War And Oil Prices
An all-out oil price war has created an "unprecedented" situation in energy markets, analysts told CNBC Monday, with traders impatiently waiting The fallout between OPEC kingpin Saudi Arabia and non-OPEC leader Russia has kickstarted an oil price war, with crude futures on track to register their... Oil prices as a tool of proxy war. The violence that is wreaking havoc on these regional oil facilities has a geopolitical element. As in the 1980s, regional proxy wars are prompting a price war from Saudi Arabia and its Gulf allies in an effort to weaken the other side, notably Russia and Iran. On 8 March 2020, Saudi Arabia initiated a price war on oil with Russia, facilitating a 65% quarterly fall in the price of oil. In the first few weeks of March, US oil prices fell by 34%, crude oil fell by 26%, and Brent oil fell by 24%.
Whichever way the oil price war pans out, Russia wins. In purely basic oil economics terms, Russia has a budget breakeven price of US$40 per barrel of Brent this year: Saudi's is US$84. Russia can produce over 11 million barrels per day (mbpd) of oil without figuratively breaking sweat; Saudi's... This oil price war is exceedingly complex, however. On one hand, there are all the geopolitical factors at play in the oil market. Untangling the economic and geopolitical implications of the oil price war could also be difficult because the larger macro environment is struggling to deal with the coronavirus. In reality, a price war means attacks come from both directions: the next salvo would have to come from Russia, then Saudi Arabia, then Russia, etc. The market was so anxious about a potential price war, that when international exchanges opened at the start of the week, oil prices dropped over 30%. Russia refused to cut oil output quotas by up to 1.5 million barrels per day at a failed meeting on Friday between OPEC and non-OPEC nations. So in retaliation, Saudi Arabia will produce 2 million barrels per day at $6 to $7 a barrel into an already oversupplied global market.
Though Riyadh's price war may be aimed at Moscow, it is likely to inflict greater pain on the kingdom and its OPEC allies. DW looks at how likely the global oil producers, including the US, are to weather this crisis. Oil prices crashed Monday after Saudi Arabia said it would slash oil prices, launching a ferocious response against Russia's move. Whatever is fueling the motivation, the oil price war couldn't have come at a worse time for an industry already suffering from a bear market in crude. Thus it is Moscow that started this crude price war, Sergey Kopylov, a junior partner at consulting company BSC, has told RT. "On the other hand, Saudi Arabia, unlike Russia, cannot withstand low oil prices for a long period of time. They have much more narrow safety margin in their budget system."
In 1992, oil prices rose relentlessly as the war drums were beating louder and louder in Kuwait, until the cacophony became unbearable. As soon as it became likely that the US and its allies would invade Kuwait to push back the invading Iraqi forces, oil prices gradually fell back. Indeed, once the US-led... Price War. Sunday's agreement ended a period in which the OPEC+ alliance appeared to be dead, with former partners engaged in oil-trade warfare. The trajectory of oil prices will be more dependent on how fast the world leaves lockdown and the pace of the economic rebound. Yet the deal's significance... "Who will win this price war? One has to assume it will be Russia," Ellen Wald, non-resident senior fellow in the Atlantic Council's Global Energy Center Even a 20% increase in oil production wouldn't compensate for crude prices that are less than half the level Saudi Arabia needs to balance its budget.
MOSCOW (Bloomberg) --Vladimir Putin's deal with OPEC to cut oil output and boost prices three years ago was a triumph for the Russian leader, bolstering his clout on the global stage. But now he's had to make stinging concessions after U.S. President Donald Trump stepped in to end a price war. Officially, the oil war which has cut the price of crude by 30% in the past 24 hours is a fight between Saudi Arabia and Russia, but the real target of both is the U.S. Let's make a few things clear about the oil price war: how it began, how it developed and what we can expect further. The oil price war started with Russia...
Demand will keep prices at painfully low levels for U.S. oil producers for the coming months, so this is the opportune time to hammer out a long-term deal. It will be in OPEC's interest to keep the price of Brent close to $30 level during this negotiating period. Many oil companies are worth a fraction of what they were at the start of the year. The coronavirus pandemic started a chain of events which led to a global crash in oil prices and slashed. Offshore Technology takes a look at events of the oil price war ahead of Thursday's "ceasefire" meeting. Now, the Russia-Saudi price war and a killer pandemic have caused prices to plunge, putting Trump in the awkward position of begging those same "The price is so low." Trump will likely aim for an oil-price sweet spot, said Kevin Book, managing director of research firm ClearView Energy Partners.