Saudis Admit That Their Assault Was Aimed Directly At US Shale Industry -- Bloomberg -- February 25, 2016

I think we learned everything we needed to know about the currently global oil situation the first two days of the Houston conference. I posted the comments of the energy minister from Saudi Arabia at this post. I suggested that his comments were a lot of double-talk. A reader said it much better: the 81-year-old energy minister spoke with a forked tongue. He's been doing this so long, his tongue is shredded. He's being doing this so long, he could be the energy czar for President Obama.

I say all that because Bloomberg wrote their story about the same time. Bloomberg agrees: the Saudi Surge was a direct attack on the US shale revolution as suspected all along.

After first ignoring it, later worrying about it and ultimately launching a price war against it, OPEC has now concluded it doesn't know how to coexist with the U.S. shale oil industry.

OPEC launched a price war against U.S. shale and other high-cost producers, including Canadian oil sands and Brazilian deep-water oilfields, in November 2014 by not reducing output despite a global oversupply. [This is so cool; the MDW blog uses October, 2014, as the "start" date for the Saudi Surge/Saudi Slump.]

Since then, oil prices have plunged by more than half, hitting a 12-year low of about $26 on February 11, 2016. In a rare admission that the policy hasn't worked out as planned, El-Badri said that OPEC didn't expect oil prices to drop this much when it decided to keep pumping near flat-out.

US shale oil will not disappear:

The International Energy Agency earlier on Monday gave OPEC reason to worry about shale oil, saying that total U.S. crude output, most of it from shale basins, will increase by 1.3 million barrels a day from 2015 to 2021 despite low prices.

While U.S. production from shale is projected to retreat by 600,000 barrels a day this year and a further 200,000 in 2017, it will grow again from 2018 onward, the IEA said. "Anybody who believes that we have seen the last of rising" U.S. shale oil production "should think again," the IEA said in its medium-term report.

I am particularly happy/reassured/pleasantly surprised that the Saudi energy minister (El-Badri) said

.... low oil prices have caused companies to cut too much spending on developing new output, which could plant the seed for "a very high price" in the future. "The concern is no investment now, no supply in the future. It's as simple as that," he said. "If there's no supply coming to the market, prices will go up." 

Well, duh, what did he expect? Over-supplying the market with Saudi oil what did he expect? That oil prices would climb and companies would to out and drill even more oil? 

I am so happy that the Saudis are worried about high prices, the US consumer, and the US economy. LOL.