Saudi Arabia has been swimming in oil revenues for decades. They could completely stop producing and live off of what they have in savings.
But many of the other oil producing countries have large populations and are very dependent upon oil revenues. They may desperately want to get the price back up but they can’t cut back because they need all the revenues they can get.
Russia is the biggest producer but they are also extremely dependent on revenues. That is why they will pay lip service to lower production while expanding capacity to take advantage of rising prices.
One good thing about the economic meltdown is it has drastically reduced consumption. It also means that oil producers are going to be even more dependent on oil exports. There will be a limit to how much opec can cut production.
[quote]Sifu wrote:
Saudi Arabia has been swimming in oil revenues for decades. They could completely stop producing and live off of what they have in savings.
But many of the other oil producing countries have large populations and are very dependent upon oil revenues. They may desperately want to get the price back up but they can’t cut back because they need all the revenues they can get.
Russia is the biggest producer but they are also extremely dependent on revenues. That is why they will pay lip service to lower production while expanding capacity to take advantage of rising prices.
One good thing about the economic meltdown is it has drastically reduced consumption. It also means that oil producers are going to be even more dependent on oil exports. There will be a limit to how much opec can cut production. [/quote]
Yes but if they are running a loss as it is and need $70, they will have to take a temporary larger loss while finding the necessary level to become profitable again.
They (Iranians) seem intent on developing nuclear power and can’t do it unless prices rise.
I wouldn’t be too shocked to see them push for cuts and temporary losses until they carry on with their plans, like any business with an aggressive growth model, but through a strange mechanism for sure.
I had a thread going on the formation of a cartel to contol the price of gas a few weeks ago, looks like the body is forming and we’ll be seeing it exert some influence on gas prices in the future, this is a significant development.
I’ve said this before and I’ll say it again. We should have put those “royal” camel jockey motherfuckers in tents and bought them a bunch of camels in exchange for all the oil fields. Either you take the camels or we’ll nuke you till the fucking desert glows.
Like they didn’t make enough money at $147 +/- a fucking barrel. God damn man. Yeah, they’ll cut production until it starts to shoot up again. It was really inevitable.