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Should supply disruption persist, the myth of Saudi excess oil production capacity will be...

Should supply disruption persist, the myth of Saudi excess oil production capacity will be exposed for all to see, says Jeff Rubin. The only thing that will stop oil from going north of $200 will be a demand crunching recession. It took $140 prices to do it in 2008. What might the price be this time?
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Comments (5)
  • Stone Fox Capital
    , contributor
    Comments (6711) | Send Message
     
    Insane. Where is their an oil shortage? The US alone has 700M barrels of oil in storage. Maybe we could pay down the debt if oil hits $200.
    2 Mar 2011, 02:25 PM Reply Like
  • Joe Dirnfeld
    , contributor
    Comments (1128) | Send Message
     
    North Dakota and Montana better ramp production up. The
    Bakken oil reserves are at 24 billion barrels.
    2 Mar 2011, 02:30 PM Reply Like
  • DrBenway
    , contributor
    Comments (300) | Send Message
     
    There is no fundamental oil shortage. The spike is not due to a supply disruption (there was hardly any so far) but probably due to China and others stockpiling fearing a possible supply disruption (aided by traders extending the trend).

     

    It's hard to predict political events, but if the turmoil does not hit Saudis, we will see $70-80 a barrel by the fall.

     

    As far as the article goes, follow this rule: book to sell = biased opinion.
    2 Mar 2011, 02:44 PM Reply Like
  • megastarx1
    , contributor
    Comments (2) | Send Message
     
    KOG is one of the best Bakken plays
    2 Mar 2011, 02:55 PM Reply Like
  • bob adamson
    , contributor
    Comments (4559) | Send Message
     
    There are two distinct threads to this debate:
    (a) Are there alternative sources of oil that can be brought to market if the established Middle Eastern supply patterns are seriously interrupted?
    (b) Would there be inherent delays in bringing alternative sources into effective play and might these delays themselves cause serious price increases and economic disruption to occur?
    Overhanging this debate are broader questions about peak oil, the future availability of economically extractable oil and the need to consider alternatives to oil for strategic, climatic or other reasons. Unfortunately, it is all too easy to conflate all of these aspects together.

     

    Arguably, the particular Jeff Rubin comment primarily raises question (b) in the near term and, y contrast, question (a) and the broader questions are matters for the longer term perspective. In other words, because of the nature and volume of the oil that Saudi Arabia could bring on stream (i.e. heavy and sour rather than light and sweat) on short notice and the difficulties that would be experienced in market allocation of increased Saudi oil (i.e. countries previously dependent on Libyan or like sources would have to bid against hoarders etc. for the type of oil they were currently geared to utilize), bottlenecks would occur and prices would spike irrespective of how one might best answer question (a) or the broader questions over time.
    2 Mar 2011, 03:30 PM Reply Like
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