Saudi Arabia sells oil at US$6-US$8 discount a barrel to undercut everyone else when prices already falling

[kobayashiGT]

Saudi Arabia sells oil at US$6-US$8 discount a barrel to undercut everyone else when prices already falling

source: https://mothership.sg/2020/03/saudi-arabia-oil-price-crash/

Saudi Arabia announced a stunning discount in oil prices on Sunday, letting customers in Asia, the United States and Europe snap up supply at US$6 to US$8 discount per barrel.

This measure sent oil prices and stock indexes into free-fall, as crude oil traded at US$28 to US$32 per barrel.

As recent as 2014, prices went as high as US$115 per barrel.

U.S. consumers will get cheaper fuel prices

United States consumers are likely to see lower prices at the gas pump.

American oil producers, though, could be hurt by the oil price slide, as America leads the world in output.

Going against logic

Instead of cutting oil production to stem falling prices, Saudi Arabia — the world’s second-largest producer — this weekend said it will actually boost oil production in a dramatic reversal in policy.

Days before, Saudi Arabia, the rest of OPEC (Organization of the Petroleum Exporting Countries), and Russia failed to agree on production cuts to combat falling prices stemming from coronavirus epidemic fears that will halt world economic growth.

Oil prices had already fallen more than 30 percent in 2020 before Sunday’s further collapse.

Saudi strategy to grab market share

Saudi Arabia and other OPEC members sought to cut production to shore up oil prices.

But the once-powerful cartel can no longer move markets alone without Russia’s participation.

Russia, which is not an OPEC member, has recently been coordinating with the organisation.

However, Russia did not go with production cuts and the talks ended failed on Friday, March 6.

OPEC and its allies announced no new reductions and didn’t even commit to extending current cuts.

Saudi Arabia going head-to-head with Russia

The logic of cutting oil prices at this stage is due to Saudi Arabia taking on Russia for dominance.

If Saudi Arabia cannot move prices upwards, its cutting of prices is to retain market share.

In all, Saudi Arabia is cutting the oil price for the U.S. market by S$7 per barrel, to Europe by S$8, and Asia by S$6.

Such a strategy is paired with Saudi Arabia’s ability to rapidly increase production and unilaterally cutting crude oil prices for everyone.

Low oil prices are bad for Saudi Arabia’s budget though.

But because Saudi Arabia’s production costs are the lowest in the world, lower prices can hit other producers harder.

Even though Russia is being targeted, American oil and gas producers, including the fracking industry, will also be hurt

Despite this unilateral move, Saudi Arabia is not guaranteed to come out on top in a prolonged face-off with Russia.

It’s not even clear if there are going to be buyers for that oil.

Lower fuel prices can offer some relief to the airline industry, with travel cancellations leading to flight cuts.

World markets hit

The oil price shocks reverberated throughout financial markets.

Dow futures dropped more than 1,000 points.

S&P 500 futures hit their limits after tumbling 5 percent.

The 10-year Treasury note yield fell below 0.5%, a record low.

 

 

[kobayashiGT]

Just a more simple way for some ppl here to understand the situation. 

🤣

[Enye]

what the frack!

🤣

[Beregond]

I will only blink if i see price drop for our petrol stations😏😏

[kobayashiGT]

15 minutes ago, Beregond said:

I will only blink if i see price drop for our petrol stations😏😏

I think Singapore very hard. When it comes to our shore, the price will automatic buffer back liao.

Can go malaysia pump. thier price drop alrd. hahah.

[Vinceng]

When petrol excise duty makes up 25% of the fuel price, any drop in prices will be minimal.

[Jusnel]

I don't care about anything if our petrol stations not dropping prices. 

All I know is our cartel is laughing to the bank

[Watwheels]

The middle east are competing with Russia. Other nations will buy oil from whoever is selling at a cheaper price. 

Oil is one of the top sgp exports. Gahment will control the price and never let it drop. It can only go up.

Edited March 10, 2020 by Watwheels

[inlinesix]

3 minutes ago, kobayashiGT said:

I think Singapore very hard. When it comes to our shore, the price will automatic buffer back liao.

Can go malaysia pump. thier price drop alrd. hahah.

Malaysia pump price will drop another 4 more weeks, at least.

[Enye]

2 minutes ago, Watwheels said:

The middle east are competing with Russia. Other nations will buy oil from whoever is selling at a cheaper price. 

Oil is one of the top sgp exports. Gahment will control the price and never let it drop. It can only go up.

wah...zhun boh?

sg produce and export oil? sg govt control oil price?

😵

[Watwheels]

4 minutes ago, Enye said:

wah...zhun boh?

sg produce and export oil? sg govt control oil price?

😵

http://www.worldstopexports.com/singapores-top-exports/

Quote

 

The following export product groups represent the highest dollar value in Singaporean global shipments during 2019. Also shown is the percentage share each export category represents in terms of overall exports from Singapore.

Electrical machinery, equipment: US$120.7 billion (30.9% of total exports)

Machinery including computers: $59.3 billion (15.2%)

Mineral fuels including oil: $47.9 billion (12.3%)

Optical, technical, medical apparatus: $20.9 billion (5.4%)

Gems, precious metals: $17.8 billion (4.6%)

Plastics, plastic articles: $14.6 billion (3.7%)

Organic chemicals: $12.9 billion (3.3%)

Perfumes, cosmetics: $9.7 billion (2.5%)

Pharmaceuticals: $8.1 billion (2.1%)

Aircraft, spacecraft: $8 billion (2%)

 

It's on the top 3rd spot. It will directly affect our gdp. So you think our gahment will control or not?

[Watwheels]

So you see now why sgp dont support things like electric car, solar/wind power, nuclear power and whatever that dont run on oil.

[Enye]

25 minutes ago, Watwheels said:

http://www.worldstopexports.com/singapores-top-exports/

It's on the top 3rd spot. It will directly affect our gdp. So you think our gahment will control or not?

people talking crude oil here you talking simi oil?

top 3rd spot means sg govt control price?

then the top 2 exports ...sg govt also control price or not?

so until which level then sg govt control price? 

😵

[Wt_know]

stock piling oil nao !!!!!! 

Edited March 10, 2020 by Wt_know

[inlinesix]

22 minutes ago, Watwheels said:

So you see now why sgp dont support things like electric car, solar/wind power, nuclear power and whatever that dont run on oil.

Daimler Group is reducing its R&D on ICE going forward.

In fact, there is a electric G wagon in the making.

Next time, Singapore President only got EQS rather than S

[Mockngbrd]

Jia you

[Philipkee]

39 minutes ago, Wt_know said:

stock piling oil nao !!!!!! 

Going JB to pump all full tanks nao!!!

[kobayashiGT]

1 hour ago, Watwheels said:

So you see now why sgp dont support things like electric car, solar/wind power, nuclear power and whatever that dont run on oil.

i also don't really suppork electric car. i still like the smell of gasoline. hahaha