{"id":7456,"date":"2015-04-21T06:00:51","date_gmt":"2015-04-21T11:00:51","guid":{"rendered":"http:\/\/olduvai.ca\/?p=7456"},"modified":"2015-04-21T06:00:51","modified_gmt":"2015-04-21T11:00:51","slug":"saudi-arabias-oil-price-war-is-with-stupid-money","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=7456","title":{"rendered":"Saudi Arabia\u2019s Oil-Price War Is With Stupid Money"},"content":{"rendered":"

Saudi Arabia\u2019s Oil-Price War Is With Stupid Money<\/a><\/h3>\n

Saudi Arabia is not trying to crush\u00a0U.S. shale plays. Its oil-price war\u00a0is with the investment banks and the\u00a0stupid money they directed to\u00a0fund the plays. It is also with the zero-interest rate economic conditions that made this possible.<\/p>\n

Saudi Arabia intends to keep oil prices low for as long as possible. Its oil production increased to\u00a010.3 million barrels per day<\/a>\u00a0in March 2015. That is 700,000 barrels per day more than in December 2014 and the highest level since the Joint Organizations Data Initiative began compiling production data\u00a0in 2002 (Figure 1 below). And Saudi Arabia\u2019s\u00a0rig count<\/a>\u00a0has never been higher.<\/p>\n

\"Chart_Saudi<\/a><\/p>\n

Figure 1. Saudi Arabian crude oil production and Brent crude oil price in 2015 U.S. dollars. Source: U.S. Bureau of Labor Statistics, EIA and Labyrinth Consulting Services, Inc.<\/p>\n

Market share is an important part of the motive but\u00a0Saudi Minister of Petroleum and Mineral Resources Ali al-Naimi recently\u00a0emphasized<\/a>\u00a0that\u00a0\u201cThe challenge is to restore the supply-demand balance and reach price stability.\u201d\u00a0Saudi Arabia\u2019s need for market share and\u00a0long-term demand<\/a>\u00a0is\u00a0best met with a growing global economy and lower oil prices.<\/p>\n

That means ending the over-production from tight oil and other expensive plays (oil sands and ultra-deep water)\u00a0and reviving global\u00a0demand by keeping oil prices low for some extended period of time. Demand has been weak since the run-up in debt and\u00a0oil prices that culminated in\u00a0the Financial Collapse of 2008 (Figure 2 below).<\/p>\n

 <\/p>\n

…click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

Saudi Arabia\u2019s Oil-Price War Is With Stupid Money Saudi Arabia is not trying to crush\u00a0U.S. shale plays. Its oil-price war\u00a0is with the investment banks and the\u00a0stupid money they directed to\u00a0fund the plays. It is also with the zero-interest rate economic conditions that made this possible. Saudi Arabia intends to keep oil prices low for as […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,3],"tags":[4866,4867,589,3102,595,2121,596,701,846,1940,1939],"class_list":["post-7456","post","type-post","status-publish","format-standard","hentry","category-economics","category-energy-2","tag-dumb-money","tag-investment-banks","tag-oil-demand","tag-oil-market-share","tag-oil-production","tag-oil-rig-count","tag-oil-supply","tag-saudi-arabia","tag-us-shale-oil","tag-zero-interest-rate-policy","tag-zirp"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/7456","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7456"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/7456\/revisions"}],"predecessor-version":[{"id":7457,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/7456\/revisions\/7457"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7456"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7456"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7456"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}