Slump In Oil Price, October 1, 2014 -- December 31, 2014: Saudi Arabia Market Share

Slump In Oil Price, October 1, 2014 - December 31, 2014

  

Saudi Arabia and Market Share

Pricing, Part I

Pricing, Part II
 Pricing, Part III

Permit Status 

Mid-East Geo-Politics

OPEC Realities

Comment: the slump in the price of oil began in October, 2014, and accelerated in December, 2014, when OPEC announced no cut in production at their Thanksgiving week meeting. The 30-second Saudi soundbite: they made the decision unilaterally, and they were protecting their "market share."

"The world" interpreted this to mean a price war with shale producers in the US and oil sands in western Canada. Interestingly enough, the international press keeps talking about Libya, and back in 2013, OPEC did away with its quota-monitoring committee. I think Saudi has three issues:

• OPEC members cheating (that's their "real" market share at risk)
• terrorist nations (Libya, ISIS, Iran)
• North American energy revolution

The entire US oil and gas industry will suffer; some companies will go bankrupt. But the US will do just fine. On the other hand, one cannot say the same for some OPEC countries like Venezuela.

Links:

• EIA: Oil imports into the US
• EIA: Oil imports into the US from Saudi Arabia
• Michael Fitzsimmons, SeekingAlpha, SaudiArabia: Do The Math, December 5, 2014 

US crude oil imports from Saudi Arabia:

• recent historical 30-second sound bite: 1.5 million bopd
• August, 2014: 0.1 million bopd
• September, 2014: 1.0 million bopd 

Back of the envelope calculations:

From the Fitzsimmons link, $138 million per day / 600,000 bopd = $230 / bbl.

Links and Updates

• Saudi Arabia to expand oil field to maintain production, April 24, 2016 
• Saudi Arabia says "no"on production freeze at Doha, posted April 24, 2016
• Saudi pumps less oil, month-over-month -- December 10, 2015
• Random update, Saudi's oil imports into US -- January 3, 2015
• Saudi's $40 billion annual deficit; how it may meet its shortfall -- Rigzone, December 26, 2014
• It's all about market share -- flashback, The Prize
• Not a conspiracy, it was not political -- John Kemp -- Rigzone; it's all about market share -- Financial Times -- December 22, 2014
• Is the "glut" a myth? -- Richard Zeits, Seeking Alpha, December 21, 2014
• Why Saudi can afford to let oil price slide. -- December 11, 2014

L'Arena, Il Mercenario, Ennio Morricone