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Gold/Mining/Energy : Big Dog's Boom Boom Room

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To: elmatador who wrote (200492)	3/9/2020 2:43:57 AM
From: Elroy Jetson	Read Replies (1) of 206193

The problem with your scenario is higher-cost shale producers pop right back when prices rise. (This excludes those really-too-high-cost producers who were already toast at $55 per barrel because the 'profitability' of their production was a debt-induced fiction). If these higher cost shale producers liquidate debt and shareholders in the process, these 'higher-cost' producers come back as 'significantly lower cost' producers. Unfortunately for this theory, the only way these higher-cost producers don't come back is if oil prices remain too low. . The Saudis have instead directly targeted only one very specific low-cost producer - Russia. Everyone else around the globe is collateral damage, of no interest to the Saudis, in this particular individualized lesson. But there's a a bigger part of this lesson which has nothing to do with the price of oil. Russia is an ally with Iran and Iran's allies in Syria through-out the Middle East. Russia refusing to reduce oil output is just the last provocation. Saudi Arabia wants to reorient Russia's entire foreign policy and they have no current 'Russian benefits' to lose in the fight. I suspect this fight will be long and bitter.

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