sepheronx wrote:KoTeMoRe wrote:sepheronx wrote:http://sputniknews.com/business/20150824/1026144413/oil-prices-muhammad-as-sayyad-fall-further.html
This is the reason why they up production.
Errm that's the consequence, not the reason. The reason is that there's a cyclical surge on oil efficiency and the US is currently NOT buying back oil for its strategic reserve as it used to. Especially since it is also lowering the need for it, since it has stopped it military shenanigans.
The other issue is the general worsening of the global economy. In the face of the Growth Crowd, there's little real growth. So people just wait for it to be the lowest possible. Your normal chicken game. However, as said, the deeper it falls, the higher it bounces back. I really hope people enjoy the 35 USD ERA, because they'll love the 190 USD era rape.
BTW little clarification, Russia pegs its bbl price with the Brent, not WTI. Brent is little under 44 USD bbl..
Yes, you are right, partially. The initial fall is what created this issue, but it was perpetuated by the issue itself. If OPEC nations decided to just drop production, then prices would go back up, even if modestly.
Right now, big time sellers is petrol for Russia, and even they are facing an issue where production costs have gone up by 14% or more (I don't know where they get the figures from) but consumer prices have dropped (really small, maybe less than 1%). But they are the ones still big time earners and I believe they are selling those more, as nations are already facing a petrol glut.
You are also right that the world economy is going into the shitter. And yes, that would also greatly effect Russia. But in these times, it should be in Russia's best interest to divert its economy not eastward, westward or souther or north or whatever, but inward. Since Russian consumers account for 80% or more of Russia's GDP, there needs to be concentration on making Russian's more consistent consumers and should concentrate on sale of petrol for domestic, sale of components for domestic, etc etc etc. With the rouble dropping, this should be prime opportunity for major companies to move production to at home. Yota devices for instance should be making the cellphones at home now. Same with other Russian brands. But they are not doing it, because it is expensive to open up production no matter where, and the Russian central bank, and the absolutely brilliant (not) minds are making it relatively expensive to set up shop at home.
With gas being so cheap and with the a low-valued Rouble, I think the time is right for a massive development plan for the Far East.