Member Info for Genghis15

TBC my post responded to "Russians will be back in discussions soon enough. "

Don't bet on it.

It's possible, but there are a number of dynamics here and the clear economic imperaitive is only one of them.

The relationship between MBS and Putin is clearly strained, and may not mend overnight. The price war is not only born out of frustration with Russia, or shale, but also at KSA shouldering the cuts while other OPEC, and non OPEC, openly cheat on their quotas. Having started this, I suspect KSA wants Iraq, Kazahks, and others to feel the pain, and come back to the table with tails between legs.

I don't know how long that will take, could be a couple of weeks, couple months is my bet, but it could easily be longer. At some point physical storage capacity will become an issue, but if we get to that point, the storage overhang will weigh on price for years.

There is no reading the minds of the unhinged, and too many of those are in leadership positions at just the wrong time.

"there is likely to be a global recession on the horizon"

Likely? Horizon? It's not on the horizon, its here and now, and its not "likely", its happening. The big job for governments now is to avoid it being a depression.

https://twitter.com/aeberman12/status/1239531508530130946?s=19

Sounds hugely over optimistic to me.

All we can say is that on current supply/ demand dynamics oil could be virtually worthless by April.

So it all depends on politics, which leaves us all in the dark.

Who knows, but of course MBS will have to change course at some point.

The article is paywalled so I can only c the 1st para, but it can easily b guessed at.

Just a Q if how much pain the JSA wants to inflict b4 it changes course.

Actually that's an interesting point.

I dont think 4 a minute KSA would allow a public health risk to stop oil production.

But, if suddenly they decided that their strategy was backfiring and they needed to stop filling the stockpiles it might be the perfect excuse.

And now this ...https://twitter.com/JavierBlas/status/1238582430275166208?s=19
Sounds extreme, but....really, 10m bd even for a short period?

Storage will surely run out.

It appears, if this article is accurate, that strategic matters apart, there are personal elements to this, which of course makes it harder to mend fences and allow commonsense to return.
Not good news, I'm afraid.
Eight days that shook the oil market — and the world - https://giftarticle.ft.com/giftarticle/actions/redeem/6b0d35fb-f97f-4a38-849e-58279dc8dc35 via @FT

This estimates global demand decline at 4.5m bd.

https://twitter.com/JavierBlas/status/1238461345978294278?s=20

On top, we have the KSA and others readying to pump at least an extra 3m bd. That's a hell of a lot of overproduction, and I'm still not sure either Brent or share prices have it all factored in.

Shale not as hedged as thought, either, it seems.
https://www.reuters.com/article/global-oil-hedges/us-shale-companies-hedges-were-inadequate-for-oil-price-crash-idUSL4N2B255X

daltry
Of course I understand. My point is you don't do that until you know what you're producing, for a good way into the future.

HUR only ramped up to 20k bpd a short time ago, so could not know how much thy woud be producing until very recently. Add to that that in many eyes this an unproven reservoir, etc, etc.....and it seems to me unlikely you would want to hedge something you might not have.

LW, no, not you,. But a no of posters both on this thread and others saying the BoD/Stobie should have hedged.

FFS, t makes no sense hedge future production until you have high confidence its gonna happen ; there is a cost to buy a hedge. Secondly, it is a perfectly sound strategy to decide NOT to hedge ; if pOo had leapt to $100 and we were hedged at $60 the same people would be shouting loudest.

The Bod takes these decisions on our behalf, and should not be criticised with the benefit of hindsight, especially in this case where te option was probably not really open anyway.

yes, Iraq, long the biggest Quota cheaters, wre the first to squeal to KSa, to little avail as yet. I am sure the KSA will want to see its fellow OPEC members feel the pain for a while before agreeing to return to quotas. It is not only shale, or Russia, that will get punished here, and one has to assume this to be part of KSA strategy. Just bcos MBS id headstrong, brutal, and somewhat impulsive, doesn't mean he hasn't a serious strategy.

I rarely swear on the bb, but this thread really tests patience. Hedging has been spoken of mANY TIMES. only yesterday I posted in answer to whether HUR had hedged
"The answer is we don't know.
But it would be surprising if any significant hedging was in place given that we have only last week been told production is up to 20k bpd ; I can't see any CFO hedging production if the capability has not yet proved itself."

Few would advocate hedging at these levels.

Excuse me, but....FFS.

This supposed to be an investment bb, not a platform for conspiracy theories. Dean Koontz, ffs. It'll be Nostradamus next, then David Icke.

LW
The problem is we are in uncharted territory. There are knowns wrt the oil price requirements of KSA and Russia, but they are not absolutes, and both countries have substantial reserve buffers. And whilst Putin can at least be rational and patient if necessary, MBS seems impulsive and unpredictable.

The CV makes this the worst time to launch a price war, just as demand is plummeting, and the timing of recovery unknown.

All we can say for sure is that at some point Cv will recede, and the game of bluff will be resolved. I rather suspect the bluff will carry on for a few months at least, long enough for shale to decline significantly, and for the serial quota c.
cheaters in OPEC to feel the pain (as Iraq seems to be doing already)

When the squealing gets loud enough, KSA and Russia will come back to the table.

However, there are other actors involved, which adds a number of unknowns ; What might the Donald do in an election year, if shale collapse hurts his support? Tax Saudi crude? Whisper in MBS' ear? Pour crude into the SPR?

Not to mention, in Rumsfeld's infamous words, the "unknown unknowns". Sorry, I don't know what they are.....

Given some of the posts here today either ignoring the VERY serious double whammy to the oil price, or OTH forecasting total wipeout, the OP here is looking one of the more sensible ones.

The answer is we don't know.

But it would be surprising if any significant hedging was in place given that we have only last week been told production is up to 20k bpd ; I can't see any CFO hedging production if the capability has not yet proved itself.