Guest views are now limited to 12 pages. If you get an "Error" message, just sign in! If you need to create an account, click here.

Jump to content
  • CRYPTO REWARDS!

    Full endorsement on this opportunity - but it's limited, so get in while you can!

Oil in Freefall After Saudis Slash Prices in All-Out Crude War


Pitcher
 Share

Recommended Posts

Oil markets fell the most since the U.S. war in Iraq in 1991 after the disintegration of the OPEC+ alliance triggered an all-out price-war among the world’s biggest producers.

In one of the most dramatic bouts of selling ever, Brent futures sunk by 31% in a matter of seconds after the open of trading in Asia on Monday after already suffering their biggest loss since the global financial crisis at the end of last week.

Hammered by a collapse in demand due to the coronavirus, the oil market sank deeper into chaos on the prospect of a supply free-for-all. Saudi Arabia over the weekend slashed its official prices by the most in at least 20 years and signaled to buyers it would ramp up output -- an unambiguous declaration of intent to flood the market with crude. Russia said its companies were free to pump as much as they could.

“It’s certainly a high-risk, high-stakes approach,” Tim Fox, chief economist at Dubai-based lender Emirates NBD PJSC, said in a Bloomberg Television interview on Sunday. “The oil-price weakness is looking likely to extend and steepen, probably in coming weeks and months, unless there is some policy coordination to bring that to an end.”

Aramco’s unprecedented pricing move came just hours after the talks between Organization of Petroleum Exporting Countries and its allies ended in dramatic failure. The breakup of the alliance effectively ends the cooperation between Saudi Arabia and Russia that has underpinned oil prices since 2016.

 

The cuts in monthly pricing by state producer Saudi Aramco were the first indication of how the Saudis will respond, an opening salvo in the impending price war. Offering huge discounts in Asia, Europe and the U.S., the world’s biggest exporter will be hoping to entice refiners to purchase Saudi crude at the expense of other suppliers.

At the same time, Aramco has privately told some market participants it plans to raise production well above 10 million barrels a day next month and could even reach a record 12 million barrels a day, according to people familiar with the conversations, who asked not to be named to protect commercial relations.

Brent for May settlement dropped as much as $14.25 a barrel to $31.02 on the London-based ICE Futures Europe Exchange. That’s the biggest intra-day loss since the U.S. invasion of Iraq in January 1991.

The prospect of another price war is spooking traders who will remember the crash that began in 2014, when an explosion in U.S. shale production prompted OPEC to open the spigots in an attempt to suppress prices and curtail shale output.

That strategy ended in failure, with shale producers proving too resilient and Brent crude tumbling below $30 a barrel in 2016 amid a global glut of crude. And it was that crash that prompted OPEC to club together with Russia and others to curtail output and help shore up their oil-dependent economies.

--With assistance from Javier Blas, Anthony DiPaola and Ramsey Al-Rikabi.

To contact the reporters on this story: Dan Murtaugh in Singapore at dmurtaugh@bloomberg.net;Alfred Cang in Singapore at acang@bloomberg.net

To contact the editors responsible for this story: Will Kennedy at wkennedy3@bloomberg.net, Alexander Kwiatkowski, Serene Cheong

 

https://www.bnnbloomberg.ca/oil-in-freefall-after-saudis-slash-prices-in-all-out-crude-war-1.1402231

 

  • Thanks 3
  • Upvote 1
Link to comment
Share on other sites

Let’s see what gold does this week on the news that SA is slashing oil prices.  

 

All I can say is I am glad I bought 1 gold ETF on Wed, and a gold stock on Thurs for Swing Trades.  Both took a hit on Friday but didn’t trigger my stop.  

  • Thanks 2
  • Upvote 4
Link to comment
Share on other sites

15 minutes ago, Pitcher said:

Let’s see what gold does this week on the news that SA is slashing oil prices.  

 

All I can say is I am glad I bought 1 gold ETF on Wed, and a gold stock on Thurs for Swing Trades.  Both took a hit on Friday but didn’t trigger my stop.  

 

OUCH!!!, Pitcher, Things Are NOT Lookin' Pretty For Tomorrow!!!

 

image.png.5df23a68d2dd0d53401b4536b9ea80c6.png

 

https://quotes.ino.com/charting/?s=NYMEX_CL.J20

 

In your opinion, do you think they will hit the NYMEX trade kill switch before the open or do you think they will let it open then hit the min stop before the kill switch is activated?

 

Seems like the open could be a more severe hit than the kill switch is set.

 

Maybe I am talking out of turn whereas I thought I remember a stop gap measure (kill switch) was put in place about twenty years ago.

 

Your opinion, Pitcher, is Highly Esteemed!!!

 

Thank You in advance!

 

The flip side COULD be the Bicraqi Iraqi will be taking financial hits AND THEN "flip" THEE "RV" "switch" LIKIE REAL, REAL FAST!!!

 

Go Moola Nova!

:pirateship:

  • Like 1
  • Upvote 4
Link to comment
Share on other sites

1 hour ago, Synopsis said:

OUCH!!!, Pitcher, Things Are NOT Lookin' Pretty For Tomorrow!!!

 

 

Trading Limits have triggered.  It might be panic time tomorrow. We’ll have to see what shakes out.  I’ll be watching TVIX, Gold and Silver.  It will be very volatile for sure.  

 

I’m headed to bed, looks like I’m going to be up early tomorrow to get in the mayhem.  

 

 

  • Thanks 1
  • Upvote 4
Link to comment
Share on other sites

5 minutes ago, Pitcher said:

 

Trading Limits have triggered.  It might be panic time tomorrow. We’ll have to see what shakes out.  I’ll be watching TVIX, Gold and Silver.  It will be very volatile for sure.  

 

I’m headed to bed, looks like I’m going to be up early tomorrow to get in the mayhem.  

 

 

 

:twothumbs: Thank You, Pitcher, Look Forward To Your Posts Tomorrow!!! :tiphat:

 

Go Moola Nova!

:pirateship:

  • Thanks 1
  • Upvote 2
Link to comment
Share on other sites

Text from a big dog friend way up in the oil business. . He lives her in Oklahoma. 
 

Brother don’t give up, it’s still a go of growth. My company is moving forth extremely fast pace and buying other companies out. We just spent 155 billion on 2 asset buyouts. It’s going to come back, stronger than ever. 

  • Thanks 3
  • Upvote 2
Link to comment
Share on other sites

DOUBLE OUCH!!!

 

image.png.870d56c102693fca838ab9fd368babfb.png

 

https://quotes.ino.com/charting/?s=NYMEX_CL.J20

 

Historic lows past twenty or so years???!!!

 

22 minutes ago, gregp said:

Text from a big dog friend way up in the oil business. . He lives her in Oklahoma. 
 

Brother don’t give up, it’s still a go of growth. My company is moving forth extremely fast pace and buying other companies out. We just spent 155 billion on 2 asset buyouts. It’s going to come back, stronger than ever. 

 

:twothumbs: Thank You And Keep Us Posted, GregP, AND ALL The Very Best!!! :tiphat:

 

Go Moola Nova!

:pirateship:

  • Upvote 1
Link to comment
Share on other sites

It is a cycle often repeated. Sorta reminds me of the Problem, Reaction, Solution scenario we so often see played out.

The small independent oil company's take the financial risk of exploration and find the best acerage and aquire the leases to develop the new field. They have big plans for the new pipelines and all the other needed infrastructure. Oil prices are looking profitable at this point of the game.

It is a very expensive undertaking and right in the middle of it the darn oil prices drop forcing the financially strapped independents to go belly up and the Exxon Mobils of the world end up with the small oil company's leases and make most if the profit.

My dad used to tell that tale 50 years ago. Watched it play out many times since.

 

  • Thanks 1
  • Upvote 2
Link to comment
Share on other sites

The  is what's happeing.  Last Friday, after OPEC had decided to cut production in order to keep gas prices up the day before, Putin backed out of OPEC+ saying he wouldn't cut production and would prices fall.  People are speculating he did that to hurt US shale oil producers and put them out of business.  Apparently Russian has money set aside to cover the shortfall for a while.  In response MbS in Saudi Arabia announced big price cuts on its oil and also said they would be increasing production too.  People say that maybe to undercut Russion so much that it can't compete and will come back to OPEC and agree to production cuts.  Then MbS three of his relatives whom he said were plotting a coup.   So this is not just normal fluxuations, this was 2  separate, different deliberate moves by two major oil producing countriesmpanies to crush oil prices.  Bloomberg's subheading is:  "Oil market braces for what hedge funds call a ‘nasty’ period" ..... I guess so!

 

Breitling just did an audio where he said the coronavirus, which is pushing oil prices down, will be good for the RV because adding value to their currency is the only way Iraq can make up for the loss in revenue from low oil prices.  So I wonder if these bombs might make the RV imminent......

Putin Dumps MBS to Start a War on America’s Shale Oil Industry

 

At 10:16 a.m. on a wet and dreary Friday morning, Russia’s energy minister walked into OPEC’s headquarters in central Vienna knowing his boss was ready to turn the global oil market upside down.Alexander Novak told his Saudi Arabian counterpart Prince Abdulaziz bin Salman that Russia was unwilling to cut oil production further. The Kremlin had decided that propping up prices as the coronavirus ravaged energy demand would be a gift to the U.S. shale industry. The frackers had added millions of barrels of oil to the global market while Russian companies kept wells idle. Now it was time to squeeze the Americans.After five hours of polite but fruitless negotiation, in which Russia clearly laid out its strategy, the talks broke down. Oil prices fell more than 10%. It wasn’t just traders who were caught out: Ministers were so shocked, they didn’t know what to say, according to a person in the room. The gathering suddenly had the atmosphere of a wake, said another.

For over three years, President Vladimir Putin had kept Russia inside the OPEC+ coalition, allying with Saudi Arabia and the other members of the Organization of Petroleum Exporting Countries to curb oil production and support prices. On top of helping Russia’s treasury – energy exports are the largest source of state revenue – the alliance brought foreign policy gains, creating a bond with Saudi Arabia’s new leader, Crown Prince Mohammed bin Salman.

But the OPEC+ deal also aided America’s shale industry and Russia was increasingly angry with the Trump administration’s willingness to employ energy as a political and economic tool. It was especially irked by the U.S.’s use of sanctions to prevent the completion of a pipeline linking Siberia’s gas fields with Germany, known as Nord Stream 2. The White House has also targeted the Venezuelan business of Russia’s state-oil producer Rosneft.“The Kremlin has decided to sacrifice OPEC+ to stop U.S. shale producers and punish the U.S. for messing with Nord Stream 2,” said Alexander Dynkin, president of the Institute of World Economy and International Relations in Moscow, a state-run think tank. “Of course, to upset Saudi Arabia could be a risky thing, but this is Russia’s strategy at the moment – flexible geometry of interests.”    link

 

Saudis Plan Big Oil Output Hike, Beginning All-Out Price War

Saudi Arabia plans to boost oil output next month to well above 10 million barrels a day, as the kingdom responds aggressively to the collapse of its OPEC+ alliance with Russia.

 
The world’s largest oil exporter engaged in an all-out price war on Saturday by slashing pricing for its crude by the most in more than 30 years. State energy giant Saudi Aramco is offering unprecedented discounts in Asia, Europe and the U.S. to entice refiners to use Saudi crude.
 

At the same time, Saudi Arabia has privately told some market participants it could raise production much higher if needed, even going to a record 12 million barrels a day, according to people familiar with the conversations, who asked not to be named to protect commercial relations. With demand ravaged by the coronavirus outbreak, opening the taps would throw the oil market into chaos.

“Saudi Arabia is now really going into a full price war,” said Iman Nasseri, managing director for the Middle East at oil consultant FGE. The Saudi Energy ministry didn’t respond to a request for comment.
 
Aramco’s unprecedented pricing move came just hours after the talks between the Organization of Petroleum Exporting Countries and its allies ended in dramatic failure. The breakup of the alliance effectively ends the cooperation between Saudi Arabia and Russia that has underpinned oil prices since 2016. Production limits agreed to by OPEC and its erstwhile partners expire at the end of the month, opening the way for producers to ramp up output.

Read: Aramco Slashes Crude Pricing

The company’s shares plunged 9% in Riyadh on Sunday, the first time the stock slumped below its initial offering price. Aramco traded at 29.95 riyals as of 1:57 p.m., giving it a market value of 6 trillion riyals ($1.6 trillion). The Saudi government sold 1.5% of the energy giant’s shares at 32 riyals each in December.

Brent crude, the global oil benchmark, closed down 9.4% on Friday, its biggest daily drop since the global financial crisis in 2008, settling at $45.27 a barrel.

Saudi production is initially likely to rise to between 10 million and 11 million barrels a day in April, from about 9.7 millions a day this month, according to people familiar with Saudi thinking. The final figure would depend on the response of refiners to the price cuts, the same people said.  

Maximum Pain

The shock-and-awe Saudi strategy could be an attempt to impose maximum pain in the quickest possible way to Russia and other producers, in an effort to bring them back to the negotiating table, and then quickly reverse the production surge and start cutting output if a deal is achieved. In a sign that both sides remain in talks, the OPEC+ Joint Technical Committee, a body of senior oil officials who advise ministers, plans to meet on March 18 to review the global oil market, according to delegates. Saudi and Russian officials are part of the JTC.

“It’s certainly a high-risk, high-stakes approach,” Tim Fox, chief economist at Dubai-based lender Emirates NBD PJSC, said Sunday in a Bloomberg Television interview. “It didn’t come together on Friday and I think market confidence that it will at some point in the next couple of weeks is actually quite low.”

The production increase and deep discounts mark a dramatic escalation by Prince Abdulaziz bin Salman, the Saudi oil minister, after his Russian counterpart Alexander Novak rejected an ultimatum on Friday in Vienna at the OPEC+ meeting to join in a collective production cut. After the talks collapsed, Novak said countries were free to pump-at-will from the end of March.

Record Discounts

With jet-fuel, gasoline and diesel consumption rapidly falling due to the economic impact of the coronavirus outbreak, the energy market now faces a simultaneous supply-and-demand shock.

Read: Oil Short-Selling Surges and It Could Be Just Getting Started

After the failure in Vienna, Riyadh responded within hours by slashing its so-called official selling prices, offering record discounts for the crude it sells worldwide. Aramco tells refiners each month the prices for its crude, often adjusting the OSPs by a few cents or as much a couple of dollars.

 

But in a notice to buyers sent Saturday, Aramco announced it was slashing most official prices by $6-$8 a barrel across all regions. The dramatic move will resonate beyond Saudi Arabia. The kingdom’s pricing decision affects about 14 million barrels a day of oil exports, as other producers in the Persian Gulf region follow its lead in setting prices for their own shipments.

Getting Nasty

In one of the most significant pricing moves, Aramco widened the discount for its flagship Arab Light crude to refiners in northwest Europe by a hefty $8 a barrel, offering it at $10.25 a barrel less than the Brent benchmark. In contrast, Urals, the Russian flagship crude blend, trades at a discount of about $2 a barrel less than Brent. Traders said the Saudi move was a direct attack at the ability of Russian companies to sell crude in Europe.

 

Read: Takeaways From the OPEC+ Flop in Vienna

“This is going to get nasty,” said Doug King, a hedge fund investor who co-founded the Merchant Commodity Fund. “OPEC+ is going to pump more, and the world is facing a demand shock. $30 oil is possible.”

Some believe the market could go even lower.

“We’re likely to see the lowest oil prices of the last 20 years in the next quarter,” said Roger Diwan, an oil analyst at consultant IHS Markit Ltd., implying that the price could fall below $20 a barrel.

Brent crude, the global benchmark, fell to a low of $9.55 a barrel in December 1998, during one of the rare price wars that Saudi Arabia has launched over the last 40 yearslink

Saudi Crown Prince purges rivals to the throne, arrests 3 members of royal family

It’s a real-life “Game of Thrones” in the desert kingdom.

Saudi Arabia’s Crown Prince Mohammad bin Salman tightened his grip on power Friday with the arrests of three top-ranking relatives — including the only surviving brother of his father, King Salman — who were once considered the prince’s rivals for the throne.

Prince Ahmed bin Abdulaziz al Saud and Prince Mohammed bin Nayef bin Abdulaziz al Saud, the king’s nephew, were taken into custody and accused of treason, sources told The Wall Street Journal — a capital crime in the kingdom. A royal cousin, Prince Nawaf bin Nayef, was also arrested.

The 35-year-old crown prince, known as MBS, has been the country’s de facto ruler since 2017, when his father ousted Mohammed bin Nayef, the former crown prince, in MBS’s favor.

MBS has won international praise for efforts to modernize the kingdom, such as abolishing rules that forbade women from driving.

But he has been ruthless in his pursuit of dominance within the royal family, arresting dozens of relatives on corruption charges in 2017 — and has been accused of ordering the gruesome death of Jamal Khashoggi, a critic of the regime, in 2018.   link

 

 

 

  • Thanks 3
  • Upvote 1
Link to comment
Share on other sites

Oil Prices Crash 25% As Oil War Begins

By Michael Kern - Mar 08, 2020, 5:00 PM CDT

Russia has just sparked what may end up being among the ugliest oil price wars in recent history. And Saudi Arabia is firing back. As the two oil superpowers face-off, American oil companies may end up as the biggest victims.

Russian President Vladimir Putin announced on Sunday that present oil prices were sustainable for the Russian economy. Adding that Russia had the tools to react to any adverse results of the spread of the coronavirus on the global financial climate.

"I want to stress that for the Russian budget, for our economy, the current oil prices level is acceptable," Putin explained in a meeting with Russian energy officials.

Now some oil analysts are anticipating barrel prices as low as $20 within the year. Some experts have suggested that Russia's move is intended to counter U.S. shale producers and hit back against the U.S. for targeting the Nord Stream 2 gas pipeline connecting Russia and Germany.

Saudi Arabia blasted back, in kind. Sunday morning, Saudi Arabia dropped its own oil weapon. Its latest plans will not only reduce its unrefined price to Chinese consumers by as much as $6 or $7 per barrel, but it is also reportedly looking to increase its daily unrefined output by as much of as 2 million barrels per day into an increasingly oversupplied international market.

The shocking move by the Saudis is both a market share grab as well as a loud signal to Moscow that it is finished playing games.

Within seconds of the market opening on Sunday night, oil prices plummeted as much as 30 percent, driving crude to its lowest level in four years. The Brent crude benchmark fell from $45 a barrel to $36.44 at the time of writing, while WTI plummeted from $40.45 to $32.97, in one of the single worst drops in recent history.

  • Thanks 3
Link to comment
Share on other sites

1 hour ago, Pitcher said:

Oil Prices Crash 25% As Oil War Begins


This Just In From Chicken Little ..... The Sky Is Falling - The Sky Is Falling ! :o 
 

 

Oh, How Bad Could It Be - Just Open Up An Ice Cold Corona And Relax ...

 

:D  :D  :D 

 

 

Oil prices collapse and economic reforms falter; Iraq is set to go bankrupt in the next two months

- 4 Hours Ago
 

%D8%A7%D9%84%D8%A7%D9%82%D8%AA%D8%B5%D8%
 

 

Researcher Shatha Khalil *


The collapse of oil prices in global markets brings the economic and societal catastrophe to Iraq, due to this expected collapse during the next two months; the salaries of Iraqi employees will stop, since the insurance of their salaries depends on revenue from the sale of crude by more than 90 percent, this is what was left behind by poor state administration and the absence of planning and use Indiscriminate resources and wealth, organization, coordination, guidance, follow-up, and oversight, resulting in chaos and floundering decisions by the Prime Minister, Parliament, officials, gangs, corruption, and ignorant people that will destroy the Iraqi state.
The absence of investments and the report of the World Bank
, economic investments of any country that works on growth and development and makes it strong, especially internal investments such as the establishment and development of various industries and infrastructures in addition to stimulating foreign investments at home that directly affect economic growth, and most studies confirmed that the relationship between foreign investment and growth Economic in the short and long term.
But Iraq remains with all the huge potentials of oil wealth, minerals, agriculture and unique human energies, it cannot build a strong base of investments to boost the economy from sudden fluctuations and crises and attributes the reason to mismanagement and corruption in this stage in the country.
Investment is one of the issues on which many views were raised, and long-term capital flows were considered the most important tools that supported their development programs, through the mechanisms of surplus of the external gap that almost all countries depend on which they find that they have competitive advantages in their trade or services within a balance of payments

The World Bank issued the annual Doing Business report for 2020 to rank countries and which is the best environment for practicing and attracting investment and economic work, and shows the ability of the Iraqi economy to attract foreign capital that works in the field of influence in the joints of the real economy, and places Iraq within the approach with the world in this regard, as well That necessity was based on an interest in the overlap between foreign direct investment and monetary policy.

Attention must be paid to the presence of power factors between economic activities and reducing the rentier implications, which would enhance the opportunity to benefit from foreign investment and reduce dependence on local resources.
And shows the Iraqi economy; by not achieving the required level in economic growth.
The report indicates the improvement in the ranking of the countries of the world, as well as the Arab and Gulf countries, and countries that are stumbling in reform, such as Iraq.
New Zealand came in first place as it provides the best business environment, followed by Singapore and Hong Kong, Denmark came fourth in this year, and then South Korea came in fifth place, while America and Britain came in sixth and eighth in a row, while appended Existing Somalia is preceded by Eritrea and the Republic of Venezuela.

As for the share of the Arab countries in this report, it was, as follows

in the report, Iraq ranks 172 out of 190 countries in the World Bank Index for ease of doing business, which indicates that Iraq is a repulsive environment for investments, while Saudi Arabia has achieved a qualitative achievement, and has advanced 30 ranks, to become so The most advanced and reformed country among 190 countries around the world has managed to enhance the country's competitiveness and raised its ranking in global reports, and the World Bank experts mentioned in the report that Saudi reforms includedestablishing a one-stop shop system for registering companies, introducing a law for secured transactions, a bankruptcy declaration, and improving protection My fruit minority and measures to bring more women into the labor force, and explained that two years ago or three years ago when these countries began to work on some of those reforms , oil prices were unstable.
The UAE strengthened its lead in the MENA region in the Ease of Business Index and advanced five places globally compared to the previous classification to occupy the 16th position.

Arab countries rank

The report concluded that most of the Arab countries that witnessed an improvement in the business climate were Saudi Arabia, Jordan, Bahrain, and Kuwait. What is noteworthy in this year's report is Egypt's absence from the Arab top ten ranks despite the economic harvest, which it recorded throughout the last fiscal year thanks to a harsh reform package.

Bahrain ranked second in the Arab world and 43 globally, with Bahrain implementing the largest number of reforms globally, as it made improvements to 9 out of 10 areas measured in the report, while Morocco came third in the Arab world and 53 globally. As for the Sultanate of Oman, it ranked fifth in the Arab world and 68 globally.

Qatar ranked seventh in the Arab world, and ranked 77th in the world. And it ranked eighth in the Arab world, followed by Tunisia, with a global ranking of 78, followed by Kuwait with a global ranking of 83, while Djibouti ranked 10th in the Arab world and 112 globally.
As for Iraq, it occupied the 172nd position from 190. This is against logic and rationality because of a country like Iraq with its enormous potential.Among the most important reasons that led the country to this dangerous slope is corruption, quotas, religious parties and gangs, not to mention mismanagement, and Iraq lives by following the rentier state and its disastrous prospects, while the powers The political, armed groups, and centers of influence, which constructed their great presence in the body of the Iraqi state and worked to weaken and destroy them.
Where Iraq is inevitably heading towards an economic catastrophe unless it begins with radical reform, as there are 75 percent of its population dependent in their lives and their livelihood on the salaries provided to them by the state and consume about 80 percent of the unilateral oil budget within an economy that suffers a permanent imbalance, as this is a fact that all officials realize The Iraqis, whose effects are aware of all the influencing forces in the investment decision, and fully understand the partisan and armed groups that wage war relentlessly on foreign investment.

A war that begins with pushing these continuous groups towards increasing the flabby functional block in the state to obtain the loyalty of electoral votes, passing through the attempt to be partisan companies, not the state, a partner for every investor coming to Iraq in exchange for its protection, and not an end linking investment with political evidence, and the inability of the political center to make decisions Cruel but necessary for the future, such as the start of administrative decentralization systems, the empowerment of the private sector, and the improvement of Iraq's reputation on the international map.

On that last point, Iraqi officials deal lightly with international reports of the World Bank, which can be asserted that they lack statistical accuracy today and are based on data from previous years. Neither Baghdad is the worst city to live in the world, nor Iraq is the most corrupt country, nor is Iraqi security at its worst It can be said that this official underestimation is part of the war on investment. Otherwise, countries that plan for their future after they develop plans for the advancement, set annual budgets to invite researchers, specialized centers and various media to encourage writing fair, balanced and realistic reports that place investors across the A world in front of facts in this or that country, and not just impressions, the greatest danger is the oil budget, which may find itself in years before an expected collapse in oil prices

The first step begins from telling the harsh facts, and among these facts is that Iraq, with its current economic situation, is exposed during the coming years to great setbacks that strike the last remaining of its security, unity and existence, and the threat will not necessarily be a terrorist like "ISIS" or any subsequent development of it, but rather the danger The biggest is the oil budget, which may find itself within years of an expected natural collapse in oil prices, before which the Iraqi rentier economy stands before it, unable to find alternatives and completely surrender to the powers before the state.

Economic Studies Unit

Links Center for Research and Strategic Studies

LINK

  • Thanks 1
Link to comment
Share on other sites

Ok, So At Least On The Bright Side - The Locusts Weren’t Carrying The Coronavirus ! :o 

 

:D  :D  :D 

 

 

Swarms of “locusts” invade Basra's largest district (video)


19:51 Sunday 08 March 2020

Baghdad - people

 

On Sunday, large swarms of locusts invaded the Zubair district, west of Basra, the largest district in the province, and destroyed dozens of acres planted in the district.

And video clips obtained by "people" today (8 March 2020) showed locust swarms coming from the Gulf countries, and passed through the Zubair district west of Basra Governorate, as it continues to advance towards the areas of the province and its markets.

A source told "people" that "locust swarms reached the Souadi market in the middle of the Zubair district, and the outskirts of the Shuaiba region and invaded large areas of land planted with tomatoes and the rest of the vegetables and destroyed them."

The source added that "the squadrons are advancing towards the residential areas amid the residents' fears," asking the concerned authorities to take urgent measures to combat them.


VIDEO LINK

VIDEO LINK

LINK

  • Thanks 1
Link to comment
Share on other sites

LINK

The Parliamentary Economy: The drop in oil prices caused the
budget deficit to rise to 51 trillion

 

%D8%AF%D9%88%D8%A7%D9%84%D8%B1.jpg
 
 
19:23 - 07/03/2020
 
 

The Parliamentary Economic Committee announced, on Saturday, that the fiscal deficit in the federal budget for 2020 rose to 51 trillion Iraqi dinars, after the price of selling a barrel of oil decreased.

Committee member Nada Shaker said in a statement to "Information", that "the government will face a major financial problem after the low price of selling a barrel of oil globally and may resort to internal borrowing to fill the expected deficit in the budget of 2020", pointing out that "the deficit increased to 51 trillion Iraqi dinars with a budget 2020 ”.

She added that "disrupting the approval of the budget caused the suspension of investment projects in all governorates of the country," noting that "political blocs are obliged to solve the problem of the post of prime minister and form a government as soon as possible to avoid the expected financial problem."

The Al-Fateh Alliance confirmed, the day before yesterday, Thursday, that it is still continuing in its consultations with the Shiite political blocs to choose the personality of the Prime Minister, while he will meet with the President of the Republic Barham Salih next week to resolve the personality of the Prime Minister.

  • Upvote 1
Link to comment
Share on other sites

The head of the Parliamentary Finance reveals the size of the deficit in the 2020 budget and talks about the lowest salaries of retirees

 

113885.jpg?watermark=4&1

 

Localities 08/20 2020 14:26 10250 Editor: gf    


Baghdad today - Baghdad 

 

On Sunday, the head of the Finance Committee, Haitham al-Jubouri, revealed the size of the deficit in the 2020 budget, noting that the deficit rate is a dangerous indicator.

And the Iraqi News Agency quoted Jubouri as saying, "The increase in the budget deficit represents a significant negative indication of increasing expenditures and declining revenues, and this is not only reflected locally, but globally, in investment and partnership opportunities with international companies as well as the credit rating of Iraq by the World Bank."

He added that "what happened in 2020 over 2019, a very large increase in expenditures and a significant decrease in the volume of revenues, whether oil or other, and the decline in oil prices is an external factor that is subject to the global market and we do not control it, but the decrease in non-oil revenues, which are customs, taxes and taxation, Inevitably due to mismanagement by the government. "

Al-Jubouri continued, "The percentage of the deficit may reach 35% of the total expenditures, and this is a problem that needs to be addressed quickly, because it means that the value of salaries will be higher than the value of the total public revenue, and thus the deficit will be reflected in the salaries, so we must expedite the development of quick treatments for the deficiency In both oil revenue and non-oil revenue.

He explained that "the total expenditures of the 2020 budget, estimated at 165 trillion dinars, and the size of the financial deficit is around 56 trillion dinars, and we do not have accurate data for the value of the gross domestic product of the Iraqi state, but if we assume that it is twice the public expenditures, also the percentage of the deficit may be 20% and this is an indication Dangerous". 

And on the structural changes in the state's staffing after the amendment of the retirement law, Al-Jubouri said, "The data received from us by the retirement committee revealed that 200,000 job degrees are vacant at the beginning of this year and 59,000 job degrees at the end of the year." 

He added, "The tendency to amend the retirement law was to remove three newborns from the job and appoint new young graduates as a substitute for them, but at the same time I see that there is an injustice that has acquired high ages, because some of them were a planner of his life and had family financial obligations or ancestor to pay them." Suddenly, I am referred to retirement. "

Al-Jubouri added, "We were supposed to give an opportunity of no less than a year, just as the law affected leaders in some ministries, and I met a group of people covered by this law and we have a plan for serious thinking to amend the unified pension law in a comprehensive amendment and not only for this matter. The law is before His amendment was passed in 2014 and has collided with many facts and facts in past years and now needs to be reviewed in many of its articles. 

Regarding the minimum amount of pensioners ’salaries, he stated that“ We wanted in the Finance Committee to make it 600 thousand dinars, but the retirement committee, clearly informed us that this step may lead to declaring the bankruptcy of the retirement fund after five years, so we resorted to making the minimum pension salary 500 thousand dinars, on Hoping to raise it if the economic situation improves to 600 thousand dinars or more. "

link

  • Upvote 1
Link to comment
Share on other sites

Politicians and experts talk about a future economic crisis:
salaries are at stake, and Iraq is following in the footsteps
of Venezuela!


11:15 Sun, 08 March 2020

People - Baghdad

 

Bilal Hassan 

 

They are turning the odds, based on recent developments in the global economic movement
and its impact on Iraq, and politicians, including former Prime Minister Haider al-Abadi,
confirm that a severe economic crisis is "coming" on the country, which experts have
compared to the crisis in Venezuela.

Iraq, which is already suffering from a deficit of about 51 trillion dinars, or approximately $ 45
billion, in its financial budget for the current year, which has not been approved yet, is 
receiving a new blow by lowering oil prices to $ 45 per barrel, with weightings of a larger
decrease, especially with the lack of access "OPEC" to an agreement to reduce production
with Russia.

After the outbreak of the “Corona” virus, most of the Chinese factories, the country from
which the virus originated, stopped working, which depends on Iraqi oil with 33% of its
consumption, and Iraq stopped economic activities with several countries after the virus also
unified it, and internal sectors, notably tourism and worked, were affected. Travel companies,
to meet with factors that might make the Iraqi state "unable to pay the salaries of its
employees."

"A dilemma caused by the prominent economist"

Speaking to “NAS”, Iraqi economist Saleh Al-Hamashi refers to “gambling” the resigned
Prime Minister Adel Abdul-Mahdi and his “false expectations of Iraq's financial returns” as
one of the causes of the expected crisis, adding that Iraq may face a “similar reality” to
what happened in Venezuela year 2014.

"In order to reduce the momentum and pressure of the popular protests that confronted
his government and eventually toppled him, he launched thousands of jobs in state
institutions already overburdened with employees," he added.

But the former Prime Minister Haider al-Abadi, who ran Iraq with difficult economic
conditions and a debilitating war against ISIS, seems more pessimistic than others about 
the  "upcoming crisis on Iraq", so he describes the financial policy of Abdul Mahdi's
government a "irrational, and reaches a level of treachery." Governance Secretariat.

Not only did Abadi blame the resigning government, accusing it of failure and wasting a
"huge financial balance", so he went on to bear the political forces that produced it "with
full historical responsibility" for what will become the situation of the Iraqi state,
expecting that the state will enter the "inability to pay salaries and operating budget
benefits by the end of this Year ”.

On the other hand, the appearance of Mohammed Saleh, the economic advisor to the
resigned Prime Minister, Adel Abdul Mahdi, has underestimated the concerns of the
salaries of employees, retirees and social welfare, saying that the government is
adopting special measures to secure it, and it believes that this issue is "from the red
lines, and cannot be compromised."

Saleh pointed out that among the measures that the government follows in this regard
are “the pressure of spending and the postponement of some unimportant projects in
addition to other treatments.” And while he indicated that “the equivalent of one third of
the Iraqi people receives income from the government directly and indirectly, he
acknowledged the impact of low prices But he added, "There are strict financial
treatments."

And the Iraqi government must pay salaries to about 7 million people,among employees,
retirees and beneficiaries of social benefits, totaling about 50 billion dollars annually, or half
of the value of the budget that circulates in the orbit of 100 billion usually, 10-15% of
which is allocated to pay internal and external debts .

The Ministry of Finance proposed to the General Secretariat of the Council of Ministers,
last month, to suspend employee allowances and freeze decisions to revoke their
contracts “due to the lack of available financial resources and the percentage of deficits
in the 2020 budget,”which MPs rejected.

Haider al-Abadi, who was known to follow austerity policy to manage the crisis that his
government faced (2014-2018) also spoke of "the plundering of state resources by the
centers of power", among the factors he said "will lead the country to an economic
catastrophe we warn against falling" after he put " The wasteful spending policy "is
among the things that helped us" enter the financial and economic risk zone.

In the same context, political analyst Hisham Al Hashemi conducted a mathematical  formula
for the 2020 budget, as follows: $ 44 oil price * 365 days * 3.750 million barrels per day +
6 billion inland revenue - 53 billion salaries and operating = 60.225 billion + 6 billion - 53
billion salaries and operating = 13.255 billion if 19 billion of them were issued rounds of
licenses, and 10 billion of them were subtracted for the region, concluding that the deficit
is "large and serious".

According to the analyst Saleh Al-Hamashi’s view, the crisis that Iraqis are expected to feel
by the middle of this year will generate two problems: the first is the increase in the
unemployment rate and the “disappearance” of employment opportunities, without the
ability of social benefits provided by the state to meet the need.

Official estimates indicate that the unemployment rate in Iraq is around 13.8%, but Hamashi
says it is greater than that, explaining that "the official estimates did not depend on a
realistic scale, based on a census."

The second problem, as the economist explains, is that "the Iraqi market will witness a very
large decline in business, which leads to the erosion of working capital among local merchants
and the lack of their financial resources, which may prompt the state to search for foreign
investments, and this affects the economy. " The National Party makes it hostage to external
parties, so the level of citizens ’ income decreases and someof them enter the poverty line.”

These factors, he says, "will produce serious social phenomena and political and industrial
problems."

"A crisis worsening over time"

While economists emphasize the "necessity" for the new government to "filter spending" and
adopt the minimum wage and include all employees, whether private grades or others,
without exception, they are talking about "very big problems" that Iraq will suffer in the
coming years. No internal alternatives have been found to offset the oil market shocks,
bearing inmind the increasing demand for alternative energy.

These people suggest investing in the transport, agriculture, and communications sectors
as solutions. They also suggest that the next government will have to retract “many”
decisions of the Abdul Mahdi’s government, including recentappointments of approximately
300,000 job degrees, and theabolition of their contracts, as the Iraqi treasury money “does
not clog”. The country's needs for six months. ”While Iraq’snon-oil resources, which amount
to 5% of the budget’s value,are not enough for twenty days, according to them.

They pointed out the difficulty of external borrowing for Iraq in light of the
difficulties it faces, which in turn will push the lenders to reduce their
lending to Baghdad, "which means having to resort to the central bank
reserves, which amount to about $ 80 billion, to fill the 
deficit."

"Supply card threatened"

In the midst of that, Reuters news agency on Tuesday, March3, quoted sources in the Iraqi
Ministry of Trade as saying that delaying approval of the Iraqi budget in light of the political
deadlock impedes the signing of new grain purchase contracts,on which most Iraqis depend,
especially those who fall belowthe poverty line.

The sources pointed out that "Iraq, the largest buyer of wheatand rice in the Middle East,
has strategic stocks of the two that are sufficient for two months."

She explained that "strategic wheat stocks are sufficient until the start of the local harvest
in April," without issuing any official position on these statements.

What happened in Venezuela?

Returning to the warnings of economist Saleh Al-Hamashiabout facing Iraq a reality similar
to what happened inVenezuela in 2014, that country depends on oil by 90% andrepresents
the richest economy in Latin America, but corruption, mismanagement and large
indebtedness led to the collapse of its economy starting From 2010, before the oil price drop
in 2015 compounded its crisis.

In an annual survey of living conditions conducted in 2017, 6 out of 10 Venezuelan citizens
said they were sleeping hungry because they were unable to buy food, even though their
country's oil reserves were estimated at the end of thesame year at about 303 billion barrels.
 While the United Nations says about 3 million Venezuelans have left their homes since 2014.

According to a study prepared by the opposition-controlled National Council, annual inflation
reached 1,300,000 percent in the 12 months leading up to November 2018.

By the end of 2018, commodity prices were doubling every 19 days on average, leaving many
Venezuelans to cling to the purchase of essentials like food and health supplies.

link

Link to comment
Share on other sites

LINK

Free fall in oil prices due to failure of the OPEC + and Texas crude contract more than 31%


19348.jpg

 

9th March, 2020

 

Oil prices fell by more than 30% in the two transactions after OPEC failed to conclude an agreement with its allies regarding production cuts, which prompted Saudi Arabia to reduce its prices, as it is reported that it is preparing to increase production, which led to fears of a comprehensive price war

Brent crude futures fell 28.7% to $ 32.27 a barrel, its lowest level since February 2016, and U.S. West Texas Intermediate crude fell 31.03% to $ 28.50 a barrel, its lowest level since February 2016. West Texas Intermediate. At its worst level since January 1991 during the Gulf War, and the second worst day ever

On Friday, Russia rejected OPEC's proposal to make deep production cuts in order to stabilize prices hit by the economic consequences of the Corona virus. OPEC responded by removing restrictions on its oil production

The Kingdom of Saudi Arabia announced on Saturday huge reductions in official selling prices for April, and the country is said to be preparing to increase production to over 10 million barrels per day, according to a Reuters report

The kingdom currently pumps 9.7 million barrels per day, but it has the capacity to raise up to 12.5 million barrels per day

  • Thanks 2
  • Haha 1
  • Upvote 1
  • Downvote 1
Link to comment
Share on other sites

Oil Price Crash: 50% Of U.S. Shale Could Go Bankrupt

By Nick Cunningham - Mar 09, 2020, 8:00 PM CDT

It’s one for the history books.

Oil opened on Monday down roughly 25 percent, the sharpest decline in decades, and broader financial markets fell so precipitously that the circuit breakers put in place during times of volatility tripped, temporarily halting trading.

The list of adjectives available to describe what is happening to the oil market is not adequate. There are now multiple crises unfolding at the same time.

First, there is obviously a health crisis – the coronavirus continues to spread. Large swathes of northern Italy are now on lockdown. The number of cases in the U.S. has surged, and could explode in the coming days. Mandatory lockdowns may not be far off. The Trump administration is asleep at the wheel, actively trying to play down the extent of the crisis.

Second, there is a brewing economic crisis. China shut down parts of its economy in January and February. Parts of Europe followed. The U.S. is next.

The Dow Jones has fallen by more than 16 percent in the past week, and markets have quickly shifted from concern to full blown panic.

Third, if all of that is not enough, OPEC and Russia just added on an oil supply crisis. The collapse of talks last week and the ensuing price war has WTI down to $33 per barrel as of midday on Monday, down from $45 last Thursday on the eve of the OPEC+ talks. OPEC and Russia have said that all restraints on production expire at the end of the month, and everyone can produce at will. Oil could easily be in the $20s at any moment (and might be by the time this piece is published). Related: Can Saudi Arabia Survive The Oil Price War It Started?

For the U.S. oil industry, this is a historic crisis. It has the ingredients to be far worse than the 2008 financial meltdown. At that time, a sharp contraction in the global economy blew a hole in the market. But OPEC responded by cutting production.

This time, that same potential for an economic calamity is present, but there is an oil price war occurring simultaneously.

A decade ago, the shale industry barely existed, and falling oil prices cushioned the blow to the U.S. economy by making energy cheaper. Today, an oil market bust could pretty quickly plunge Texas, North Dakota and Appalachia, among other places, into a recession.

Analysts are now predicting that the Eurozone, at a minimum, is heading for an economic recession. France’s finance minister Bruno Le Maire said that Europe needs a “call to arms” to defend the economy.

The pain for U.S. drillers was immediately visible when markets opened on Monday. Deep losses hit everyone. “We have taken the unprecedented steps of bringing our full coverage group to Hold or Sell,” Neal Dingmann of SunTrust said, according to Bloomberg. He called it “energy Armageddon.”

“Not one company in our coverage can keep production flat for more than a few months while spending within cash flow at $35 WTI,” Charles Meade of Johnson Rice & Co. said, according to Bloomberg.

The U.S. shale sector is getting completely killed. A complete bloodbath. Billions of dollars in equity wiped out.

Related: Oil Crash Could Trigger A Recession In The Middle East

“The U.S. is going to be the collateral damage here. The producers here are going to be suffering so much,” Amrita Sen, chief oil analyst at Energy Aspects, told Bloomberg from Houston. “They were already suffering and there’s no lending. There’s no money right now for them. This is really going to crush them.”

On Monday, Diamondback Energy said that it would “immediately” slash capex and cut back on completion crews and rigs. 

Shale drillers were already facing substantial hurdles with cash flow problems and maturing debt. “We are preparing for two years of low prices and will make the necessary adjustments to maintain our great balance sheet,” Pioneer Natural Resources’ CEO Scott Sheffield told the Washington Post. Pioneer’s share price cratered by 32 percent on Monday.

“There will be many bankruptcies in our industries and tens of thousands of layoffs over the next 12 months,” Sheffield added.

Shale stocks tanked on Monday, with big names in shale such as EOG Resources, Whiting, Continental Resources and Apache all down over 30%. But one of the biggest losers was Occidental Petroleum, which has seen its market capitalization shrink to $15 billion. It paid $38 billion for Anadarko, and shares are off roughly 73% since that deal.

  • Thanks 1
  • Upvote 1
Link to comment
Share on other sites

The majors with cash will swoop up the companies with the best leases for pennies on the dollar.  In the long run the US oil industry will be better.  Oil is only 3% of the S&P so it’s impact on that index will be minimal.  The credit defaults, well, that’s another story.  We’ll have to see how that shakes out. I heard one analyst say the SA War on Oil is economic war on the US Shale oil companies.  

 

I will not be buying any oil companies no matter how cheap they become.  

  • Upvote 1
Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
 Share

  • Recently Browsing   0 members

    • No registered users viewing this page.
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.