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Senior Advisor

Oil, Iran and Saudi Arabia

I'm going to guess that the Saudis are going to drive the price of oil into the ground. With Iran influencing events in Yemen, which borders the Saudis, I think they will go for the jugular. Saudi milirtary attacks might not be nearly as effective as ruining the Iranian economy.

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9 Replies
Honored Advisor

Re: Oil, Iran and Saudi Arabia

Just so it doesn`t take the US economy to the brink in the process.

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Veteran Advisor

Re: Oil, USA. We need bout

$44 crude to drive the whole Middle East off the oil map.

 

guess we'll see.  

i tend to think the Saudis will take crude to $31 to $34 pb.

 

 

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Senior Advisor

Re: Oil, Iran and Saudi Arabia

In the end the Saudis take more interest in their own survival than the problems it might cause the US. They are taking rather indsependent action from the US. Since the genie of the Middle East was released from the bottle we aren't willing to fight every front independently all the time. The drone war used Yemen as it's model but the model failed in Yemen big time. Larger forces have been unleashed from Irag to Iran, Syria and so on. General Powell made the point, and never more plain than today, that if you go into a shop and start breaking the stuff - you own the results.

 

The Saudis won't back off now but I'm not convinced they'll be successful either, in the long run. This is all going to play itself out on its own schedule. We are forced to wait and react. It's the nature of the beast.

Advisor

Re: Oil, Iran and Saudi Arabia

Saudis gonna prove the world doesn't need Iran oil. No need for a deal with Iran, kick the can down the road.
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Senior Contributor

Re: Oil, Iran and Saudi Arabia

I was told that the Saudi's can make money on oil at $5.00/barrel and have enough cash reserves not to be adversely effected for two years at that level.  Don't know if it is a crock, but was told this by someone that has owned an oilfield busness since the late 50's.  Won't say it will happen, but they have the ability to something drastic if it serves them in the long run.

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Advisor

Re: Oil, Iran and Saudi Arabia

http://en.wikipedia.org/wiki/Twilight_in_the_Desert

 

My hunch is that there's even more to the story than that- that Matt Simmons was probably right, if a bit early.

 

Saudi production is maintained through very sophisticated enhanced extraction methods- primarily flooding the reservoirs with seawater- and "water cuts" are rising, i.e., there's ever more water coming up to be separated from the oil.

 

Whatever their reserves are, they are finite. With enhanced extraction, the fields probably won't exhibit a Hubbert Curve type production profile (bell curve) but rather a peak that's pushed to the right on the curve and then a sharper decline.

 

They have a pretty good idea where they are on the curve, we don't. But to me their actions indicate that they decided it is time to make their move, both geopolitically and economically.

 

It'll be tricky- a multitide of unknown variuables exist- but there will come a time to take a serious investment poke at things oil related. I'd also suggest ordering one's life in a manner to best accomodate a greater energy crisis out in the 20s. Alternatives and unconventional oil and gas production will help some but there hasn't been enough lead time to avoid a lot of disruption from Peak Oil if it hits that soon.

 

Peak oil is about Saudi Arabia and Saudi Arabia is about their giant Ghawar oil field. Isn't any magic that's going to change that.

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Advisor

Re: Oil, Iran and Saudi Arabia

PS. Conventional global production probably peaked around 2006 and owing to high prices has bumped along a plateau while unconventional sources have added about 3m/b/d.

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Senior Contributor

Re: Oil, Iran and Saudi Arabia

Its nice to see the saudis do some heavy lifting.
I think???!!!
Highlighted
Veteran Contributor

Re: Oil, Iran and Saudi Arabia

Baltic Dry Index (orange)-CLc1 (Green)-S&P 500 (purple) ...past 6 months.  

 

Baltic-CLC1.png

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