The Saudi’s and Russians will max their output in April. This is when low oil prices will be tested again along with lower oil stock prices. What will the oil industry look like in 1 year if the market remains flooded with oil? Should the oil industry have anticipated Putin would not continue helping American frackers by cutting his own countries production?
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These market shakeups happen from time to time. Clears out the deadwood. Like a forest fire. Redwoods survive but underbrush burns.
Besides, MSB won’t let dotard pull out the Navy.
Nah, if the U.S. pulls out its navy, it loses significant leverage in the Middle East creating a vacuum that China will gladly fill, as it furthers its geopolitical goals while guaranteeing its supply of cheap oil.
Want to get the oil price up? Trump gives the order to pull all US Navy ships out of the Arabian Gulf. Iran starts to cause trouble with the tankers so owners refuse to let them sail in the Gulf. Saudi can't export its oil. Oil price rockets. Happy days are here again....
Key oil metric for the oil industry will not be ROCE but Free Cash Flow at $30/b; at $20/b; at $15/b
Saudi Arabia and Russia will crush the American petroleum industry if we do not find a legal/acceptable way to restrict our oil production as our Contribution in the effort towards price support . They can and will devastate the American oil and gas. It’s neither a bluff nor a ploy, it’s just international business.
Laws can be changed
“American oil and gas producers need to form a consortium, and come to the table offering to manage US oil production to assist in supporting reasonable market prices for oil.”
That would be a great idea if it wasn’t illegal af. Oh who cares, there are no more rules and laws in this dying country, Dotard and his stupid cult saw to that.
If non oil stocks return to prior highs after C-Virus dies down will anyone care what happens to the oil industry? Our industry typically does not get much sympathy or support. Yet people enjoy our dependable inexpensive energy product.
So in response to no production restrictions for a full year: So no production curtailments until March 2021 result: an American economic disaster of epic proportions.
There will serious carnage if they over supply the market by ~2 MM BPD. If they let it rip and over supply by 3 MM BPD they will literally crush 75% of the US oil industry, many independents, smaller majors and numerous service companies will be dead and buried. Only a select few majors will survive and that may take governmental intervention on a grand scale. Banks hold the cash and therefore the key to anyone seeking to borrow to sustain operations, or buy out a competitor or negotiate new terms for debt repayment.
O&G debt is at record breaking levels. Banks will be very reluctant to loan big money, they will urge M&A and try to wheel and deal themselves in favorable terms within new arrangements to save some portion of their current debt holdings. There will be a ton of idle iron in the Permian and unemployment will skyrocket. Crime will skyrocket too. The used car lots will be full, lifted trucks will be on sale and the pawn shops full of gear. Home prices will drop big time.
By the way there is no war between Putin and MSB; its a well coordinated strategy aimed directly at the US Shale revolution and by most reasonable assessments it will be tremendously effective. The arrival of the corona virus provided a fantastic opportunity to take advantage of in the form of low demand. It will be sad to see and tough to live through but their timing is perfect.
Lets hope it doesn't last nearly a year for everyone's sake. American oil and gas producers need to form a consortium, and come to the table offering to manage US oil production to assist in supporting reasonable market prices for oil. If America does not find a way to contribute to the give and take currently being managed by OPEC + then Russia and Saudi Arabia have little reason to play nice. They could also be using this to pressure Trump to make concessions so that the economy is not in the toilet when he is trying to get re-elected. Or they may want to see him out of office altogether. Could be this is part of something bigger than just a petroleum issue. Will be a interesting summer and fall for sure.
They will hurt us but I think at the end Russia and Saudis will hurt way more...
I can’t wait for 99 cent gasoline. I have a full summer planned for touring the US in my brand new motor coach.
The market will also be flooded with laid off Chevroids.
Impact to oil industry will be bigger then 2015-16.