Oil is moving to 20's level, tough time for American oil stocks...

The Saudis are not going to stop till 1/2 the US production shuts down. That may be at $10-20
They could care less if they cause a worldwide recession, they are looking at a 20 year plan to stay on top.
Remember their cost for well already tapped is $5 so even if it reaches $10 they are still making 100% markup

So now that oil is 1/3 the price it was 18 months ago have they captured 3x the market share? Probably not but once the squeeze out the US oil producers they will allow price to rise again, then rinse and repeat as many times as needed.
 
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Chubbly said:
So now that oil is 1/3 the price it was 18 months ago have they captured 3x the market share?
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Not even close but they(Saudis) HAVE lost 2/3 of their former revenue stream. In all likelihood, weaker shale players will be absorbed by stronger players at firesale prices. Either that or an oil industry bailout ala auto industry 2008. Either way, once prices rise appreciably, shale becomes economically viable again. I simply don't see any genius in Saudi's strategy, unless the motive is some other reason (Iran, dissolve OPEC, Russia, etc)
 
bh_prop said:
Not even close but they(Saudis) HAVE lost 2/3 of their former revenue stream. In all likelihood, weaker shale players will be absorbed by stronger players at firesale prices. Either that or an oil industry bailout ala auto industry 2008. Either way, once prices rise appreciably, shale becomes economically viable again. I simply don't see any genius in Saudi's strategy, unless the motive is some other reason (Iran, dissolve OPEC, Russia, etc)
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Yes, you are right. As soon as oil hits 50-60 all those shale producers are going to start popping up again. The Saudis will let that happen for then then crash it down again and keep repeating these 3-5 year cycles of price crashing trying to hurt competition.
You have to remember they look at this from a 30-50 year plan to get the most $$ out of their oil reserves over that time. But the flip side is that companies only have to remain in business and pay their bills compared to Saudi that have to fund the revenue for an entire country.
There is a chart showing if they hold 35$ that the country will go bankrupt in 6 years if they maintain spending. We can already see they are cutting domestic spending and considering an IPO so we know they are hurting, but they can maintain it for longer. This has likely gone on longer than they thought it would. But remember they drove it right down to $10 when the wanted to squeeze out Venezuela back in 1998

Regardless, not sure why the US considers them an ally when they are trying to sink the US economy
In the US they would have been charged for predatory pricing.

Also remember that when comparing oil prices today to 12 years ago does not take into account inflation so in reality it is already much lower in comparison to 2003
 
Chubbly said:
Regardless, not sure why the US considers them an ally when they are trying to sink the US economy
In the US they would have been charged for predatory pricing.
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sinking oil competitors is not the same thing as sinking the US economy."predatory pricing" is not illegal per se in the US. the statement is nonsensical,
 
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zdreg said:
sinking oil competitors is not the same thing as sinking the US economy."predatory pricing" is not illegal per se in the US. the statement is nonsensical,
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Predatory pricing (also undercutting) is apricing strategy where a product or service is set at a very low price, intending to drive competitors out of the market, or createbarriers to entry for potential new competitors. If competitors or potential competitors cannot sustain equal or lower prices without losing money, they go out of business or choose not to enter the business. The predatory merchant then has fewer competitors or is even a de facto monopoly.

In many countries predatory pricing is considered anti-competitive and is illegal under competition laws. It is usually difficult to prove that prices dropped because of deliberate predatory pricing rather than legitimate price competition. In any case, competitors may be driven out of the market before the case is ever heard.
 
Regardless if it is legal or not. They wont stop till US oil production is cut by 50%
I do think they are proving harder to snuff out than they thought.

So i am thinking prices will stay low and go lower
 
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