Saudi Arabia: We'll Never Cut Oil Production

jthomas666 · Dec 22, 2014

Saudi Arabia has a tough message for oil producers hurting from the price crash: We'll never cut our output.

In an exclusive interview with CNN, Saudi oil minister Ali al-Naimi also said he wasn't conspiring to take out rival producers by driving down the price. "These rumors or whoever generated them, is completely mistaken," he said.

U.S. crude prices have slumped by nearly 50% in six months, the sharpest fall for many years.

That has unsettled stock markets, accelerated a financial crisis in Russia, raised the risk that Venezuela will default and forced some U.S. producers to shed jobs and scale back investment.

Depending on which conspiracy theory you subscribe to, Saudi Arabia is waging an oil price war against fellow OPEC member Iran, Syria, Russia or even the U.S., its long-standing ally.

I suppose the price drop is hurting some people, but 2.25/gallon is like manna from heaven for me.

Tidewater · Dec 22, 2014

jthomas666 said:
Curiouser and curiouser...

I suppose the price drop is hurting some people, but 2.25/gallon is like manna from heaven for me.

Saudi Arabia is waging an oil price war against ... the U.S., its long-standing ally.

I agree. I'm not sure you can call cheapening oil "waging war" on the US. If it is "waging war," then I say, "wage away."

JBama_in_PCOLA · Dec 22, 2014

jthomas666 said:
Curiouser and curiouser...

I suppose the price drop is hurting some people, but 2.25/gallon is like manna from heaven for me.

Almost!! Gotta love the prices. I wish I could see the 1.99 everyone is seeing but I'm not complaining.

Sent from my iPhone 6 Plus RTR

Displaced Bama Fan · Dec 22, 2014

JBama_in_PCOLA said:
Almost!! Gotta love the prices. I wish I could see the 1.99 everyone is seeing but I'm not complaining.

Sent from my iPhone 6 Plus RTR

2.18 here. Wish they were higher though. This is going to sink Houston ' s economy.

JBama_in_PCOLA · Dec 22, 2014

Displaced Bama Fan said:
2.18 here. Wish they were higher though. This is going to sink Houston ' s economy.

I'm not sure how. It could depend on how Houston spends that extra money that it's people are saving now. Could go both ways.

Sent from my iPhone 6 Plus RTR

Displaced Bama Fan · Dec 22, 2014

JBama_in_PCOLA said:
I'm not sure how. It could depend on how Houston spends that extra money that it's people are saving now. Could go both ways.

Sent from my iPhone 6 Plus RTR

It's going to cost a lot of people their jobs as companies start cutting back due to slimmer margins. Also the small companies working the shale plays will go under. Their profitability is estimated on oil prices remaining at $80 bbl.

In addition, companies are slashing their capex budgets which will kill suppliers like my company.

Jon · Dec 22, 2014

Tidewater said:
Saudi Arabia is waging an oil price war against ... the U.S., its long-standing ally.
I agree. I'm not sure you can call cheapening oil "waging war" on the US. If it is "waging war," then I say, "wage away."

ripple effects are coming, many of them good. Lower food prices, travel prices, and shipping/transport in general lowering the cost of almost everything you buy.

Some however are very bad. The economies of Texas, Oklahoma, Louisiana, North Dakota and Alaska are all going to take a significant hit. All that "drill baby drill" work that is going on, that will grind to a halt. Then factor in all of the ancillary industry and not just Oil and Gas suppliers you'd think of like the ABB's and Haliburtons but also the Big IT Firms, construction, you name it it will be effected. Really happy that I let a team mate take on the Oil and Gas Vertical and attached quota for 2015 when I was asked earlier to do it. I warned him that the gravy train wouldn't roll forever. O&G Super computing exploration dollars that seemed limitless 6 months ago are evaporating from budgets as fast as the price is falling

cbi1972 · Dec 22, 2014

Tidewater said:
Saudi Arabia is waging an oil price war against ... the U.S., its long-standing ally.
I agree. I'm not sure you can call cheapening oil "waging war" on the US. If it is "waging war," then I say, "wage away."

Whatever you do, please don't throw me into the briar patch

JBama_in_PCOLA · Dec 22, 2014

Displaced Bama Fan said:
It's going to cost a lot of people their jobs as companies start cutting back due to slimmer margins. Also the small companies working the shale plays will go under. Their profitability is estimated on oil prices remaining at $80 bbl.

In addition, companies are slashing their capex budgets which will kill suppliers like my company.

Ahh, understood. That ripple effect comes in to play as well.

Capitalism at its worst, then.

Sent from my iPhone 6 Plus RTR

92tide · Dec 22, 2014

jthomas666 said:
Curiouser and curiouser...

I suppose the price drop is hurting some people, but 2.25/gallon is like manna from heaven for me.

i am consistently buying diesel below $3 per gallon now in metro atlanta, near the airport. i have had my car for 2.5 years now and have never bought it so cheap

92tide · Dec 22, 2014

Jon said:
ripple effects are coming, many of them good. Lower food prices, travel prices, and shipping/transport in general lowering the cost of almost everything you buy.

Some however are very bad. The economies of Texas, Oklahoma, Louisiana, North Dakota and Alaska are all going to take a significant hit. All that "drill baby drill" work that is going on, that will grind to a halt. Then factor in all of the ancillary industry and not just Oil and Gas suppliers you'd think of like the ABB's and Haliburtons but also the Big IT Firms, construction, you name it it will be effected. Really happy that I let a team mate take on the Oil and Gas Vertical and attached quota for 2015 when I was asked earlier to do it. I warned him that the gravy train wouldn't roll forever. O&G Super computing exploration dollars that seemed limitless 6 months ago are evaporating from budgets as fast as the price is falling

i really hope it works its way into the shipping and trucking industry quickly. we have been getting killed with fuel surcharges on trucking to the port and also from the container lines for the past couple of years.

2003TIDE · Dec 22, 2014

Tidewater said:
Saudi Arabia is waging an oil price war against ... the U.S., its long-standing ally.
I agree. I'm not sure you can call cheapening oil "waging war" on the US. If it is "waging war," then I say, "wage away."

But they are also giving the business to countries we don't like who rely on high oil prices such as Iran, Russia, and Venezuela.

2003TIDE · Dec 22, 2014

Displaced Bama Fan said:
It's going to cost a lot of people their jobs as companies start cutting back due to slimmer margins. Also the small companies working the shale plays will go under. Their profitability is estimated on oil prices remaining at $80 bbl.

In addition, companies are slashing their capex budgets which will kill suppliers like my company.

I've heard the larger companies can remain profitable on $45.

Jon · Dec 22, 2014

92tide said:
i really hope it works its way into the shipping and trucking industry quickly. we have been getting killed with fuel surcharges on trucking to the port and also from the container lines for the past couple of years.

I would recommend trying different suppliers. Your transport companies are raking in huge margins based on their costs dropping drastically, they won't hand it back to you unless they feel pressured to do so by you shopping them

92tide · Dec 22, 2014

Jon said:
I would recommend trying different suppliers. Your transport companies are raking in huge margins based on their costs dropping drastically, they won't hand it back to you unless they feel pressured to do so by you shopping them

we have very few options with the shipping lines and we can sometimes get the rate increases waived or lowered, but the lines are horrid to work with. the trucking is where it hit us hardest, but the trucking in the areas where we need it is basically under-supplied and there is very little price differential between suppliers. 2013 is when the fuel $ hit us hardest, but overall we had a good year so were able to absorb the costs while still posting good results.

fuel is becoming less of an issue these days thankfully, but scheduling vessels and getting equipment has gotten ridiculous the past few months and doesn't look to get any better in the near future.

RammerJammer14 · Dec 22, 2014

What is really infuriating is gleefully filling up my tank with the lowest priced gas I have seen in years, then driving by 6hrs later to see it has dropped another 15c.

Jon · Dec 22, 2014

RammerJammer14 said:
What is really infuriating is gleefully filling up my tank with the lowest priced gas I have seen in years, then driving by 6hrs later to see it has dropped another 15c.

how about working from home and driving almost never. My car is sitting in the garage with ~13 Gallons of $4 premium unleaded in it at the moment

twofbyc · Dec 22, 2014

92tide said:
we have very few options with the shipping lines and we can sometimes get the rate increases waived or lowered, but the lines are horrid to work with. the trucking is where it hit us hardest, but the trucking in the areas where we need it is basically under-supplied and there is very little price differential between suppliers. 2013 is when the fuel $ hit us hardest, but overall we had a good year so were able to absorb the costs while still posting good results.

fuel is becoming less of an issue these days thankfully, but scheduling vessels and getting equipment has gotten ridiculous the past few months and doesn't look to get any better in the near future.

The airlines (reportedly) are locked into long-term (I can't put a number to 'long-term') fuel contracts; and if any leg of the cargo's journey is on a plane, gas could go down to $1 a gallon tomorrow and shipping costs will remain the same.

twofbyc · Dec 22, 2014

Tidewater said:
I agree. I'm not sure you can call cheapening oil "waging war" on the US. If it is "waging war," then I say, "wage away."

Not sure I do; unless you equate the US oil companies with the US government. Oh, wait....

BamaFlum · Dec 22, 2014

Just now starting to see less than 2.00 in SA, TX.

Saudi Arabia: We'll Never Cut Oil Production

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