No Good Deed Goes Unpunished; Looks Like Saudi Is Losing Market Share To Iran, Iraq, Kuwait, Even Angola -- February 19, 2015

Washington Post/Bloomberg is reporting today:

[Saudi] shipments averaged 7.11 million barrels a day, down from an 11-year high of 7.54 million barrels a day in 2013 and the lowest in three years In December, exports dropped 5 percent from November to 6.9 million barrels a day.

China, Saudi Arabia’s largest customer in Asia, cut imports of Saudi crude by 7.9 percent in 2014, while it increased imports from Iran, Iraq, Kuwait, Angola, and U.A.E.

Saudi Arabia needs to keep exports at a minimum of 7 million barrels a day for the 860 billion-riyal ($229 billion) 2015 budget, he said. Brent oil must average $80 this year for the budget to break even, he said. Crude was $59.53 a barrel today.

The drop in crude exports explains to some extent why Saudi Arabia is offering discounts on crude.

Saudi Aramco, the state-run oil company, offered Asian customers the biggest discount on its benchmark crude in at least 14 years for January sales. It also cut prices for all grades it sells to U.S. refineries.

By the way, not all Saudi production is being exported. Saudi Arabia continues to increase the amount of oil it refines for its own use as its economy expands (Saudi uses oil to generate electricity and air conditioning use has increased significantly over the years).

BloombergBusiness has provided an update with regard to Saudi's increased production and is quite enlightening.

Saudi Arabia is boosting oil production, pursuing its policy to maintain market share as prices fall. Crude oil output is about 10 million barrels a day. That would be the highest since July and up from an average of 9.7 million barrels a day in the second half of 2014.

Saudi Arabia is keeping production high as it processes more crude at two refineries it started last year and burned more oil to generate power.

Local refineries processed 2.22 million barrels a day in December, the highest in any single month since at least January 2002.

Saudi Aramco, the state-run oil company, and partner Sinopec Group started a refinery last year at a plant at Yanbu on the Red Sea. It will have crude-processing capacity of 400,000 barrels a day. The company, along with partner Total SA of France, built a refinery of the same size at Jubail on the Persian Gulf. That plant, known as Satorp, had been running at full capacity since August 1, 2014. 

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The Threes

A lot of things are done in threes. During the Cold War, the US nuclear triad was: land-based ICBM; submarine-launched ICBMs; and airborne nuclear bombs.

Likewise, President Obama has announced his three-pronged approach for dealing with ISIS:

• kill 'em with kindness
• provide jobs and job training
• direct the small business administration to help ISIS jihadists start their own businesses

I can't make this stuff up.

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Not Ready For Prime Time 

Earlier today a reader sent me an article on the Kennedy Cold Front moving through the northeast, eastern seaboard, and the southeast today. In a non sequitur I replied:

Obama is getting skewered with his strategy for ISIS: "kill 'em with kindness, find them jobs."

Obama used to have just one huge, huge problem: credibility. Now he has two more: relevancy (as a lame duck president); and, fathomless ignorance ("provide ISIS jobs and job training")

His inner circle is probably intact, though hard to say. Just outside his inner circle, his staff is jumping ship, starting to move on (Eric Holder, for example). Not because of the problems but simply because they need to start looking for their next job when Obama is no longer president.

Meanwhile:

• amnesty stopped and it appears stopped on a pretty good basis; hard for Obama to win appeal easily
• Ukraine not getting any better; US seems to be on different sheet of music than EU
• huge, huge challenge with avoiding term "Islamist terrorism"; denying "Islamist terrorism" headlines alongside photos of "Islamist terrorists beheading and burning Christians alive
• his global warming stance is perhaps a joke in Boston; and Agore nowhere to help the president out

ObamaCare case will be heard by the Supreme Court starting March 4

Obama certainly has his hands full; his staff is leaving; and, everything above is "status quo" -- who knows what unexpected event will happen next?

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Sitting Pretty