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Page added on November 25, 2018
Does The US Really Need Saudi Oil?
“Saudi Arabia — if we broke with them, I think your oil prices would go through the roof. I’ve kept them down,” President Trump told reporters on Tuesday. “They’ve helped me keep them down. Right now we have low oil prices, or relatively. I’d like to see it go down even lower — lower.”
Oil prices have indeed fallen significantly in recent weeks, and to be sure, Saudi Arabia has played a large role in that. Saudi production reportedly hit a record high 11 million barrels per day (mb/d) at times this month, and global inventories are rising once again.
But Riyadh is also clearly upset at being “duped” by Trump. Having been convinced by the Trump administration that Iran’s oil exports were heading to zero, or at least close to zero, Saudi Arabia ramped up supply to offset the losses.
The U.S. then surprised the market by issuing a bunch of waivers, allowing Iran to continue to export oil. Japan and South Korea may even resume buying oil from Iran in January, after cutting imports to zero in anticipation of sanctions.
Almost immediately after the waivers were issued, oil prices crashed. Saudi Arabia then promptly announced that it would cut production by 500,000 bpd in December, and the rumors of an OPEC+ cut really began to pick up.
Trump is happy about the slide in oil prices, but Saudi Arabia clearly isn’t. Saudi Arabia and its OPEC+ partners could soon take action to push prices back up. So, it isn’t clear that Washington and Riyadh have the same objectives, or that their tight relationship is resulting in lower oil prices.
More to the point, however, is the odd belief in Washington that the U.S. needs to keep Saudi Arabia close in order to keep the oil flowing. Trump said that oil prices “would go through the roof” if he broke with them. The U.S. has coddled the Saudi monarchy for decades, and only very recently, with the murder of Saudi journalist Jamal Khashoggi – likely at the order of crown prince Mohammed bin Salman – has the American foreign policy establishment finally begun to reevaluate the wisdom of the relationship.
The murder has put the focus on Saudi atrocities. Earlier this week, the Wall Street Journal reported that Saudi security forces jailed and tortured women’s-rights activists, even as the world gushed over the decision from crown prince Mohammed bin Salman to allow women to drive.
Whereas past U.S. presidents, from both parties, maintained a close alliance with Riyadh in the face of horrific human rights abuses, using varying explanations of security and cooperation, the Trump administration is more brutally honest in its transactional approach. Trump talks about how the U.S. makes billions off of weapons sales, while also enjoying lower oil prices. Related: The Oil Industry Is Facing A “Capex Conundrum”
But that last point, which is arguably considered conventional wisdom in Washington, doesn’t really add up. While the U.S. imported 1 mb/d from Saudi Arabia in August (a figure that has fluctuated over time but is down from between 1.5 and 2 mb/d in the mid-2000s), it doesn’t really matter. The precise volumes of oil the U.S. imports from Saudi Arabia isn’t relevant.
What if the U.S. did break with Saudi Arabia? What if the U.S. condemned MbS, and took more punitive action towards Riyadh? Or, more significantly, downgraded the alliance with Saudi Araba?
The fear implied in Trump’s comments is that Saudi Arabia would somehow restrict exports to the U.S., a nonsensical scenario. Even if Saudi Arabia restricted shipments to the U.S., the oil would still flow elsewhere. Crude oil is a “fungible” commodity, in the jargon, which is to say that oil would still find its way to the U.S. If Saudi Arabia sent all of its oil to China instead of the U.S., that would simply displace oil heading from, say, Iraq to China. That Iraqi oil would then shift back to the U.S. and the end result would be minimal.
What if Saudi Arabia decided to significantly cut production in order to jack up prices in retaliation for punishment from Washington? That’s possible, in theory, but it would also be hugely painful to Saudi Arabia. Cutting production and exports would reduce sales for Saudi Arabia; higher prices would ignite an even stronger response from U.S. shale; higher prices would aid Iran (Saudi Arabia’s enemy); and higher prices would also put pressure on the U.S. to issue more waivers on importing oil from Iran in order to relieve market pressure. All of this would be hugely negative for Saudi Arabia, and that is even before we consider the fact that an oil price spike would accelerate the long-term switch off of oil and bring on peak oil demand faster. As Liam Denning put it for Bloomberg Opinion, using “the oil weapon would be a self-own of colossal proportions.” Thus, it simply wouldn’t happen.
Yet, U.S. politicians are dominated by this line of thinking. “I’m not going to tell a country that is spending hundreds of billions of dollars and has helped me do one thing very importantly — keep oil prices down so that they’re not going to $100 and $150 dollars a barrel,” Trump told reporters. “Right now we have oil prices in great shape. I’m not going to destroy the world economy, and I’m not going to destroy the economy for our country by being foolish with Saudi Arabia.”
He went on to add: “If you want to see oil prices go to $150 a barrel — like, by the way, Russia would love to see that — all you have to do is break up our relationship with Saudi Arabia.” Bloomberg Opinion called it “Trump’s Stage-Five MBS Clinging.”
For emphasis, Trump reiterated this position early Thursday morning on twitter.
“It’s a mean & nasty world out there, the Middle East in particular. This is a long and historic commitment, & one that is absolutely vital to America’s national security.” @SecPompeo I agree 100%. In addition, many Billions of Dollars of purchases made in U.S., big Jobs & Oil!
— Donald J. Trump (@realDonaldTrump) November 22, 2018
Saudi Arabia desperately needs the U.S. for security, weapons and as a massive consumer of crude oil (Saudi Aramco also owns the largest oil refinery in the U.S., the Motiva facility in Port Arthur, Texas). For some reason, American officials have long thought that it is Saudi Arabia that holds all the cards.
By Nick Cunningham of Oilprice.com
87 Comments on "Does The US Really Need Saudi Oil?"
onlooker on Mon, 26th Nov 2018 3:10 pm
Juan your right on the mark. The imperial aspirations of the US, have been plainly documented via the Net for any who wish to know. And their cruel and destructive tactic as well. Perhaps it helps you and me Juan, that our race is not white and our ancestry is from another country. In my case, Colombia S.A. My parents came in the 1960’s.
I AM THE MOB on Mon, 26th Nov 2018 3:37 pm
Tesla Owner Waits Nine Months On Body Shop
https://www.citynews1130.com/2018/11/23/surrey-tesla-owner-still-waiting-for-repairs-nine-months-after-accident/?fbclid=IwAR3plp8wgxGZ_Rq4hECCbB65Dnl70dtF605dALv61sNSPx-NzrZtZ6ZDBcc
https://media.giphy.com/media/2Y8Iq3xe121Ba3hUAM/giphy.gif
I AM THE MOB on Mon, 26th Nov 2018 3:47 pm
Dead: Chevrolet Volt
https://jalopnik.com/general-motors-may-kill-the-chevrolet-volt-1830653844?fbclid=IwAR3yWNK2PgefUtqArFtSzDzXqsbjKoaNa1ahAskN0vOEPxgygLA6Lib8Oe8
Davy on Mon, 26th Nov 2018 4:12 pm
Onlooker, it is more complicated than cheerleading JuanP style. You guys want a nice and simple villian. I can see right through the bias and hypocrisy. Besides, these nationalistic cheerleading games are so lame. Ask JuanP to give you a “Go Russia” chant.
onlooker on Mon, 26th Nov 2018 4:34 pm
Agreed that our situation, how we got here and what is happening involves more than just the US. It is a worldwide ongoing catastrophe. But, my research points to a particularly pernicious influence by institutions of the US especially the Military and the Intelligence agencies. I think this is pretty indisputable. I do not like to get into the personal squabbles and petty bias stuff. I just about to agree with the statement of Juan. Can we try and find points of agreement and let go of the ongoing dumb feuds. I find it a privledge to be able to talk about all this rather than having to live very bad experiences many are going through now in the planet.
Davy on Mon, 26th Nov 2018 4:51 pm
Onlooker, the squabbles turn into personifications of national and global problems. With extremist like Juan it is all or nothing positions. If I show bias here it is to deal with these extremist positions not because I like it. When you take sides you enable this bad behavior. If you haven’t noticed these extremist love squabbles because it promotes their extremism.
I AM THE MOB on Mon, 26th Nov 2018 5:27 pm
DONALD TRUMP’S DISAPPROVAL RATING HITS ALL-TIME HIGH
https://www.newsweek.com/disapproval-donald-trump-hits-all-time-high-rising-midterm-election-latest-1232037?utm_source=newsweek&utm_medium=push_notification&utm_campaign=onesignal
I AM THE MOB on Mon, 26th Nov 2018 6:00 pm
Someone did this to Melania Trump’s creepy Christmas trees
https://imgur.com/a/6gXihM7
makati1 on Mon, 26th Nov 2018 6:20 pm
Davy, you are such a hypocrite and liar! YOU started the vicious putdowns years ago and still pursue them. Denying it does not change the fact.
They will continue as long as you keep doing it here. You are a delusional, bloody flag waving, terrorist empire supporter. The sooner that empire is destroyed, the better for the rest of the world. I hope it is soon. It is well deserved.
Davy on Mon, 26th Nov 2018 6:25 pm
billy, you are responsible for the extremism that has caused most of the board hostility. You have been asked multiple times to moderate your hate but you have no interest in cooperation. You are a narcissist preaching a personal message and uninterested in the truth. I am not the only one to bring this up.
“bloody flag waving, terrorist empire supporter.”
graphic exaggerated words of an extremist
makati1 on Mon, 26th Nov 2018 6:34 pm
USA Today in the news:
“The Two Paths to Collapse” (Slow and then sudden)
“Here We Go Again: US Accuses Iran Of Hiding Chemical Weapons” (Shades of Iraq!)
“Bolton to meet with Brazil’s far-right elected leader next week. Mission? To confront Cuba”
“Revenge Is Mine Saith Washington” (What Constitution?)
“All U.S. Gov’t. Accusations Against Russia’s Gov’t. Are Lies” (Propaganda)
“How Social Media Is Becoming an Arm of the State” (Police State America)
“Thoughts From The Precipice — Things are worsening. But we’re not over the edge quite yet.”
“Constitutional questions emerge about expanding role of troops on US soil” (Not legal!)
“U.S. impacts of climate change are intensifying, federal report says”
“438 Stocks on the NYSE Have Already Plunged 40%-94% from 52-Week Highs” (And going down…)
“If we’re headed for regime change in Iran, get ready for a military draft. We’ll need one.”
http://ricefarmer.blogspot.com/
Slip slidin’…
makati1 on Mon, 26th Nov 2018 6:39 pm
WOW! Your hypocrisy is so fucking blatant, even the dumbest reader here cannot help but see it. It shows in red neon flashing 100 feet high saying: “I am a liar and a delusional, immature, bully, and support my terrorist, plundering, baby-killing country 100%!”
Well that country is going down, Davy and so are you. Trying to cover up all of your past bullshit, lies and bullying with a few words now does NOT change anything. You are still the person described above and deserve what is coming.
makati1 on Mon, 26th Nov 2018 6:41 pm
““bloody flag waving, terrorist empire supporter.”
!00% accurate in ALL areas, Davy. 100%
makati1 on Mon, 26th Nov 2018 6:45 pm
“I am not the only one to bring this up.”
OK Davy, give me examples of others here who agree with you, other than your sock puppets. I’m waiting. I have not read ANY serious disagreement in years. Intelligent people see you for what you are Davy. An immature, delusional bully who supports the murdering, terrorist country called the USA.
I AM THE MOB on Mon, 26th Nov 2018 6:49 pm
Mak I think its past your bedtime and your depends need changed..You are getting crabby..
Davy on Mon, 26th Nov 2018 7:03 pm
billy listen to MOB, you are acting strange.
Эй, братья, пожалуйста, ударьте антиамериканскую собаку, которую я сделал из гранитного форума on Mon, 26th Nov 2018 7:28 pm
aswange is your insanity getting worse? holidays are bad and your bfs provide no substitue to family
Эй, братья, пожалуйста, ударьте антиамериканскую собаку, которую я сделал из гранитного форума on Mon, 26th Nov 2018 7:30 pm
ukraine decided that putin going the way of czar. so much for PBBM which will soon be PBB
makati1 on Mon, 26th Nov 2018 8:11 pm
Davy and his sock puppets braying. Get a life guys. Your delusional insanity is showing, along with your jealousy of my safe, comfortable situation/lifestyle.
Sunny and 83F this Tuesday morning. A nice breeze and a walk with the dogs coming up. Nice to be retired and independent (free) something you all will never have/know. The USS Debt is going down. Jump ship now before the doors close forever.
“Hey, brothers, please strike the anti-American dog I made from the granite forum” – Google trans of the latest sock puppet’s handle. LOL
I AM THE MOB on Mon, 26th Nov 2018 8:12 pm
How a Real Civil War Between Rich and Poor Could Actually Happen
https://www.vice.com/en_us/article/d3qqpk/how-a-real-class-war-like-with-guns-could-actually-happen
I AM THE MOB on Mon, 26th Nov 2018 9:21 pm
Mak
China has over three times as much debt as the US..And the US has the worlds reserve currency..And China is going to collapse when the oil shortage hits..
You are so ill informed..A total duffus..
Cloggie on Mon, 26th Nov 2018 9:43 pm
“How a Real Civil War Between Rich and Poor Could Actually Happen”
Holland, 4:22, another day, another post.
Vice: “if the capitalist class continued to be overwhelmingly white, a working class uprising several decades from now—when, as we’ve established, the working class will be predominantly Americans of color—might look an awful lot like a race war.”
Decades?
CW2 will be fought over identity, not capitalism.
And forget about “10% gdp chopped of because of CC”. Loss of reserve currency alone is 35-40% gdp. Factor that in for the next decade and then you have your Yugoslavia. The real reason for armed conflict will be the consequence of half a century unprecedented intentional third world immigration, intended as warfare against white America.
I AM THE MOB on Mon, 26th Nov 2018 10:11 pm
CLogg
The dollar will never be replaced..And the US is nothing like Yugoslavia..You are comparing apples to rocks..
George Soros warns the European Union is on the brink of collapse — and Trump is partly to blame
https://www.businessinsider.com/george-soros-president-trump-eu-collapse-2018-5
What are you going to do clog when the global oil shortage hits soon? Europe is the worlds second largest oil importer?
Peak Oil & Drastic Oil Shortages Imminent, Says IEA
https://cleantechnica.com/2018/11/22/peak-oil-drastic-oil-shortages-imminent-says-iea/
Raising the fuel price just a few percent created riots in Europe..Just wait till the price sky rockets and the people find out we are running out of oil and their kids are going to starve..
It wont be pretty..
I AM THE MOB on Mon, 26th Nov 2018 10:12 pm
Limits to growth had 12 models. One of those models, the “standard run” or, alternatively, the “business as usual” model was the one that 40 years of historical data has tracked/followed. And according to that model the global economy will collapse by 2030.
https://www.scientificamerican.com/article/apocalypse-soon-has-civilization-passed-the-environmental-point-of-no-return/
https://www.smithsonianmag.com/science-nature/looking-back-on-the-limits-of-growth-125269840/
https://www.scribd.com/document/379418787/Is-Global-Collapse-Imminent-An-Updated-Comparison-of-The-Limits-to-Growth-with-Historical-Data-Turner-2014
Cloggie on Mon, 26th Nov 2018 10:32 pm
“What are you going to do clog when the global oil shortage hits soon?”
Install more wind turbines and solar panels and heatpumps and save massive energy with autonomous car sharing and working online from home.
“Raising the fuel price just a few percent created riots in Europe”
Every French president had to deal with these kind of brutal riots.
France: western Europe’s own USSR.
makati1 on Mon, 26th Nov 2018 10:58 pm
MOB, “You are so ill informed..A total duffus…”
No, that is not accurate in your case nor mine. I post stats from many reliable sources that prove my assertions and you post unsubstantiated bullshit because you know that I am correct.
EVERY article posted online rates the US as NUMBER ONE in Total debt, yet you insist that they are all wrong and you, a couch potato, uneducated, snowflake in 3rd world America are correct. Such arrogance! You are scared shitless and in deep denial.
“#20 The U.S. has accumulated the biggest national debt that the world has ever seen and it is rapidly getting worse. Right now, U.S. government debt is expanding at a rate of $40,000 per second.”
http://theeconomiccollapseblog.com/archives/number-one-20-not-so-good-categories-that-the-united-states-leads-the-world-in
“The United States is the world’s largest economy and it also has the highest level of national debt.”
https://learn.stashinvest.com/10-countries-with-largest-national-debt-to-gdp
US Total debt today: $71.6 Trillion plus. Or, $217,000+ for each man, woman and child in the US. Not to mention another $58,000+ in Personal debt for every man woman and child in the US.
http://www.usdebtclock.org/
http://www.usdebtclock.org/world-debt-clock.html
http://www.worldometers.info/world-population/china-population/
National Debt of China: ~$2,414 Billion divided by 1,417 billion people = $1.70 owed by each person in China. Do the math, if you are able.
To have equal total debt that the US has per capita, they would have to owe 10,000 times their current debt or about $24,240,000,000,000,000. or more than the total debt of the planet. Do you think before you spew MOB? It doesn’t appear so.
makati1 on Tue, 27th Nov 2018 12:16 am
Oops! Math error! Comma should have been a period in the Chinese population number.
” = $1.70 owed by each person in China…”
Should read: ” = $1,700 owed by each person in China…”
But that is still a lot less than $217,000+ per person in the US.
“To have equal total debt that the US has per capita, they would have to owe more than 127 times their current debt or about $260,000,000,000,000. or more than the total debt of the planet.”
There, corrected. Still proves my assertion.
Davy on Tue, 27th Nov 2018 5:01 am
“Install more wind turbines and solar panels and heatpumps and save massive energy with autonomous car sharing and working online from home.”
neder, this will help but it likely won’t save you. You have a long way to go and the hardest part is ahead just as your economy is stalling out.
Davy on Tue, 27th Nov 2018 5:36 am
“EVERY article posted online rates the US as NUMBER ONE in Total debt”
Well, sure billy the US is the largest economy. It does not have the largest debt to GDP. Europe taken together has close to the amount the US has. Most US debt is held by the US. Yet, total public and private debt is huge for China but you never talk about that. I have a summary at the bottom of this comment. Some estimates put the number at between 200%-350% of GDP. Many agree that Chinese official figures are useless getting at the real picture. Yes, much of this is held in China but it represents a huge systematic risk. BTW the world owes the US 9,454BIL and the US owes the world 6,003BIL in “monies”. (see graph bellow)
“$63 Trillion of World Debt in One Visualization”
https://tinyurl.com/y79hydsg
(graph) https://tinyurl.com/y8uw5ysj
“Visualizing Who Holds U.S. Debt Internationally”
https://tinyurl.com/y83wlwl6
(graph) https://tinyurl.com/ybx4dmfq
“Total debts $19,597.8 Debt held by the public $14,202.1 Intragovernmental debt $5,395.7 Foreign/International $6,154.9”
“China’s Debt Bomb”
https://tinyurl.com/yazt2nlk
“Mckinsey came out with a widely-publicized estimate of China’s debt at the beginning of 2015. Using figures up to Q2 2014, they estimated that total Chinese debt was 282% of GDP, an increase from 158% in 2007. Since then, various trusted organizations have come up with follow-up estimates. On the low end, Goldman Sachs came out with an estimate in January 2016 of 216% total debt-to-GDP for 2015. (A few months later, they put out a separate report saying that total debt-to-GDP was estimated to be closer to 270% for 2016.) On the high end, Macquarie analyst Viktor Shvets said that China’s debt was $35 trillion, or “nearly 350%” of GDP. The truth is that it’s anybody’s guess. China’s official estimates are fairly useless, and the country has a massive and quickly evolving shadow banking sector that complicates these projections significantly.”
Davy on Tue, 27th Nov 2018 5:48 am
“CW2 will be fought over identity, not capitalism.”
Nonsense the CW2 is now and it is political. It will likely not be identitarian because there are not clear opposing camps. The liberal/conservative divide is very thin. The US is too diverse culturally, with ethnicity and with class for a civil war. Civil wars require clear opposing forces. A CW2 will likely not be about rich and poor because the class structure is so diverse and diffused throughout the country. When and if the entire global economy fails then the US may break apart into regions associated with rich/poor and identitarian characteristics. This breakup will likely not be about war like the neder prays daily so passionately for. The breakup will likely be about regional and individual survival and this phenomena will be global.
I AM THE MOB on Tue, 27th Nov 2018 6:11 am
Clogg
Solar panels and wind turbines produce electricity and oil is used for transportation..Those aren’t going to help you with an oil shortage you duffus..And autonomous cars HAHA! How are you going afford to charge it when the global econony collapses from lack of growth?
I AM THE MOB on Tue, 27th Nov 2018 6:13 am
Mak
Debt, Not Trade War, Is China’s Biggest Problem
Officially China’s debt is a small number: 47.60%. Unofficially, it’s hard to figure it out. For a good reason: the government is both the lender and the borrower. One branch of the government lends money to another branch of government. Government-owned banks, for instance, lend money to State Owned Enterprises (SOEs) and Town Village Enterprises (TVEs). But there are some unofficial estimates. Like one from the Institute of International Finance (IIF) last week, which place China’s debt to GDP at 300%!
https://www.forbes.com/sites/panosmourdoukoutas/2018/11/24/debt-not-trade-war-is-chinas-biggest-problem/#2809abd54c4d
The Chinese “economic miracle” is built on a mountain of debt. As Chinese GDP grew over 12-fold in 20 years to $12.24 trillion at the end of 2017, credit in the Chinese financial system grew over 40-fold, taking the debt-to-GDP ratio from 100% to 400%, if one counts the shadow banking system. Shadow banking credit aggregates are omitted from official statistics, but they add at a minimum 100% to the total debt to GDP ratio for China (see this Brookings Institution paper).
https://www.marketwatch.com/story/chinas-coming-recession-has-pushed-oil-below-60-2018-11-13?link=sfmw_fb
China central bank chief warns of ‘Minsky moment’
https://www.ft.com/content/4bcb14c8-b4d2-11e7-a398-73d59db9e399
China’s grand plan hit by delays and debt fears
https://asia.nikkei.com/Spotlight/Cover-Story/Is-China-s-Belt-and-Road-working-A-progress-report-from-eight-countries
I AM THE MOB on Tue, 27th Nov 2018 6:16 am
CLogg
There wont be any civil way you duffus..You are just want to see the US collapse like Mak because you are jealous..You are a poor social loser and who can’t get laid..
I AM THE MOB on Tue, 27th Nov 2018 6:19 am
CLogg
Autonomous car sharing?
Tesla: Autopilot was on during deadly Mountain View crash
https://www.mercurynews.com/2018/03/30/tesla-autopilot-was-on-during-deadly-mountain-view-crash/
Tesla and GM self-drive cars involved in road collisions
http://www.bbc.com/news/technology-42801772
Self-driving Uber kills Arizona woman in first fatal crash involving pedestrian
https://www.theguardian.com/technology/2018/mar/19/uber-self-driving-car-kills-woman-arizona-tempe
Consumers Don’t Really Want Self-Driving Cars, MIT Study Finds
http://agelab.mit.edu/news/consumers-dont-really-want-self-driving-cars-mit-study-finds
I AM THE MOB on Tue, 27th Nov 2018 7:11 am
GM’s Job Cuts Draw Angry Reaction in Heartland That Backed Trump
https://www.bloomberg.com/news/articles/2018-11-26/gm-s-job-cuts-draw-angry-reaction-in-heartland-that-backed-trump?fbclid=IwAR1nn6qc5mZAsaxvcV3Y11WRdQGivggnnRcrfHRTMfUzPwahwBJMpaF2JWk
Trump supporters can’t get enough of what is coming to them..
LMFAO!
Duncan Idaho on Thu, 29th Nov 2018 11:30 am
If The Saudi’s Oil No Longer Matters Why Is Trump Still Supporting Them?
https://www.moonofalabama.org/2018/11/if-saudi-oil-no-longer-matters-why-is-trump-still-supporting-them.html#more
Boat on Thu, 29th Nov 2018 2:13 pm
The US needs 1.3 mbpd now from the world. Canada sends us over 3 mbpd. So who needs who more at this point? What the world needs is refined products. The US not only has state of the art refineries but some of the cheapest Nat gas as feed stock. Over 4 mbpd of refined products is what’s happening. Even Trump can figure this out and use it as leverage. All the rest of this talk is nonsense, smoke and mirrors. So let’s build another pipeline for the world, you depend on it.