The oil weapon can jeopardize Alberta Oil Investment and Canada economy

Saudi Arabia will force the price of oil down, in an effort to put political pressure on Iran and Russia, according to the President of Saudi Arabia Oil Policies and Strategic Expectations Center.

Saudi Arabia plans to sell oil cheap for political reasons, one analyst says.

·         L'Arabie saoudite a précipité la dégringolade en vendant au rabais pour garder ses parts de marché. En août, 400 000 barils de pétrole saoudien n'avaient pas trouvé preneurs.

·         Grâce au pétrole de schiste, la production des États-Unis dépasse les 8 millions de barils par jour. Les Américains ont donc grandement coupé leurs importations et veulent maintenant devenir un important exportateur.

Cette baisse résulte d’une combinaison de facteurs.

Les premiers tiennent à l’offre. La situation en Irak est moins préoccupante, la Libye recommence à produire, la production russe n’est pas affectée par la crise ukrainienne et l’offre américaine d’huile de schiste monte en puissance. Face à cette offre abondante, la demande elle n’est pas au rendez-vous car l’économie mondiale n’est pas florissante : l’Europe patine et la vigueur du dynamisme chinois suscite des interrogations. (1)

Justement à quoi joue l’Arabie Saoudite ?

Il y a plusieurs hypothèses.

L’Arabie Saoudite, confrontée à la montée en puissance de la production américaine qui était l’un de ses principaux clients, ne veut plus perdre de parts de marché et donc joue sur les volumes.

Elle serait donc engagée dans un bras de fer avec les États-Unis : avec un prix du baril sous pression la rentabilité des sites de production américains d’huile de schiste est dégradée car les coûts d’exploitation y sont beaucoup plus élevés que pour le pétrole conventionnel.

Nombre de projets d’investissements ne verront pas le jour si le prix de vente du baril n’est pas à la hauteur des coûts de production.

Une deuxième hypothèse, contraire à celle du bras de fer, serait celle d’une alliance entre les États-Unis et l’Arabie Saoudite. Pour des raisons géopolitiques, ils joueraient la carte de la baisse du prix du pétrole pour nuire à la Russie et à l’Iran. (2)

Alberta

L’Arabie Saoudite a tout simplement décidé de faire baisser le prix du baril de pétrole , au Canada, les faibles prix du pétrole coûteront cher à l'Alberta.

Certains projets pourraient même être retardés si les prix continuaient de descendre jusqu'à 70 $, comme certains le prédisent.

Les prévisions des projets albertains sont basées
sur un baril de pétrole à
97 $.

Par contre, les américains sont capables de :

“Even at $75 a barrel or perhaps below, U.S. oil production would almost certainly grow in 2015 an 2016, not changing much the need for OPEC to cut if the market is to be balanced. Even if such a price war were ensuing, the Saudis would end up punishing themselves in our view.

They could sustain the pain of $60 a barrel oil for a while, but definitely not forever.”,  Réf: l’article à la fin du carnet.


Extrait de : Baisse des prix du pétrole, le pacte secret entre les Etats-Unis et l’Arabie Saoudite, Repéré par Eric Leser,  Salte, 12.10.2014

Un accord secret a été établi entre les Etats-Unis et l’Arabie Saoudite et nous en voyons peu à peu les contours se dessiner. C’est ce qu’expliquent à la fois le Wall Street Journalet plus en détail encore le blog spécialisé dans la finance Zerohedge, souvent très bien informé.

Le premier signe d’un réchauffement des relations entre l’Arabie Saoudite et les Etats-Unis,devenues très tendues après le soutien de Washington aux révolutions arabes et aux Frères Musulmans notamment en Egypte, l’Arabie Saoudite s’est jointe officiellement aux Etats-Unis et aux occidentaux dans le combat contre l’Etat Islamique en Irak et en Syrie. Mais il y a deux autres parties encore plus importante à cet accord négocié par le Secrétaire d’Etat John Kerry.

La première, écrit le Wall Street Journal, c’est que «le processus a permis aux Saoudiens de faire pression sur les Etats-Unis pour obtenir un engagement d’entraîner les rebelles combattant Bashar el-Assad (le dictateur syrien), dont le renversement est toujours considéré par les Saoudiens comme une priorité».

La deuxième partie de l’accord, c’est le prix du pétrole, qui est une arme de premier plan dans la guerre que se livrent au Moyen-Orient les sunnites et les chiites et leurs alliés. D’un côté donc, l’Arabie Saoudite, la Turquie, la Jordanie, l’Egypte et le Qatar et de l’autre l’Iran, la Syrie de Bashar el-Assad et le Hezbollah libanais.

As it happens, though, the Obama administration is also wielding the oil weapon against two of the world’s leading producers, Iran and Russia. These efforts, which include embargoes and trade sanctions, are likely to have a far greater impact on world output, reflecting White House confidence that, in the pursuit of U.S. strategic interests, anything goes. (1).

L’Arabie Saoudite a tout simplement décidé de faire baisser le prix du baril de pétrole, il lui suffit d'ouvrir un peu plus les vannes, pour peser économiquement et politiquement sur l’Iran et sur son allié et soutien la Russie.

Opec Price Cruch

Si au cours des trois derniers mois, le prix du baril a baissé de plus de 20% et est passé ainsi de 115 dollars à moins de 90 dollars vendredi 10 octobre, c’est directement à la suite d’une décision saoudienne reconnait Rashid Abanmy, Président du Saudi Arabia Oil Policies and Strategic Expectations Center qui est installé à Riyad.

Avec l’arme du pétrole, l’Arabie Saoudite entend contraindre l’Iran a limiter ses ambitions d’armement nucléaire et obtenir de la Russie qu’elle cesse de soutenir à bout de bras le régime de Bashar el-Assad. Deux objectifs que partagent maintenant l'administration Obama.

Selon les calculs effectués par plusieurs études économiques, l’Iran a besoin pour équilibrer son budget et soutenir une économie affectée par des années d'embargo et de mauvaise gestion d’un baril de pétrole à 140 dollars et la Russie de Poutine d’un prix du baril supérieur à 100 dollars. Pour le magazine Forbes, la baisse des cours du pétrole est ainsi bien plus dangereuse pour l’économie russe qui est en récession et pour Vladimir Poutine que les sanctions financières décidées par les occidentaux après l’annexion de la Crimée et le soutien militaire aux indépendantistes de l’est de l’Ukraine.


Extrait de : Why Oil Is Plunging: The Other Part Of The "Secret Deal" Between The US And Saudi Arabia, Tyler Durden's, Zero hedge, 10/11/2014

Two weeks ago, we revealed one part of the "Secret Deal" between the US and Saudi Arabia: namely what the US 'brought to the table' as part of its grand alliance strategy in the middle east, which proudly revealed Saudi Arabia to be "aligned" with the US against ISIS, when in reality John Kerry was merely doing Saudi Arabia's will when the WSJ reported that "the process gave the Saudis leverage to extract a fresh U.S. commitment to beef up training for rebels fighting Mr. Assad, whose demise the Saudis still see as a top priority."

What was not clear is what was the other part: what did the Saudis bring to the table, or said otherwise, how exactly it was that Saudi Arabia would compensate the US for bombing the Assad infrastructure until the hated Syrian leader was toppled, creating a power vacuum in his wake that would allow Syria, Qatar, Jordan and/or Turkey to divide the spoils of war as they saw fit.

A glimpse of the answer was provided earlier in the article "The Oil Weapon: A New Way To Wage War", because at the end of the day it is always about oil, and leverage.

The full answer comes courtesy of Anadolu Agency, which explains not only the big picture involving Saudi Arabia and its biggest asset, oil, but also the latest fracturing of OPEC at the behest of Saudi Arabia...

Saudi Arabia will force the price of oil down, in an effort to put political pressure on Iran and Russia, according to the President of Saudi Arabia Oil Policies and Strategic Expectations Center.

Saudi Arabia plans to sell oil cheap for political reasons, one analyst says.

To pressure Iran to limit its nuclear program, and to change Russia's position on Syria, Riyadh will sell oil below the average spot price at $50 to $60 per barrel in the Asian markets and North America, says Rashid Abanmy, President of the Riyadh-based Saudi Arabia Oil Policies and Strategic Expectations Center. The marked decrease in the price of oil in the last three months, to $92 from $115 per barrel, was caused by Saudi Arabia, according to Abanmy.

With oil demand declining, the ostensible reason for the price drop is to attract new clients, Abanmy said, but the real reason is political. Saudi Arabia wants to get Iran to limit its nuclear energy expansion, and to make Russia change its position of support for the Assad Regime in Syria. Both countries depend heavily on petroleum exports for revenue, and a lower oil price means less money coming in, Abanmy pointed out. The Gulf states will be less affected by the price drop, he added.

The Organization of the Petroleum Exporting Countries, which is the technical arbiter of the price of oil for Saudi Arabia and the 11 other countries that make up the group, won't be able to affect Saudi Arabia's decision, Abanmy maintained.

The organization's decisions are only recommendations and are not binding for the member oil producing countries, he explained.

Today's Brent closing price: $90. Russia's oil price budget for the period 2015-2017? $100. Which means much more "forced Brent liquidation" is in the cards in the coming weeks as America's suddenly once again very strategic ally, Saudi Arabia, does everything in its power to break Putin.


Extrait de : Saudi Arabia to pressure Russia, Iran with price of oil, By Nihan Cabbaroglu , Anadolu Agency, 10 October 2014

Saudi Arabia plans to sell oil cheap for political reasons, one analyst says.

To pressure Iran to limit its nuclear program, and to change Russia's position on Syria, Riyadh will sell oil below the average spot price at $50 to $60 per barrel in the Asian markets and North America, says Rashid Abanmy, President of the Riyadh-based Saudi Arabia Oil Policies and Strategic Expectations Center.

The marked decrease in the price of oil in the last three months, to $92 from $115 per barrel, was caused by Saudi Arabia, according to Abanmy.

With oil demand declining, the ostensible reason for the price drop is to attract new clients, Abanmy said, but the real reason is political. Saudi Arabia wants to get Iran to limit its nuclear energy expansion, and to make Russia change its position of support for the Assad Regime in Syria. Both countries depend heavily on petroleum exports for revenue, and a lower oil price means less money coming in, Abanmy pointed out. The Gulf states will be less affected by the price drop, he added.

The Organization of the Petroleum Exporting Countries, which is the technical arbiter of the price of oil for Saudi Arabia and the 11 other countries that make up the group, won't be able to affect Saudi Arabia's decision, Abanmy maintained.

The organization's decisions are only recomendations and are not binding for the member oil producing countries, he explained.

Another analyst took issue with Abanmy's views, however. Caspian Strategy Institute analyst  Mubariz Hasanov told Anadolu Agency (AA), that a single country cannot have much effect on oil prices.

“The U.S. and Saudi Arabia alone do not have the power to seriously affect oil prices”, Hasanov insisted. “No country has this kind of power, unless it starts a war or executes a strong embargo, as was done in 1973.”

All other efforts could only have a limited and temporary effect on oil prices, Hasanov said, "If the price of oil is going to fall by 5 percent for economic reasons, political efforts to decrease it can only make it 5.5 percent, not 10 percent.”


Extrait de: In Alberta, anxiety grows over declining oil prices, Jeffrey Jones , The Globe and Mail, Oct. 15 2014, 10:54 PM EDT

Alberta’s oil patch and government are watching nervously as the slump in world oil markets threatens the province’s economic boom.

The price of West Texas Intermediate (WTI) crude, a grade used as a benchmark in pricing, fell slightly to $81.78 (U.S) a barrel on Wednesday, extending a recent rout that has taken it down 10 per cent this month alone. Oil prices have tumbled as the demand for crude in major economies has fallen and producing countries have stared each other down, refusing to cut output for fear of losing market share.

Crude futures slip again due to an abundant supply. As Melanie Ralph reports the global market appears to be shifting from an era of scarcity, potentially damaging sanctions-hit Russia.   

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Vidéo : Winners and losers of low oil prices

Why Canadian oil patch investors should be tracking U.S. crude price

For Alberta, the oil plunge is rekindling bitter memories. In the financial crisis of late 2008 and early 2009, skidding oil prices and a credit crunch forced the Canadian industry to cancel or shelve as much as $90-billion (Canadian) worth of energy expansion plans, many in the oil sands. At the time, WTI sank below $40 (U.S.) a barrel.

Suddenly, some high-cost projects in Alberta are again at risk, and sustained weak pricing could hamper the industry’s current forecast for oil sands output to double over the next decade.

Any cutbacks will reverberate through the Alberta economy, which has driven economic growth in Canada in recent years.

Energy prices weigh “extremely heavily” on the whole Alberta economy, said Douglas Porter, chief economist at BMO Capital Markets. “Now that we’ve seen oil prices correct so heavily, there is a risk that the damage spreads far beyond just the energy sector,” he said.

A recent study by BMO Nesbitt Burns pegged the average cost of developing an oil-sands mine and operating it profitably at about $90 per barrel, well above the current price of crude. For example, the study said, costs at CNOOC Ltd.’s Long Lake project are well over $100 a barrel, and costs for the Suncor Energy Inc.-Total SA Fort Hills development, now under construction, are above $90.

Investors have already driven down the share prices of oil producers amid growing fears that profit margins will be squeezed and plans delayed or cancelled.

However, many well-established oil projects remain profitable at current or lower prices. The core operations of Suncor and Syncrude Canada Ltd. have costs of less than $50 a barrel. Some steam-driven oil sands projects, such as MEG Energy Corp.’s Christina Lake development and Imperial Oil Ltd.’s Cold Lake venture, have costs under $65, according to the study, giving them breathing room.

Other factors are also working in favour of the energy sector now compared with the financial crisis. Credit remains available, the falling Canadian dollar is cushioning the blow of weaker oil prices, and demand for Alberta’s domestic heavy crude remains strong.

Still, some fear the shaky crude market will erode investor and consumer confidence, and hinder job growth and the real estate market in the province of four million people.

The Progressive Conservative government, under new Premier Jim Prentice, is watching the situation closely, but points out that the province is in a good position to weather the current downturn because its budget assumptions early in the year underestimated oil prices. As recently as August, the government said its operational surplus was on track to hit $3.2-billion (Canadian), up more than half a billion from the March prediction.

The WTI oil price could fall as far as $75 (U.S.) a barrel if OPEC members cut production at their Nov. 27 meeting, and $60 if they refuse to act, said Martin King, analyst at FirstEnergy Capital Corp. The length of the downturn will be key, however, he said.

“With the price meltdown here, if you want to call it that – it’s only really been dramatic over the last 10 days – to start basing annual budgets and everything on a 10-day movement in crude oil prices is ridiculous, where it is going up or going down,” Mr. King said.

The oil rout has been cited as pushing the Canadian dollar to five-year lows. The loonie fetched 88.87 U.S. cents late on Wednesday. As a major exporter, the oil patch benefits from a weaker domestic currency because oil is priced in U.S. dollars. As a result, these companies take in the stronger U.S. dollars from sales and spend Canadian dollars on operations.

And the discount on Western Canadian Select, the benchmark for prices of Canadian heavy oil, has been unusually narrow at less than $13 a barrel below WTI, compared with as much as $40 late last year. Canadian oil has traditionally been priced lower because bottlenecks getting it to U.S. markets created a surplus. Because of new U.S. pipelines and more capacity for shipping crude by rail, the difference has narrowed.

That has counteracted the effect of weakening world oil prices on export revenues for energy producers as well as the government’s take, said Amina Beecroft, president of A2B2 Analytics Inc., which tracks the impact of oil and currency on the province’s finances. In Alberta’s current budget, every 1 per cent change in the heavy oil discount translates into $274-million in government revenue, Dr. Beecroft said. “As the differential gets narrower, that’s additional revenue,” she said.

Alberta remains a magnet for job seekers. Unemployment in September was 4.4 per cent, well below the national jobless rate of 6.8 per cent. And the province’s finances are strong, Mr. Porter said.

Still, BMO forecasts growth there will slip below 3 per cent next year from about 3.5 per cent this year. “By any other yardstick, growth of almost 3 per cent would still be very good, but it does mark a slowdown for the province,” he said. “And that’s based on our assumption that oil prices do come back a little bit in 2015.”


Extrait de: Can Saudis beat North Dakota in an oil price war?, MarketWatch, William Watch, Oct 8, 2014

NEW YORK (MarketWatch) — With oil prices tumbling — and dragging gasoline prices at U.S. pumps further below $4 a gallon — investors wonder if Saudi Arabia will cut production in an effort to stop the slide.

Don’t count on it.

In a note, commodity strategists led by Seth Kleinman at Citi argue that the Saudis aren’t likely to throttle back output, in part because they apparently “think that they can win any price war” with U.S. shale producers.

In other words, Saudi producers are playing a long game, confident that “full cycle” shale production costs are considerably more than their own.

As Julian Jessop, head of commodities at Capital Economics points out, there is precedent. Saudi Arabia responded to a glut of non-OPEC oil in the latter half of the 1980s by increasing its own output, successfully eroding the profitability of other producers, including those in the North Sea, he said.

Oil futures remained under pressure Wednesday, with the price of light, sweet crude for November delivery CLX4, +0.66%  on the New York Mercantile Exchange falling $1.54, or 1.7%, to $87.31 a barrel, hitting the lowest price for a most-active contract since April 2013 after data showed a further rise in U.S. crude supplies. ICE November Brent crude futures UK:LCOX4  fell 58 cents, or 0.6%, to $91.53 a barrel, setting a two-year low.

Saudi Arabia earlier this month cut the official selling price for its crude, according to news reports, a move that put additional pressure on oil prices at the time.

The Citi analysts say the Saudis might be right to think they can win a price war, but only up to a point.

Comments by Saudi officials indicate they continue to believe shale oil requires a price of $90 a barrel to be profitable, the analysts noted. While the Saudis think this represents a new floor for oil prices, the floor is actually falling as shale-oil production technology continues to improve, Citi said. (It costs just a few dollars a barrel to extract Saudi Arabian oil, but the International Monetary Fund in September estimated that the “breakeven” price required to balance the country’s budget rose to $89 a barrel in 2013 from $78 in 2012.)

Moreover, this supposed floor reflects the “full cycle costs” of production, they said, arguing that this overlooks the fact that many producers in North Dakota, Texas and elsewhere have already acquired acreage, contracted rigs and even hedged crude prices.

“We think what counts at this stage is half-cycle costs, which are in the significantly lower band of $37 to $45 a barrel. This means that the floor is falling and may not be nearly as firm as the Saudi view assumes,” they wrote.

Even at $75 a barrel or perhaps below, U.S. oil production would almost certainly grow in 2015 an 2016, not changing much the need for OPEC to cut if the market is to be balanced. Even if such a price war were ensuing, the Saudis would end up punishing themselves in our view. They could sustain the pain of $60 a barrel oil for a while, but definitely not forever.”

The bottom line, they said, is that the Saudis could conceivably win a price war, but it would be a “painful, pyrrhic and short-lived” victory as the price floor for shale continues to fall.