Ukraine: military (Aug '14 to mid-June '15) closed

[Dayuhan]

And Dayuhan why was there a common word used during that period "oil cartel" and it was being led by the KSA so what motivated the KSA to flood the market if pricing went lower which would cut into their earnings as well?

I just explained that; possibly it wasn't clear.

Nobody really "led" OPEC at that point, because OPEC effectively collapsed. Its production quotas, its only tools for supporting the price, were voluntary and when countries ceased to follow them, the cartel lost all power.

What has to be understood is that this process started slowly. When prices dropped slightly, oil producers pumped more because their political masters wanted the money. When prices dropped a little more, they pumped even more, because the political masters still wanted more money.

If they were thinking long term and if they trusted each other, they could have all decided to cut back production and forced the price back up. They weren't thinking long term, and they didn't trust each other, so they didn't do that. They acted to bail themselves out in the short run, by pumping more and selling more. Once the spiral started they couldn't break out of it, largely because they didn't trust each other enough to cooperate.

As a result the US had a 10 year cheap oil joyride, the Soviet Union went broke, and oil producers everywhere had a very miserable decade, very much including the Saudis.

This has been picked apart in near infinite detail by oil industry analysts, and I don't know of anyone in that community who buys into the idea that the oil glut was intentionally contrived as a weapon. It had a lot to do with chaos, suspicion, and mistrust, not much to do with conspiracy.

[OUTLAW 09]

I just explained that; possibly it wasn't clear.

Nobody really "led" OPEC at that point, because OPEC effectively collapsed. Its production quotas, its only tools for supporting the price, were voluntary and when countries ceased to follow them, the cartel lost all power.

What has to be understood is that this process started slowly. When prices dropped slightly, oil producers pumped more because their political masters wanted the money. When prices dropped a little more, they pumped even more, because the political masters still wanted more money.

If they were thinking long term and if they trusted each other, they could have all decided to cut back production and forced the price back up. They weren't thinking long term, and they didn't trust each other, so they didn't do that. They acted to bail themselves out in the short run, by pumping more and selling more. Once the spiral started they couldn't break out of it, largely because they didn't trust each other enough to cooperate.

As a result the US had a 10 year cheap oil joyride, the Soviet Union went broke, and oil producers everywhere had a very miserable decade, very much including the Saudis.

This has been picked apart in near infinite detail by oil industry analysts, and I don't know of anyone in that community who buys into the idea that the oil glut was intentionally contrived as a weapon. It had a lot to do with chaos, suspicion, and mistrust, not much to do with conspiracy.

Really Dayuhan you are still stating the KSA does not "guide nor influence" OPEC---even in times of overproduction which if you really do look at the numbers from that period-- then why did the two major producers of sour crude the exact same quality as that which comes out of the Urals overproduce?

Why would anyone cut their income deliberately via overproduction if that is what you are saying ---it was general overall overproduction that caused the low income earnings. The OPEC is smart enough to fully understand overproduction in a normal demand market does not lead to a great cash flow--so again why did they over produce?

Ask the question again why was there an over production strictly in sour crude when the refineries of the west could not handle the volume that was being offerred?

Ask the question again why did the market dip when the US made their recent sells of sour crude when in fact the general product sour crude was running fairly stable---why the price dip which exactly matched the US sales period of their reserve sour crude?

You really need to start asking the question why---until you fill in the why answer in ---all other questions such as who what when where and how jet unanswered into space---answer the why and then the answers to the above questions make sense.

[OUTLAW 09]

The same stolen white tractor trailer that long hauled the Buk SAM11 out of the Ukraine into Russia after downing MH17 is back again from Russia headed towards Donetsk with a T80 on the long haul trailer.

Man he is racking up the per diem and mileage these days---there must be even a night time hauling fee that he also gets as it rumored he is making the nightly runs quite often these days.

https://twitter.com/tombreadley/stat...876224/photo/1

[Dayuhan]

Really Dayuhan you are still stating the KSA does not "guide nor influence" OPEC---even in times of overproduction which if you really do look at the numbers from that period-- then why did the two major producers of sour crude the exact same quality as that which comes out of the Urals overproduce?

Actually everbody was overproducing, of all types of crude: the various indices moved together and rarely deviated from each other by more than a very small percentage. The glut was in no way a phenomenon specific to any given type of crude.

Why would anyone cut their income deliberately via overproduction if that is what you are saying ---it was general overall overproduction that caused the low income earnings. The OPEC is smart enough to fully understand overproduction in a normal demand market does not lead to a great cash flow--so again why did they over produce?

Because they didn't trust each other. For all intents and purposes, the cartel ceased to function as a cartel, and become every producer for himself. At any given price point, pumping more earns you more. Of course you can push the price up if everybody cooperates... but they didn't cooperate. Of course by the 80s non-OPEC production was a majority of global production anyway, which cut into OPEC influence even more.

Ask the question again why was there an over production strictly in sour crude when the refineries of the west could not handle the volume that was being offerred?

Again, not correct: the glut extended across the entire spectrum of crude types.

Ask the question again why did the market dip when the US made their recent sells of sour crude when in fact the general product sour crude was running fairly stable---why the price dip which exactly matched the US sales period of their reserve sour crude?

Of course if you put oil on the market, the price will drop, unless somebody somewhere cuts back production to compensate. Of course the ability of the US to sustain those sales is limited, and everybody knows that releases from reserves will have to be replaced, creating excess demand that will drive prices back up.

You really need to start asking the question why---until you fill in the why answer in ---all other questions such as who what when where and how jet unanswered into space---answer the why and then the answers to the above questions make sense.

You need to stop assuming that everything that happens is the result of intentional planning.

This is a good general briefing on what went on:

http://www.e-ir.info/2012/12/28/worl...es-and-crises/

These are key paragraphs:

One of the major factors causing overabundance of world oil was OPECs inability to limit its production sufficiently to support a given price level. Between 1979 and 1982, demand for OPEC oil dropped by 40 percent, consequently all members decreased production by at least 20 percent. Nearly all OPEC members bore the brunt of limiting production, although certain members made larger cuts: Saudi Arabia, Kuwait, and Libya reducing output by 65 percent, 60 percent, and 50 percent respectively. Yet even with this drop in output, prices continued to fall. This put pressure on producers to make up for falling revenues by increasing their output.

Eventually, towards the end of 1985, Saudi Arabia announced that in riposte to other OPEC members’ repeated violations of their respective production quotas, it would no longer play the role of ‘swing producer’ and would instead attempt to increase its share of world oil by selling oil at whatever prices the market would bear. As OPEC abandoned all production and pricing agreements, OPEC output rose by 25 percent, between 1985 and 1986.[8] (Gately 1986: 241-242) Of course, this only added to the world oil glut, causing oil prices to fall below $10 a barrel, which in real terms is lower than the $3 per barrel price that prevailed before the 1973 price shock. (Georgiou 1987: 298)

It's all worth reading, though. Again, I don't think there's a single serious oil market analyst on the planet who buys your premise. Do you know of any?

EIA has a similar take:

http://www.eia.gov/pub/oil_gas/petro...2000.htm#T_10_

[JMA]

Actually everbody was overproducing, ...

Why?