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Originally Posted by DiracSpike
Tough to overstate how awful this news is. Opec+ breaking up is worse than anyone’s expectations for worst case scenario. Shale production was already slowly turning over as banks put the squeeze on for profitability and the Permian became more consolidated with large companies, but it sounds like the Russians are pissed and want to take a blowtorch to American interests instead of being patient. The ironic thing is the first price war didn’t kill shale, and that was when it was a bunch of scattered no name producers. Now that it’s mainly big companies like Exxon and Chevron it’s going to take longer to inflict the kind of damage the Russians are looking for, meanwhile everyone else including them and Saudi are going to get dicked on the price. Millions of barrels are going to be added to the market while millions are coming off from demand losses, it looks like it could be one of the biggest shocks in the history of the oil market. The consequences will be awful here. We’re gonna see more layoffs, more decline in property values, more people leaving the province. This even increases the risk on TMX and keystone getting built too. This is just a brutal brutal development and it’ll only end when Russia and Saudi both come to their senses, who knows when that will be.
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The one potential positive is this will let the market see what Saudi Arabia actually has for capacity if this goes on for very long. If it turns out that number is actually 10.5 mmbbl/d instead of the 12.5 mmbbl/d they claim they have, that would be supportive in the long run.