A dangerous mistake or an accurate calculation: why did Russia disrupt the oil deal

Widely discussed not only in our country, but throughout the world, the disruption of the large-scale reduction of “black gold” production proposed by the OPEC countries causes extremely contradictory estimates. Someone speaks of a “most dangerous mistake” in Russia, because it was our country that refused the Middle East monarchies a new agreement. Someone is trying to fantasize on the topic of “Russian cunning”. And only the most cautious analysts allow themselves to assume that in this case we are talking about a balanced and reasonable step, whose true reasons should not be reduced to simple and lying on the surface motives.

As for the expected consequences, it is even more difficult to predict them. And yet we will try ...

What was wrong OPEC

Before starting a discussion of the reasons and motives for the "disobedience" that was shown by the Russian delegation during the last OPEC + meeting and made so much noise, we should at least briefly recall the main "balance of power" at the global level in the field of "black gold" mining. In the most simplified form today, these are three “whales”, which are, firstly, countries that are members of the Organization of Oil Exporters, secondly, Russia, and thirdly, the United States. The rest is a fairly small audience, which does not have a real impact on world energy markets and does not have a price. It should be noted that, in fact, the "weight" of OPEC is falling every year - both due to the reduction in the number of its members, and due to the appearance on the arena of non-members, capable of leveling their actions policies of this "oil club". Qatar left the Organization last year, Ecuador left its ranks on January 1, and Libya and Iran, which are its members, have actually been removed from the list of real exporters of “black gold”. At the same time, Russia, which does not belong to any OPEC, continues to be the world leader in oil production. And the United States, which does not want to hear about any international cartels at all and, accordingly, to coordinate its own policy in the field of energy production and export with anyone, continues to increase their sale from year to year, spitting on anyone else’s interests except their own. Do not forget that the measures taken by OPEC in recent years to reduce global oil production have been directed, first of all, to counteract American expansion in this industry. But, alas, they not only turned out to be inconclusive, but led to consequences directly opposite to what was expected.

Why did it happen? The fact is that too many analysts at one time predicted the American "shale revolution", which overnight disrupted the usual oil "alignments", the end as fast as its sharp and unexpected surge. They say, they will play around, burn themselves and even abandon ... Such, as it turned out, very superficial and frivolous forecasts were based on economic calculations, according to which, given a sufficiently large drop in world prices for "black gold", the development of "shale" will at first become low-profit, and then completely unprofitable. And those enthusiasts in the United States who rushed in full accordance with the "great American dream" to amass millions of fortunes on the newfangled oil projects, either go bankrupt, or, convinced that this business is too risky, switch to something else. However, in OPEC itself, they began to take seriously the "shale" wave that flooded the world and treat it with apprehension back in 2018. Even then, in their reports on the state of the energy market, the organization's analysts admitted that the daily production of "black gold" by countries outside of it is growing much faster than they expected, ahead of preliminary estimates by hundreds of thousands of barrels per month, and the demand for oil continues to fall. And, again, at rates and volumes that far exceed even the most pessimistic expectations. Nevertheless, for some reason, OPEC decided that in order to counter the sudden threat that arose, it would be quite enough to reduce its own production by 1.5 million barrels per day and convince its partners to do the same, first of all - Russia. In this case, prices can be kept under control. It was not so ...

"Slate" is seriously

It should be noted that initially, when the “slate” from the USA confused all “cards” appeared on the markets, the voices of those who called to fight this invasion in a completely opposite way were heard. Namely, letting prices drop to such a minimum that, as mentioned above, will make its production unprofitable. As the "threshold" was called the figure of $ 45 per barrel. At the same time, analysts closely monitored the number of “shale” oil rigs in the United States - both newly opened and ceased operations, and carefully calculated how many mining companies there managed to collect debts beyond any reasonable limit. There were moments when it seemed: the “shale pyramid”, which was drawing in investments with the speed and voracity of a good vacuum cleaner, would simply collapse, because of its own unprofitability, it would not be able to pay off loans. When, at the beginning of this year, because of the outbreak of the coronavirus epidemic in China, prices for “black gold” first crawled, and then flew down at a crazy speed, many held their breath in anticipation: “Now it will all crash!” However, nothing similar, unfortunately, did not happen. In the United States, the number of rigs as well as the volumes of oil pumped from the bowels are still growing steadily. In early March, the US Department of Energy’s Energy Information Administration announced another record: 13-plus million barrels per day. This is exactly a million more than last year. Along with production, exports are growing. At the beginning of this month, he had already reached more than 4.15 million barrels per day, “surpassing” the figures for the same period in 2019 by one and a half million.

Today, the United States "spills" daily into the world market of "black gold" more than during the same time it is mined in the vast majority of countries of the same OPEC, with the exception of Saudi Arabia and Iraq. At the same time, the vast majority of American oil has shale deposits in 48 states of the USA in places of origin. The only “normal” oil pumped in Alaska does not show any increase in volumes. Despite the collapse in prices, the number of operating drilling rigs in the country has remained stable for a couple of months - about 680. An increasing number of analysts come to the conclusion that they will continue to work just as clearly and smoothly at 40 dollars per barrel, or even at 30. More Moreover, in 2020 it is forecasted to increase “shale” production by another 1.1 million barrels per day. Its “margin of safety” turned out to be much higher than it was originally seen. Moreover, there is news and worse: according to reports, having become convinced of the prospects of oil shale production, such giants as Chevron and ExxonMobil are determined to deal with it. The entry into the business of these transnational corporations, which have practically unlimited opportunities for investment, generally changes the situation in the most fundamental way. Even if we hypothetically imagine that now a wave of bankruptcies of small oil companies caused by a new, even sharper fall in prices for black gold will sweep across the United States, their sections will simply be taken over by TNCs, which can work for a while almost at a loss ( or even really “minus”) in order to continue the expansion to capture markets. This will in no way bring down the position of the American “oil shale”, but only strengthen them even more.

Will have to play for a long time

What Mikhail Leontyev, who expressed the official position of Rosneft, is a little more than 100% right, is that in the current situation every inch on the already shrinking, like the notorious shagreen leather world energy market that will be “released »The lack of supplies from Russia or the Middle East, immediately take the US oil industry. As a matter of fact, this is already happening, and this is far from the first month. At the same time, panic that is being intensely inflated by some people, like the statement by one of the owners of Lukoil about the terrible losses allegedly awaiting our country (either 100, or even 150 million dollars a day), are, according to experts either fortune telling on coffee grounds, or an expression of personal interest. The same Lukoil is preparing for sale and is afraid of losing in capitalization, while Novatek, which also criticizes the decision, does not want to lose in gas prices tied to oil. Sheikhs from Saudi Arabia or the UAE, threatening Russia with almost "oil jihad", also somewhat exaggerate their own capabilities, while minimizing the problems. The budget of our country at 40 dollars per barrel will certainly not flourish, but it will not collapse. At the same time, the same Saudis vitally need a price of 75-80 dollars for it. Oman - $ 75, the Emirates - about 60, and Kuwait at least 54 dollars per barrel. So who will “strangle” someone or “lead to humility” with low oil prices is still a very, very big question.

It is obvious that the game started in the United States. They will certainly not be going to torment their own land with hydraulic fractures while at least a drop of “black gold” remains in it. Everything is much more thoughtful, large-scale and, as American, meaner. In parallel with the crowding out of competitors from the market through its saturation and collapse of prices, there is a completely different activity. Americans have already “survived” such significant exporters from the world energy markets as Libya, Venezuela, Iran. After all, they are pressing us more and more with their sanctions! They would bomb with great pleasure, but the gut is thin ... Events in Syria, where the US military completely saddled oil fields, which, apparently, they are not going to leave, perfectly illustrate Washington’s long-term strategy in this matter. Having expelled all (or almost all) competitors from the market, the United States will simply take over the main oil-bearing regions of the world, turning most of the “black gold” reserves on the planet into its property. And then they will leave the “slate” alone and enjoy life. I am sure that is precisely how they see the future. Do not forget that, in fact, the lion's share of really suitable for development deposits is in 10-20 pools of "black gold". At the same time, 70% of them were opened before 1970. New deposits are supposed only in the Arctic and Antarctic. And the rest, according to the Americans, is the time to "take and share." Not at all brotherly, of course.

The fall in world oil prices caused by the coronavirus epidemic, alas, cannot be corrected by any reduction in production. Will the epidemic turn into a pandemic? Will the global financial and economic crisis follow? Will oil prices collapse to an unprecedented minimum, or, after some time, skyrocket? These questions are still open. However, in any case, life on the planet will not end there. Behind the recession there will be a rise; after today's overabundance of oil, it will inevitably be deficient. This "long-term game", in which only those who can keep afloat their own oil industry and positions in world markets can win. Let's hope that our country succeeds.
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  1. steelmaker Offline steelmaker
    steelmaker 9 March 2020 14: 01
    Dangerous mistake or accurate calculation?

    Our government only has the exact calculation in its pocket, but for the state, only losses!
  2. Monster_Fat Offline Monster_Fat
    Monster_Fat (What's the difference) 9 March 2020 15: 08
    The profitability of American shale production varies widely. Even if the oil price drops to $ 22-24 per barrel, up to 50% of the wells will remain profitable. But even if shale production collapses completely, the United States will have conserved and unexploited "classic" deposits, which they have not specially touched for decades, and what will Russia have? wink Well, and most importantly, just as I paid $ 2012 for what cost $ 1 in 1, I pay now and will pay in the future, and our gasoline per gallon will become cheaper due to the fall in oil prices. But in Russia, the dollar is already for 74-75 "wooden" is traded on the stock exchange, that is, prices in Russia for absolutely everything will go up in any way, especially for imports and for what is produced with the participation of imported components. Well, and gasoline will fly up - as he always does in Russia in such cases. And the Russian government both kept salaries in Russia at a miserable level, and is going to keep them in the future (recalculate the minimum wage at the current dollar rate - you laugh). The question is: who will feel bad in this case? Americans? Sechin and Co.? Or ordinary Russians? It seems that Sechin decided to "fight" (to avenge the SP-2, etc.) with the United States to the last pants of a Russian man in the street. yes
    1. YUG64 Offline YUG64
      YUG64 (Yuri) 9 March 2020 22: 18
      Yes, the dollar is eternal, the shales are unshakable, Russia will fall apart (impoverish) - or vice versa - at first it will become impoverished, then it will fall apart .. And you will always buy gasoline for a dollar. And no other way !!!!))))
    2. Dear sofa expert. 10 March 2020 01: 21
      Americans are still beggars. These beggars are everywhere. At every step. Begging. Phew. A disgrace. And there are many homeless people. Every 6th American does not have basic health insurance. This is life until the first sore. Prices, you say, have not changed since 2012?) And why even many workers can not afford normal even rental housing? And 74 rubles per dollar .. so I tell you. For 74 thousand rubles in Russia, the family will live a good month, and for $ 1000 you are a beggar in the States, and there’s no way to call you. Because the real purchasing power of your stinky dollar is nowhere else to be seen in America itself.
      1. master3 Offline master3
        master3 (Vitali) 12 March 2020 11: 02
        ... in Russia, the family will live a good month, and for $ 1000 in the States you are a beggar.

        - you answered your question, in the United States only a beggar receives $ 1000 per month and do not compare the poor in America and the poor in Russia, these are completely different people.

        Americans are still some beggars ..

        - you need to watch less TV, this is very harmful.
    3. maidan.izrailovich (Maidan Izrailovich) 11 March 2020 03: 57
      But even if shale production collapses completely, the United States will have conserved and unexploited "classic" deposits, which they have not specially touched for decades, and what will Russia have?

      A storyteller, he composed this fairy tale himself, or who thought of it?
      Canned (undeveloped) deposits, and there are such in Russia and the USA, are mainly offshore deposits. So, there the cost is even higher than that of shale.
      According to statistics, in 2019, the United States has the largest cost of oil production. The lowest in Saudi Arabia. Russia in the middle.


      Now what will Russia be left with.
      Oil reserves in Russia are two times greater than in the United States. And these are just proven. Because in Russia there are deposits that are discovered, but their final volume has not been proved. Such statistics are not included.
      And in this situation, the United States also consumes oil many times more. So who is left with what?
  3. Roman Soloviev Offline Roman Soloviev
    Roman Soloviev (Roman Soloviev) 10 March 2020 08: 35
    Anything higher than $ 40 per barrel, we still go to reserves in the form of US securities. Budget rule.
  4. g1washntwn Offline g1washntwn
    g1washntwn (George Washington) 10 March 2020 10: 13
    ... if you hypothetically imagine that now a wave of bankruptcies of small oil companies, caused by a new, even sharper fall in prices for black gold, will sweep across the United States, their sections simply will pick up the hands of TNCs

    The author quietly voiced the main reason. For a cost-effective fracturing operation, the site must not only be cheap, but practically at a bargain price. Well, and the traditional "democratic" method of getting rid of competitors.
    It is pointless to fight such an approach by any OPEC. With dumping and strikebreakers, only a forceful scenario works, while everywhere we have the Western model of the "free market", where speculators rule, who themselves arrange these crises.
  5. Natalya Letitskaya (Natalya Letitskaya) 10 March 2020 10: 45
    It was necessary to play for a long time when the Chekists were young. Now, when the economy has not been diversified, it remains to state the death of the hydrocarbon empire. Knowing the abilities of "productive managers", I would like to recall the saying:

    Do not wash floors before a tsunami.
  6. vvnab Offline vvnab
    vvnab (Vitali) 10 March 2020 12: 53
    The winner will be the one who managed to preserve industry and scientific potential, and all these games of expensive / cheap oil, complete garbage. Unfortunately, Russia missed its chance.
  7. T. Henks Offline T. Henks
    T. Henks (Igor) 10 March 2020 16: 35
    Good poem from the old USSR:

    It was five, but it was eight.
    We won’t stop drinking anyway.
    And tell Ilyich, we have ten on the shoulder.
    Well, it will be twenty-five, we will begin to take Winter.

    The personalities have changed, but 75 will not kill us. And the gas from the gas station will flow into our gas tank.
  8. Kazimir Prutikoff (Kazimir Prutikoff) 10 March 2020 20: 36
    As for some exact calculations of our power, I strongly doubt something. The whole world has been playing complex combinations for a long time - mnogohodovki like chess. And we, as firefighters, still play dominoes and constantly want to make fish with an incomprehensible outcome! I think everything is simpler. Here, once, in an interview with Putin, Sechin poured that the cost of oil at Rosneft was $ 3,6 per barrel. At the wellhead, this is possible, but in no way on FOB conditions. Evil tongues say that in new fields on the shelf of the Arctic Ocean the cost price reaches $ 60-80 dollars per barrel. All these projects are unprofitable. And what is the solution? That's right - the devaluation of the ruble. The ruble revenues of the oil industry grows, and the ruble cost remains the same. That is the reason.
  9. master3 Offline master3
    master3 (Vitali) 12 March 2020 10: 47
    Dangerous mistake or accurate calculation

    - you do not understand, this is a multi-entry route, now Russia is definitely giving the West in all directions.
    1. Alexzn Offline Alexzn
      Alexzn (Alexander) 12 March 2020 21: 26
      Quote: master3
      Dangerous mistake or accurate calculation

      - you do not understand, this is a multi-entry route, now Russia is definitely giving the West in all directions.

      Cool humor you have!
      1. master3 Offline master3
        master3 (Vitali) 12 March 2020 21: 50
        This is not humor, but the bitter truth.
        1. Alexzn Offline Alexzn
          Alexzn (Alexander) 12 March 2020 22: 21
          I would also like to learn about these ALL areas in which Russia devotes the West.
          1. master3 Offline master3
            master3 (Vitali) 12 March 2020 22: 50
            It was a joke. Russia is in the full ass and this stupidity or greed will affect ordinary people.
            1. Alexzn Offline Alexzn
              Alexzn (Alexander) 12 March 2020 23: 27
              Already reflected.
              1. Monster_Fat Offline Monster_Fat
                Monster_Fat (What's the difference) 15 March 2020 12: 05
                Already reflected.

                And what’s going on in the USA! laughing lol Trump "zeroes" taxes for small and medium-sized businesses for three months - horror, right? And in Russia, a "multi-passer" "term" sycophants "nullifies" - like, so that he even more with friends "developed" the country with his HPP. Well, as for the Russian people, as usual, it will cost nothing. tongue
                1. Alexzn Offline Alexzn
                  Alexzn (Alexander) 15 March 2020 15: 11
                  Yeah! It’s hard now for the Americans, they don’t have Putin!