The world has so much oil that abundance is actually becoming a logistical problem: We’re not sure where to stash all the crude sloshing around the global market. Most onshore storage sites are full-up at this point, so producers have taken to offloading their cargo onto tankers and anchoring the ships off the coasts of major oil ports. Houston, for example, had some 41 tankers idling outside its port last week.
Low oil prices infuriate the Democrats and Vladimir Putin. Too bad.
Brent crude is currently trading below $44 per barrel, and America’s West Texas Intermediate benchmark is barely above $40. When we look at the supply side of the market, it’s not hard to see why prices have fallen so dramatically, and, with demand unlikely to rise enough to offset this glut, prices seem set to stay a bargain for the foreseeable future.
It seems as if you are not aware that the Middle East is flooding the market on purpose to teach the West a lesson about their attempts to become self sufficient through the development of shale oil. There used to be artificial limits on crude production, to keep worldwide prices up. The Saudis merely have to open the valves on their wells further, while Western deposits require high investments to bring new production online.
ReplyDeleteBut the Saudis (who have NEVER been our friends) are hurting at their bottom line in this faceoff. If we hold on long enough, they are the ones who are going to suffer. A lot of their money is now going into their military and the ongoing fight the royal house will be engaged in for the foreseeable future just to fend off their coreligionist fanatics in order to stay in power. The kingdom is far from worry-free.
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