to $91.50 a barrel on Wednesday — up 8 per cent since last week.

Tensions between Saudi Arabia, the world’s largest crude oil exporter, and the US, the world’s largest consumer, come as analysts warn of a deepening global energy war triggered by Russia’s invasion of Ukraine.

Riyadh and Moscow have stepped up pursuit of production cuts to halt the slide in oil prices, which have fallen from about $120 a barrel in early June, a drop that has hit Russian state revenues.

The US wants to restrict Russia’s oil revenues to starve its military of funding, making Saudi Arabia’s co-operation with Moscow a source of tension between Riyadh and the White House.

Helima Croft, a former CIA analyst and head of commodities research at RBC Capital Markets, said Russia was likely to turn its attention to disrupting oil markets, having already cut most of its gas supplies to Europe.

“We think more asymmetric, disruptive acts are coming as we head into winter,” she said.

The risk of further US-Saudi strains comes more than two months after Biden travelled to Jeddah to meet Crown Prince Mohammed bin Salman and said the kingdom would “take additional steps” to increase oil supplies.

The White House’s efforts to lower US petrol prices included months of shuttle diplomacy with Gulf oil producers, calls for US shale producers to increase supply and releases of oil from emergency stockpiles.

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Just last week, Brett McGurk and Amos Hochstein, two senior Biden administration officials, visited Saudi Arabia in the latest of a series of bilateral meetings.

In August, US energy secretary Jennifer Granholm told refiners to build domestic inventories rather than exporting more fuel. She warned that the US government was otherwise prepared to “consider additional federal requirements or other emergency measures”.

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The Biden administration has been weighing restrictions on exports of refined petroleum products — and has discussed the possibility with oil companies — according to people familiar with the discussions. A significant Opec+ supply cut would increase the likelihood of such a move, the people said.

The US oil industry’s main lobby groups on Tuesday urged Granholm to “disavow” any potential restrictions, warning they would further drive up prices in the US and internationally.

During a briefing with reporters, White House press secretary Karine Jean-Pierre said the administration would not comment on any Opec+ moves in advance.

She added that the US would focus “on taking every step to ensure markets are sufficiently supplied to meet demand for a growing global economy”. Jean-Pierre said the US was not considering new releases from the country’s Strategic Petroleum Reserve after selling off tens of millions of barrels from the stockpile this year in a bid to reduce energy prices.

But the US and other G7 countries plan to try to impose a price cap on Russian oil sales this year, a move that could lead to lower supplies from the country alongside a tightening of European sanctions against Moscow in December.

“Opec+ producers worry that the price cap planned only for Russia now could later become a precedent for wider use against other producers,” said Bob McNally, head of Rapidan Energy Group and a former adviser to the George W Bush White House.

Amin Nasser, the chief executive of state oil company Saudi Aramco, warned on Tuesday that the market was too focused on the demand impact of a possible recession rather than the limitations of current supply.

Additional reporting by James Politi and Felicia Schwartz in Washington and Myles McCormick in New York.

Saudi Arabia and Russia plan deep oil cuts in defiance of US

Riyadh and Moscow seek reductions that would push prices higher at crucial Opec+ meeting

www.ft.com

https://twitter.com/x/status/1577385523349491712

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https://twitter.com/x/status/1577746297934823453

The most rational way to reduce carbon emissions is by increasing the price of petroleum. In the short run it will cause economic dislocation, in the long run, climate healing. OPEC did not intend it but if higher price leads to conservation and use of alternate sources of energy, planet has much to thank them for that. Best thing is for them to gradually increase the price to allow predictability. Like $1 per barrel per week or month. That way we know, Oil will be $100 in January 2023, $200 in January 2024 and finally $1000 in January 2033 at which point it is effectively phased out.

 

[jhungary]

Saudi and UAE will be fine.

If you think "On a wing and a Prayer" is fine....

Not just defense, their entire O&G industry is dependent on access to western technology. Their capital is heavily invested in Europe and North America. To highlight their vulnerability destroying a handful of desalination plants in the UAE will cause a massive exodus from the country within a month the UAE will be unable to provide drinking water to its population. And you have to remember there are multiple pillars of power and internal fissures between members of the royal family in both countries such that the US could easily destabilize the power equation by shifting alliance from one brother or uncle to another. And most people forget, it is the same two nations that begged the US to stop Saddam, were it not for the US, Saddam would've marched his army unopposed and conquered all of the Arabian peninsula.Something Iran can also accomplish if it weren't for the US.

US had stopped a lot of Military Aggression in the Middle East on behalf of Saudi Arabia for sure, whether you like it or not, and with Russia not at the capacity to intervene even CSTO country, they won't be able to help Saudi Arabia even if they wanted to. And China have no traditional sense/oligation to help Saudi Arabia, so if US pull out of Saudi Arabia, they know they won't last a year.

Saudi prince Mohammad may not like Biden, but so did a little less than half of America, that does not mean he can rid their dependence of America anytime soon.

The US is the bedrock of stability and progress in UAE and Saudi. Sure these guys may not like Biden and may even conspire to shift public opinion in the US in time to affect the next US election. But both these countries can i'll afford US/Western public opinion turning hostile against their countries. As for oil, Saudi and UAE have historically sent most of its oil cargoes to China and India. Both China and India have significantly increased purchase from Russia in 2022 eroding Saudi and UAE market share in a market they have taken for granted. The only avenue to replace their lost market share is aggressive expansion into Western Europe to fill the vacuum left by Russia's exit from that market. Their main competitor in W.Europe is US O&G and the only way to fight the US is to either overproduce and bring down oil prices OR blackmail Europe through significant recession inducing cuts into a preferential deal by extracting a long term commitment from Europe with the aim of eating into US market share.

The problem I can see is EU will not be dumb enough to depend on one energy source again, which mean they will buy a little bit of ME energy, a little bit of US energy product and a whole lot of North Sea Energy Product

The lost of Chinese contract is a big blow for Saudi and it is not going to be able to fill even with overproducing or blackmailing, and that is why they has been asking to reduce oil production since Russian invasion of Ukraine. In fact, I do think Saudi actaully blame Russia and China for losing those lucrative deal, there are no reason to help them out at all. And it's weird to say so anyway, because essentially you are saying Saudi is helping Russia and China for basically Russian taking away millions if not Billions of Chinese customer.......

If anything, Russia make Saudi looks like an idiot for loosing USD and settle Oil Contract with China with Yuan, and then proceed to take those contracts away from Saudi....

 

[JohnyD]

hope US will pour more capital in shale oil fields and increase the production...

 

[Falcon29]

The most rational way to reduce carbon emissions is by increasing the price of petroleum. In the short run it will cause economic dislocation, in the long run, climate healing. OPEC did not intend it but if higher price leads to conservation and use of alternate sources of energy, planet has much to thank them for that. Best thing is for them to gradually increase the price to allow predictability. Like $1 per barrel per week or month. That way we know, Oil will be $100 in January 2023, $200 in January 2024 and finally $1000 in January 2033 at which point it is effectively phased out.

$1000 a barrel by 2033? We need oil and can't go without it. Electric cars are not the solution at the moment. We can't build enough. Low output combustion vehicles and hybrids will continue to be majority of vehicles on market throughout the 2030's.

 

[RealNapster]

What is happening is mind boggling, a quantum shift.

1. The Saudis/ UAE not even picking up the phone when Biden rings.

2. Selling oil to the Chinese in Yuan.

3. Consulting with Russia about a cut in oil production at a time when the US is demanding an increase.

The US has deemed Saudi actions as 'aggressive' towards them. The American's most loyal and servile vassal in the middle east being quantified by the US as an adversary.

We are truly living in exceptional times. ' Decades go by when nothing happens, then in the space of weeks decades go by.'

Exceptional times ? All these big powers doing politics on world energy which cost them minimal to produce but still they seek political mileage and high prices out of it which is further dragging small economies and developing countries in the mud.

 

[epebble]

$1000 a barrel by 2033? We need oil and can't go without it. Electric cars are not the solution at the moment. We can't build enough. Low output combustion vehicles and hybrids will continue to be majority of vehicles on market throughout the 2030's.

California bans the sale of new gas-powered cars by 2035​

California bans the sale of new gas-powered cars by 2035

The historic rule, issued by the California Air Resources Board on Thursday, will force automakers to speed up production of cleaner vehicles starting in 2026.

www.cnbc.com