Why the USA and Saudi Arabia will not be able to create a new cartel


The Oil War hits all market participants. According to recent estimates, if prices for “black gold” remain at the current level, then by 2024, Saudi Arabia, which initiated the crisis by dumping, will completely exhaust all its reserves, after which it will face an “incredible crisis”. In the United States, shale oil production begins to decline, thousands of industry workers are getting laid off.


Against this background, there is growing evidence that Washington and Riyadh can create a certain alliance as an alternative to OPEC to regulate world oil prices. Is such a new cartel possible?

OPEC is an international cartel consisting of countries that control 2/3 of the “black gold” reserves on the planet. If you call a spade a spade, then it does not include the most technologically advanced states: Angola, Venezuela, Algeria, Gabon, Nigeria, Libya, the UAE, Kuwait, Ecuador, Saudi Arabia and several others. Neither the US nor the USSR, which also have large deposits, joined this club.

A few years ago, Russia entered into the OPEC + agreement to limit production volumes in order to maintain high prices for hydrocarbons. Some domestic economists criticized the deal because they believed that in this way Moscow actually subsidized the American shale industry. Now, Russia is going to exit, but the possibility of its replacement by the United States is being discussed. How real is it?

This question is not entirely clear. On the one hand, according to formal signs, shale oil producers are the first in line to take off from the market. Their production profitability is at the level of 40-45 dollars, with the current 25 they will not last long. That is why American companies began to reduce volumes and think about stopping a number of projects. On the other hand, their losses are insured for a year in advance, and the business of those who have gone bankrupt can later be redeemed by larger players.

There are arguments of a purely political nature. 2020 is the year of the presidential campaign; elections will be held in November. Cheap oil is also cheap gasoline at gas stations for ordinary Americans, since in this country the connection between world quotes and gas station price tags is direct. If now Trump will achieve an increase in the cost of a barrel, then this will immediately affect the fuel for consumers, as indicated political rivals of the president. But if oil production declines, gas and electricity prices within the United States will rise. The fact is that the production of shale oil at the same time subsidized the production of shale gas. The low cost of gas and electricity was the competitive advantage through which Donald Trump promised to "make America great again." Consequently, big business will suffer, the representative of whose interests is the head of the White House himself.

Finally, there is a legal issue. Cartel conspiracy is prohibited by law within the United States. Texas shale companies are asking for a reduction in production, but there are plenty of other private companies in the Gulf of Mexico, Louisiana, and Pennsylvania. How to persuade them all is not entirely clear, given that the agreement between Washington and Riyadh will be a new cartel.

In general, it is hardly worth expecting any drastic changes in this matter until the fall. However, 2020 is a year of unexpected and very unpleasant surprises.
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  1. Bakht Offline Bakht
    Bakht (Bakhtiyar) 24 March 2020 13: 30
    0
    The most interesting is the US law called NOPEC (No Oil Producing and Exporting Cartels Act). This law is dragged by the States for 10 years and can not in any way. It seems. Last year, it was agreed to in Congress. But the approval is still far away.
    Surrealism is that the States were unhappy with the OPEC + deal, and now they want Russia to return to this deal. And if he doesn’t return, then the States will enter it. It is useless to look for logic here. This is all the momentary throwing of an offended child. Or misinformation.

    The situation in Saudi Arabia is a mystery behind seven seals. The Saudis could never produce more than 12 million barrels. On the one hand, it is full of information that the freight of tankers soared by 700%, because they store excess oil. On the other hand, the Saudis empty their tanks to reach the declared 13 million barrels. And where will these extra 5-10 million barrels per day be stored? With a recession in the economy and a reduction in consumption.

    The only obvious way out for the United States is FULL displacement of Russian oil from the market. The logic is this. We introduce sanctions against the entire oil and gas sector of the Russian Federation. And then it’s not like China, no one will buy Russian oil at all (including Italy). And gas in addition. The freed niche is divided between the Saudis and the States. Under such conditions (the complete displacement of Russia from the market), the Saudis will go to reduce production to the previous 9 million barrels, and the States retain their shale production. Russia loses up to 50% of budget revenues and all (without exception) oil and gas projects freeze.

    Why do I say that Moscow is even less adequate than in Washington? Yes, because this is an apocalyptic scenario for the entire Russian economy. Yes, so far only a script. But you have to be prepared for it. And I talked so much about preparation that I already have a callus on my tongue and on the fingers with which I tap the keyboard. Refusal to convert the ruble, nationalization of all significant economic entities. Ban on trade with the West by private companies. This is wood, steel, aluminum, titanium, coal and a lot more. It is necessary to completely recover. Print a little egg and start the industrialization of the country.
    On the external front, this is a complete rejection of any agreements with the West. Resolution of the issue with Ukraine and Syria. Complete and final. It is isolation and economics in a state of emergency. This is a severe blow to the welfare of citizens. But money is not blood. The rhetorical question remains "can Russia repeat"?
    1. 123 Offline 123
      123 (123) 24 March 2020 19: 43
      0
      You joked?
      1. Bakht Offline Bakht
        Bakht (Bakhtiyar) 24 March 2020 20: 05
        0
        Wait and see.
    2. 123 Offline 123
      123 (123) 25 March 2020 07: 54
      0
      The only obvious way out for the United States is FULL displacement of Russian oil from the market. The logic is this. We introduce sanctions against the entire oil and gas sector of the Russian Federation. And then it’s not like China, no one will buy Russian oil at all (including Italy). And gas in addition.

      It is for this reason that the price war began. Russia now has too much market share to undertake such an operation. They simply cannot replace its share, at least quickly. They did not wait for a gradual decrease in market share with the subsequent "Irano-Venezuelan" scenario.

      Why do I say that Moscow is even less adequate than in Washington? Yes, because this is an apocalyptic scenario for the entire Russian economy. Yes, so far only a script. But you have to be prepared for it.

      Is this not a measure to prevent such a scenario? While oil and gas projects freeze over the ocean.

      Refusal to convert the ruble, nationalization of all significant economic entities.

      The ruble cannot be called a fully freely convertible currency; it can be effectively used as a tool for the movement of capital between countries. For this, they created their own payment system. In this market, the ruble is not welcome and in every way interfere. Do you offer to help them?
      What are the criteria that make the "Economic Subject" significant?

      Ban on trade with the West by private companies. This is wood, steel, aluminum, titanium, coal and a lot more.

      I suppose you are proposing to nationalize them? After nationalization, it will be possible to trade it or what? If so, what's the point? Just collect all the currency in one big "state pocket"?

      It is necessary to completely recover.

      Is it like China or Japan in antiquity? Or how is the DPRK now?

      Print a little egg and start the industrialization of the country.

      And why then this little egg? After implementing the above measures, a fully autonomous financial system will be obtained. Money will turn into a surrogate, in fact, it will be coupons for food, clothes, a TV or a car, etc. With industrialization, it’s generally interesting. In my opinion, she already goes. Are you going to speed it up, to do it as in the pre-war period, with all-Union construction projects? The goals are not clear. Become the leader in releasing everything? But why? To just be? The problem is not that we can’t produce something, it’s just that there’s nowhere to sell.

      On the external front, this is a complete rejection of any agreements with the West.

      Again the Iron Curtain?

      Solving the issue with Ukraine and Syria.

      Do you mean the entry of troops into Ukraine and the destruction of Turkish and American troops in Syria?

      This is isolation and economics in a state of emergency.

      We ourselves will bring everything to the situation. when will a state of emergency be needed?

      This is a major blow to the welfare of citizens.

      Drive people into dugouts? What for?

      The rhetorical question remains "can Russia repeat"?

      Usually they say that, referring to the world war. It turns out

      But money is not blood

      is this just an intermediate stage and is it still supposed to pour blood?
      To be honest, the "program of action" is so unexpected that I even find it difficult to assess. I'm just in a stupor. belay
      1. Bakht Offline Bakht
        Bakht (Bakhtiyar) 25 March 2020 09: 27
        +1
        I suggest. It is not necessary that everything is true. For money there are precedents. That is exactly what I am proposing. Ruble conversion allows you to convert rubles into dollars and export them abroad. In the USSR, the double-circuit principle acted. Rubles were a medium of exchange within the country. Not money, but a medium of exchange. And this allowed to raise the industry. External procurement was commanded by Vneshtorg.
        And yes, I suggest the iron curtain. Since the 90s, Russia has entered the world economic system. With all its cons. Pluses I do not see. In any case, significant advantages. Russia received an outflow of capital, the export of raw materials for a penny (in any case, the price is set on exchanges), crises and sanctions. What's up? Tell me.

        I gave only a possible scenario of action for the States. It is not necessary that it be realized. And if they go to him? Russia exports 5 million barrels per day. The Saudis promised to raise production by 2,6 million. Iraq and Nigeria each by another 1 million. Gulf countries by another 1 million. Is it difficult to replace Russian oil? Like two fingers on the asphalt. And if the States are crushed by themselves and Venezuela, then they are on horseback. And on white, front.
      2. Bakht Offline Bakht
        Bakht (Bakhtiyar) 25 March 2020 09: 30
        0
        I forgot. Across Ukraine. No, I am not suggesting that troops be brought in. I suggest closing this project. Stop funding the "fraternal" regime. And in Syria, it's time for the Syrian army to cross the Euphrates. Namber van's task is to squeeze the Americans out of Iraq and Syria. By the forces of Iranian proxies and the Syrian military. Supported by VKS.
      3. Bakht Offline Bakht
        Bakht (Bakhtiyar) 25 March 2020 10: 14
        0
        With regard to finance and the Soviet financial system, you can see here. And what does ruble convertibility mean? This is the same nightmare that will not allow Russia to rise to its feet. NEVER allow.

        http://www.kara-murza.ru/books/sc_a/sc_a85.htm
        http://www.stoletie.ru/vzglyad/rubl_nalichnyj_i_beznalichnyj_492.htm

        The second feature was principal ruble convertibility.

        To put an end to this chronic disease, stop the plunder of the public domain, it is necessary to prohibit (or at least strictly regulate) the conversion of non-cash and cash.
    3. Alexander Semenov (Alexander Semenov) 25 March 2020 11: 19
      -1
      It is possible, only one thing ... they will do it gradually and at the most critical moment for the Russian economy, while at the turn of 2020-2021 it is unlikely.
      1. Bakht Offline Bakht
        Bakht (Bakhtiyar) 25 March 2020 11: 51
        0
        The total net outflow of capital from Russia for the first time in the history of observations of the country's stock and debt assets has reached record levels. According to Vesti, in particular, with reference to the EPFR Global data, from March 12 to March 18, 2020 it reached the level of 1,4 billion dollars.
        -------
        At the same time, there is a very simple and not expensive way to stabilize the ruble - introduction of restrictions on cross-border capital flows. Capital, walking back and forth across the border, and leads to destabilization of the ruble exchange rate. But this is a taboo thing, a key moment of the Washington consensus, and since neither the president, nor the prime minister, nor any of the ministers at all stutters on this topic, we are in the position of a classical colony that does not even try to dispute this thesis.

        https://svpressa.ru/economy/article/260525/?utm_source=finobzor.ru

        A week ago, there were no signs that foreign capital was about to leave Russian debt securities. And now we see a very serious signal that the likelihood of a negative scenario has increased significantly.

        Interestingly, if this trend was not a week ago, and now it has appeared - there must be some reason? I voiced my version. This is a complete package of economic sanctions.
  2. gorenina91 Offline gorenina91
    gorenina91 (Irina) 24 March 2020 16: 51
    -1
    Why the USA and Saudi Arabia will not be able to create a new cartel

    - But why ... - they can create a "new cartel" ... - It already exists almost unofficially ... - USA + Saudi Arabia ... - And all the "originality" still lies in the fact that this " the cartel "also includes China ... - no, not as a full-fledged member of this newly-minted cartel ... - but as a" calf for the slaughter "... - Yes, the Americans managed to throw the bridle on China's entry into the world ...
    - And the calculation of the Americans ...- is very accurate ... - and while this calculation without failures has consistently begun to be implemented ...
    - And what’s the calculation ...- And the fact that Russia will begin (has already begun) to lose not only its economic dividends, but also ... both political and domestic ...
    - The United States is attacking Russia with all its guns and for sure ... - They saw through and understood the cliche devotion and dependence of Russia on China ... - even in the aspect where Russia can be tough towards China ... -That is . the Americans realized the absolute loss of Russia's will to China (even to the point that Russia is even ready to parody China to please him in everything) and decided to take advantage of it ...
    - Here ... China has just begun the movement of aid towards Italy .., - and Russia is right there ... - they say, and I am ready to support China in its endeavors ...... -And charges as many as 14 air liners to Italy ... - It seems that Russia at its own expense was going to conduct a medical examination for the entire population of Italy ... - It’s a good thing ... to help those in need .. but Russia also made it clear to China that, they say, she was not offended to the fact that China is so tough and insidious and the whole world has officially broken off Russia in the oil / gas direction ... - come on, they say ...- we will help together ...- shoulder to shoulder ...
    - So Russia is jumping on its hind legs and fawning in front of China ... - they say, let's continue to "be friends" ..
    - Well, and will continue to "be friends" (and the Americans have already understood and calculated this) .. And when they start to blame China, Russia will start in every possible way to continue to support and substitute its "gold and currency" shoulder to China ... -Well , but in this situation, such movements are simply destructive for Russia ... - Here the Americans are hitting two birds with one stone ...
  3. Observer2014 Offline Observer2014
    Observer2014 24 March 2020 19: 01
    -2
    Why the USA and Saudi Arabia will not be able to create a new cartel

    Because then in the 80s the United States did not have such a debt! And there were no players like modern China!
    1. Bakht Offline Bakht
      Bakht (Bakhtiyar) 24 March 2020 20: 09
      +1
      And their duty does not bother at all. If there is such a debt, they are going to print either 10 or 12 trillion. After all, someone will need to then hang these trillions. It was 20 trillion, it will be 30. Is there a difference? In my opinion, no.
      Therefore, the conversion of the ruble is the export of capital from Russia. There will be no conversion - there will be no outflow. You can’t take the rubles to the border.