The collapse of oil was just a "dress rehearsal" of the impending collapse


The collapse that hit the energy markets on April 20 was just a dress rehearsal for the global collapse that awaits the entire world oil and gas production industry in the foreseeable future. No negotiations and deals to reduce the volume of raw materials pumped out of the earth’s bowels will no longer help. The impending catastrophe can neither be prevented nor even delayed. You can only survive it ...


General situation


The oil storages of the whole Earth are crowded. In this case, it is not an artistic metaphor, not an exaggeration, but a literal statement of an extremely sad fact. Goldman Sachs Group Inc. estimates that since the beginning of this year, 700 million barrels of “black gold” have already been pumped into them, which no one wants to buy. 250 million barrels today “hangs” across the seas and oceans in the holds of tankers, which, in fact, have nowhere to sail. At least 20 such oil "flying Dutchmen" with 20 million barrels on board drifted off the coast of California, more than three dozen crowded similar poor fellows off the coast of North-Western Europe, more than a hundred in the vicinity of the port of Singapore. The reason for this is not just a fall, but, in fact, a complete lack of demand for hydrocarbons. Rystad Energy estimates the reduction in consumption caused by the global coronavirus pandemic at 20 million barrels per day, and Trafugura at 35. The International Energy Agency says oil demand has fallen by more than 30% from the usual volume.

Among analysts, there is currently only debate about exactly when the tanks “filled under the cork” will take in the last ton, barrel, liter of “black gold”. Frightening forecasts vary slightly. Using satellite imagery data from Oilx oil storage facilities, it takes six weeks to fill them. The same Goldman Sachs is even more "optimistic": three weeks, a month on the strength - that's all. In mid-May, the market will lose the need for another 18 million barrels daily, after which at least every fifth oil rig will have to stop on the planet. But even with this, there will be no shortage in the energy market, at least until June. The restoration of oil prices to real and acceptable positions for exporters may well drag on until the middle of next year. There are still too many “unknowns” for accurate forecasts - everything will depend on the speed of mankind's exit from quarantine and the economic crisis, on the volume and, again, the pace of resumption of transportation, especially aviation. It remains to endure and wait.

Russia


According to the latest information, the president of the country held a special meeting with representatives of the fuel and energy industry, primarily dedicated to the period of “turbulence” she was experiencing. According to Vladimir Putin, the world has not yet seen such large-scale problems that are “global in nature and far go beyond our national borders”. “Something unprecedented is happening with oil,” the head of state admitted. Nevertheless, Vladimir Vladimirovich is set up in the spirit of cautious optimism - he speaks of “reaching agreements and joint work on balancing the market” with foreign partners, and also promises “a number of other solutions” that will allow industry enterprises to develop in accordance with long-term production and investment plans . Russian Minister of Energy Alexander Novak also supports the position of the head of state. According to him, the peak of decline in consumption of "black gold" on the planet is already close and, having passed it, we can say that the worst is behind.

In total, according to Mr. Novak, the average annual decline in oil production in Russia will be no more than 10%. The minister is much more worried about the 30-40% drop in the oilfield services sector, which he considers necessary to be kept fully operational until a new increase in demand and, correspondingly, an increase in domestic energy exports. Alexander Novak is inclined to believe that a certain positive will appear after the first decisive steps taken by European countries to remove quarantine restrictions and the entry into force of the last OPEC + deal, and by the end of this year, a certain stabilization of energy prices can be expected. According to experts, a serious devaluation of the ruble (up to 100-110 per dollar), and, consequently, a significant drop in the standard of living of our citizens can be caused only by the long-term location of the cost of oil in the “zero” or even negative zone, which would lead to an average annual price on it from $ 30 per barrel and below. However, in connection with the world’s beginning to emerge from the period of the most severe restrictive measures associated with the pandemic, the absolute majority of economists consider such a “black” forecast unlikely.

Saudi Arabia


The state, which has embarked on "spite to everyone" to flood the planet with super-cheap oil flows, is today reaping the fruits of its rather reckless actions. In March alone, Riyadh lost its own gold and foreign exchange reserves by a record amount of 2007 billion rials ($ 100 billion) since 27. The country has lost 5% of its own gold and foreign currency reserves, which ultimately decreased to $ 464 billion, which is the minimum amount since 2011. This clearly contradicts the plans and calculations of the local authorities - after all, last week the Minister of Finance of the country, Mohammed al-Jadaan, made a statement that the government intends to spend no more than 2020 million reais of its own “savings” throughout 120. The year is still very far from completion, but the announced figure has already actually gone into attempts to compensate for the decrease in the state’s oil revenues in the first quarter of 2020 by 24% and all others by 17%. For Saudi Arabia, whose budget is dependent on energy exports, perhaps even to a much greater extent than the treasury of our country, the situation looks extremely unfavorable.

Moreover, according to financial analysts, what is happening is only the beginning of problems. In any case, that's exactly what, for example, Bloomberg experts believe, calling the current situation only a “prelude” for Riyadh. In their opinion, the country will also see a reduction in its own savings associated with lower energy prices in the second quarter, when the Saudis will have to “get deeper into their own little pillow” to stabilize the domestic economic situation. However, Saudi Arabia today does not really rely on its own strengths - according to the same Bloomberg, only recently the country has twice entered the international bond markets and gained about 20 billion debts from local and international investors. Apparently, this can not be avoided in the future. In the end, the March expansion into energy markets with an increase in their production to 12-13 million barrels per day and the offer of unheard-of discounts to all buyers is very expensive for Riyadh. One can only hope that the correct conclusions will be drawn from current events there.

Соединенные Штаты Америки


Back in February of this year, the production of "black gold" in the United States steadily kept at around 13 million barrels per day. However, according to the Energy Information Administration (EIA) of the US Department of Energy, this indicator has now begun to decline rapidly - since mid-March, the daily volume has decreased by 1 million, and over the past week it fell another 100 thousand barrels. Most likely, the estimates of the same EIA, which predicted an annual decline in black gold production in the country by 9,5% to 11,76 million barrels per day, followed by a decrease in 2021 to just over 11 million barrels per day, were too much optimistic. Analysts at IHS Markit Ltd believe that literally in the near future, drilling rigs that pump today 1,75 million barrels per day will most likely stop, and in general, the “minus” for the US oil industry will be at least 20% of its recent production. In the meantime, reports have already begun to come about American companies, driven by falling prices to complete ruin. So far we are talking about the "shale" of Whiting Petroleum and Continental Resources. But market experts in the US are already talking about a possible “chain reaction” in the industry.

According to experts of the American analytical and consulting company Rystad Energy, the price of oil from $ 10 and below a barrel will lead to the inevitable bankruptcy of more than 1,1 thousand companies involved in the extraction of hydrocarbons and are now in debt, as they say, "over the ears". Investors, who had so recently admired the prospects of the “oil shale”, are now beginning to shy away from it worse than from the coronavirus. The only hope for salvation for the industry in the country, where they so boast of strict observance of the "laws of the free market", remains government intervention. Washington, it must be said, is reacting rather peculiarly to what is happening - in particular, it became known that the US Futures Commodity Trading Commission announced its intention to initiate an investigation into possible violations of the law on commodity exchanges during the trading on April 20, when the price of May futures on the American WTI reached up to -40 dollars per barrel. However, the government also speaks of some "plans to save oil production." True, what exactly is being discussed is not very clear yet. US Treasury Secretary Stephen Mnuchin, in particular, said he was "exploring the many possible options," noting, however, that "a final decision has not yet been reached." Meanwhile, while debate and consensus-building are ongoing, American oil companies are approaching collapse every day.

Incidentally, according to the same Mnuchin, one of the options under consideration is the provision of federal credit lines to mining companies. However, this will most likely be done in exchange for a significant part of their shares, in fact, for transferring to the state a share of ownership in these companies. It should be noted that the “shale” has practically no other option to get help from the treasury. In terms of their size, they don’t really want to “small business”, to which the White House promises to send quite considerable amounts of support. Has Washington reached the point of nationalization, albeit partial, of its own energy sector? Incidentally, IHS Markit analysts, cited by German Die Welt in their publication on this subject, believe that Russia and Saudi Arabia are much more likely to survive a catastrophic drop in oil prices with minimal (if not critical) losses not only only because the cost of their energy resources is lower than American, and, above all, due to the fact that their mining enterprises are in the hands of the state, and not private owners, in the USA, moreover, are completely dependent on the whims of investors.

One way or another, but ahead of all the states that occupy key positions in world energy markets are extremely difficult times. Each country has its own realities and its “starting conditions” before this, I would very much hope that the last test of strength. To whom and how to manage to get through it, we will know soon enough.
Photos used: Sanjay Acharya / wikimedia.org
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  1. Bulanov Offline
    Bulanov (Vladimir) April 30 2020 11: 17
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    If the summer is really hot, then a lot of electricity will go to air conditioners and refrigerators. And in this case it is better to take it from the thermal power station.
    In Russia: In connection with the fires that have begun, it is necessary to provide fuel for all the Ministry of Emergencies and environmental organizations. With an increase in the number of full-time forest conservation workers, in Siberia and the Far East, the number of people living there can be increased, and they need oil products!
    Finally, it is necessary to start refining oil not only for gasoline, but also for light industry. To produce fabrics and ropes, plastics, composite materials, etc.
  2. Cheburashk Offline
    Cheburashk (Vladimir) April 30 2020 12: 16
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    In fact, we are present at the new reconstruction, I would say, of the world! The financial world, to be more precise. It will be virtually impossible to survive at such a time alone, in my opinion, only alliances of countries, strong alliances, and not their parody, will survive.
    Well, and accordingly, God forbid, how in such cases there may be local armed conflicts!
    1. boriz Offline
      boriz (boriz) April 30 2020 13: 06
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      There will be not strong unions, but currency zones. There will be Yalta 2.0, where the Russian Federation, the USA, China and, in part, India will cut the boundaries of these zones and determine the conditions of the game for the coming decades.
      I wrote about this here more than once and was ridiculed for it. Like, I live in parallel reality. And life, slowly, takes its toll.
      1. Arkharov Offline
        Arkharov (Grigory Arkharov) April 30 2020 18: 30
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        And again ridiculed ...
        1. boriz Offline
          boriz (boriz) April 30 2020 19: 35
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          You’ve already hit, do you want new experiences?
          1. Arkharov Offline
            Arkharov (Grigory Arkharov) 1 May 2020 07: 12
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            If you suddenly me, then where did you go?
            1. boriz Offline
              boriz (boriz) 4 May 2020 11: 31
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              About toilet paper in the USA. You forgot, and the people, judging by the minuses, remember.
              1. Arkharov Offline
                Arkharov (Grigory Arkharov) 4 May 2020 12: 12
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                Can you somehow express your thoughts more clearly? Write only understandable to yourself, and hardly even to yourself, semblance of thoughts. What kind of people is that toilet paper? So, for each of your thoughts, arrange a trial? So I want to say: NULL!
                1. boriz Offline
                  boriz (boriz) 4 May 2020 12: 33
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                  https://topcor.ru/13830-panicheskij-shoping-kak-ssha-ostalis-s-pustymi-polkami.html#comment

                  Read the comments for the post.
                  1. Arkharov Offline
                    Arkharov (Grigory Arkharov) 4 May 2020 13: 00
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                    Didn’t understand what you wanted to say? That a certain number of idiots rushed for some reason to buy toilet paper, after a couple of days leaving them to do it for the meaninglessness of the action? I wonder how many bags of buckwheat buckwheat is in our population? We have not had this and never happen? America collapsed? Some kind of laughter. "Everything is mixed up" in the minds of the near-patriots.
  3. boriz Offline
    boriz (boriz) April 30 2020 12: 41
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    It should be noted that the “shale” has practically no other option to get help from the treasury. In terms of their size, they don’t really want to “small business”, to which the White House promises to send quite considerable amounts of support.

    Why so? It is shale oil that is mainly dealt with by small companies. Often they are just family.
    The only question is: will the USA have enough money in the new conditions to support everything? Yes, and desires. In the context of oil prices many times higher than its cost, who needs this set of unpromising companies. Even if there is a desire to support them, while everyone will be sorted out, companies that do not have a margin of safety will stop oil production. And in the conditions of shale technology, even a short-term shutdown of production will make its resumption unrealistic.
    1. boriz Offline
      boriz (boriz) April 30 2020 13: 01
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      I apologize, oil prices are at times BELOW the cost.
    2. Bakht Offline
      Bakht (Bakhtiyar) April 30 2020 19: 44
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      Shale technology is more flexible than traditional. Resume production can be fast enough. Another thing is that the “shale” has never shown profitability and it will be quite difficult to find investors who are ready to re-invest in this adventure.
  4. boriz Offline
    boriz (boriz) April 30 2020 12: 45
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    And where are the funeral howls, such as: "KSA and the US punished and crushed Russia for its" oil adventure "?
  5. boriz Offline
    boriz (boriz) April 30 2020 12: 58
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    However, Saudi Arabia today does not really rely on its own strengths - according to the same Bloomberg, only recently the country has twice entered the international bond markets and gained about 20 billion debts from local and international investors. Apparently, this can not be avoided in the future.

    Of course, they will ask for a loan. But who will give them?
    I see only one reason why someone will decide to give money to KSA. This: taking advantage of the new financial and other problems of the CSA (which are simple and inexpensive to organize, as I wrote the day before yesterday in the commentary to the post -

    https://topcor.ru/14386-iiss-rossija-provalila-svoju-neftjanuju-avantjuru.html#comment)

    - take control of the country. The Russian Federation with Iran on shares will completely overpower this event. And the United States, by then, will not be able to prevent this. And Israel will have one lesser ally. And them and so, nothing at all.
    1. Bakht Offline
      Bakht (Bakhtiyar) April 30 2020 19: 45
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      I do not think that the Russian Federation or Iran will be able to take control of the KSA. I rather believe in Israel. wassat
  6. Sergey Latyshev Offline
    Sergey Latyshev (Serge) April 30 2020 13: 29
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    For about 30 years, the "impending collapse", about the "impending collapse" .....
    And she’s not bored ...

    But in fact, they write, India is already restarting on a 6-day working day, Yusa is restarting, Italy and France will open cafes and museums, in Russia rumors are the same after the holidays, Belarus and K are generally spitting, and China is rubbing her hands on oil prices and gas ....
  7. T. Henks Offline
    T. Henks (Igor) April 30 2020 14: 41
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    Stupid question of a stupid user: If oil is not needed, why should it be pumped? Do we live in different planes with oil producers? Who is making a fool of? To me, Marx from the three-volume edition Capital whispers about the basic principle of the capitalists about the crisis of overproduction. Or has something fundamentally changed in the world?
    1. Arkharov Offline
      Arkharov (Grigory Arkharov) April 30 2020 18: 32
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      Well, they will pump it less and less. And woe to the one who is obsessed with it ...
      1. Nick Offline
        Nick (Nikolai) April 30 2020 20: 03
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        Quote: Arkharov
        Well, they will pump it less and less. And woe to the one who is obsessed with it ...

        Yes, the Saudis cover.
        1. Arkharov Offline
          Arkharov (Grigory Arkharov) 1 May 2020 07: 15
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          Maybe you are right. And perhaps not only them?
          1. Nick Offline
            Nick (Nikolai) 2 May 2020 20: 07
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            Quote: Arkharov
            Maybe you are right. And perhaps not only them?

            I agree. American oilmen will also have a hard time. It seems that Russia not only defended its oil markets, but also seized others. As of April this year, Russia sold an average of 6,38 million barrels per day on foreign markets. The average daily sales in the previous three months was only 5,07 barrels per day. The growth of April sales to the previous period amounted to as much as 26%.
            Iksperds like Mr. Marzhetsky once again proved their incompetence.
    2. Nick Offline
      Nick (Nikolai) 2 May 2020 20: 22
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      Quote: T. Henks
      Stupid question of a stupid user: If oil is not needed, why should it be pumped? Do we live in different planes with oil producers?

      Oil is needed, but not in the volumes that are produced. Now between oil exporters there is a struggle for markets. And judging by the April data, Russia and its markets defended, and found new ones.
      The physical volume of sales of Russian oil on foreign markets increased, compared with sales in January-March of this year, by 26%, and reached 6,38 million barrels per day, compared to 5 million barrels in the first quarter.
  8. Astronaut Offline
    Astronaut (San Sanych) April 30 2020 18: 09
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    Each gopher in the field is an agronomist.
    How do you want to read normal, knowledgeable in the subject, experts!
    1. Accidentally Offline
      Accidentally 7 May 2020 09: 25
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      Alexey Kungurov - Chelyabinsk .... Once upon a time this was predicted. Waiting for his article.
  9. Maxim727 Offline
    Maxim727 (Maksim) April 30 2020 20: 40
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    The number of unemployed in the United States is growing rapidly, and a person who has lost his job deprives those who served him, and those, in turn, deprive those who fed them. And so on ad infinitum. 10 million American families will not be able to pay the mortgage and banks put them on the street. Real estate prices fall, banks go bankrupt, and then insurers of the banking sector go bankrupt. The fall in prices for all goods - real estate, oil, luxury goods and expensive services leads to an excess of dollar supply within the United States. Will have to withdraw the extra money from domestic circulation, but how?
    Although all these processes are just beginning, we can say that they have not yet begun, but if the first pebble falls, then the avalanche of stones will begin to converge. And everyone understands this and carefully watches every stone at the base of the pyramid, but will they see it?
    Ignoring coronavirus is an attractive idea, but will it work? Maybe yes, maybe not.
    Everything in America now depends on chance, on luck.
    1. Smirnoff Offline
      Smirnoff (Victor) 10 May 2020 08: 07
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      Attempts by the Americans, by the hands of the Saudis, to oust Russia from the oil market failed miserably.
      The Americans were preparing the oil war against Russia, by the hands of the Saudis, long before April 1, when the contract expired between the OPEC + countries.
      The dates of its beginning, they have long agreed with their Saudi puppets.
      Here you have American oil terrorism against Russia in the act of atrocities.
      Russia did not fall apart, but STANDED, and moreover, in the USA there is a collapse of oil industry, which the United States did not even imagine.
      The Americans, building oil plans with the Saudis against Russia, did not take into account the viral epidemic, which was gaining momentum and also helped bring down oil prices, but confused all US oil maps.
      And if it weren’t for the virus, it’s still unknown if this US oil SCAM could help them ruin Russia with low prices for raw materials.
  10. Jack clubs Offline
    Jack clubs (Eugene) 3 May 2020 10: 57
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    Crazy world. Oil has become cheap, and this is the basis of our entire industry and agriculture, and everything is in a panic. How do we breathe and does the river flow for free? But the economy is not collapsing.
    There is even less reason for the collapse of the modern world than for the collapse of the USSR. Poor destroyers are sweating their faces.))) And still implausible.
    1. Smirnoff Offline
      Smirnoff (Victor) 10 May 2020 08: 04
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      The United States has long ruled the territory of the Saudis and cranked up various political, economic, military and espionage SCAMs there for the benefit of the United States, while the Saudis get leftovers from the lordly democratic table.
      The Saudis, following the lead of the United States, were themselves in a deep oil crisis.
      Most of all, in the oil crisis, the United States and the Saudis lost.
      Russia also lost, but not by much, in comparison with them.
      The duration of the crisis will lead to the collapse of the US oil industry and the Saudis, and Russia will emerge from the crisis with less loss.
    2. The comment was deleted.
  11. Smirnoff Offline
    Smirnoff (Victor) 10 May 2020 08: 04
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    The United States and the Saudis DID Russia an oil hole, and fell into it themselves.

    The world oil market today is in a fever due to the fault of the US oil conspiracy and the Saudis against Russia.
    The United States hooked the Saudis with an oil hook and forced them to withdraw from their OPEC + agreements.
    The Americans promised the Saudis to enter the American oil market and, by lowering their oil prices, to gain great advantages over other market players.
    All last year and the beginning of this, the United States put pressure on the Saudis to lower oil prices by raising production to ruin Russia.
    The Saudis really liked the cheap trick offered by the USA and they bought the American trick to enter the American market with cheap oil.
    The largest oil market in the world.

    However, the global coronavirus pandemic has confused the United States and the Saudis with all their insidious oil conspiracies against Russia.