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As expected Iran boycotts the talks in Doha of 16 major oil producers seeking to stabilize oil prices. Saudi Arabia, Russia, Qatar and Venezuela sought to stabilize oil production at January levels to support oil prices. Wth the Saudia and Russia producing all out, Iran seeks to do the same, effectively closing the door on any agreement to freeze production levels.

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Experts point out that Saudi oil price policies are set on a technocratic basis by a small group of advisors. An oil industry veteran Naimi, 79, leads this group of advisors. This means the new King Salman is likely to follow the same course as his predecessor King Abdullah. Gulf oil officials were expecting a drop to around $50 to $60 a barrel, the drop below $50 has surprised even the Saudis. NYT cites IMF estimates of a loss of oil revenues for Saudi Arabia and its allies in the Persian Gulf of about $300 billion in 2015. The Economist and WSJ reports say that for the long term shale oil production and advance in technologies are likely to play a lasting role in keeping oil prices low. At a time when Saudi society is changing, population growing, an older generation likely to transition to a younger generation in government, the cost of the social safety net and ample benefits will remain a concern for the Saudis for the long term.

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Forecasts show global oil output exceeding demand by 630,000 barrels a day for the fourth quarter of 2012. This is partly the result of extra oil supplies coming in from Saudi Arabia to counter the situation with Iran at the same time as oil demand is slowing with the economic slowdown in the U.S., Europe and China. Prices of crude declined to $85.73 a barrel on the Nymex, and $107.85 for Brent crude on the ICE Futures Exchange on Oct. 24, 2012. Goldman Sachs cut the 2013 price forecast for Brent crude to $110 a barrel from $130. Earlier the QE III monetary easing by the U.S. Federal Reserve had rallied oil prices because of a weakening of the dollar.

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Lower oil prices in June 2012 with slowing growth worldwide and a planned buildup of inventories by Saudi Arabia and western nations. U.S. crude oil prices dropped to $83.23 a barrel on June 1, 2012.

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Saudis are now prepared to increase oil production after weeks of US diplomacy in exchange for security guarantees against attacks by Yemeni rebels and Iran. Russian oil output has declined by about 1 million barrels a day since the start of the war says WSJ. Drops in production lead to a rise in oil prices more than making up for the decline in revenues for Russia. This makes oil sanctions a weak deterrent for Russia in its invasion of Ukraine unless Saudis and UAE step in with increased oil production to make the EU embargo on Russian oil work effectively to cut Russian oil revenues financing the Ukraine invasion. Europe has stepped up with its embargo on about 90% of Russian oil- all except pipeline supplies to Hungary and Czech Republic, Slovakia as an exception. This will reduce oil production in Russia as EU is the biggest importer of Russian oil, bigger after previous German chancellor Merkel's failure to see the risks in such dependence and increased imports. For the oil embargo to lead to sharp reduction in Russian oil revenues that reduces financing of the Ukraine invasion, and for the EU oil embargo to bring results the missing piece is Saudi action to increase production. This may now be in place as Mr. Biden visits Riyadh next month. Crown Prince Salman of Saudi Arabia has pushed Saudi Arabia to make changes to modernize the country's culture providing the US with a partner that is now different than the Saudi Arabia steeped in tradition and inward looking under previous rulers. Under president Obama Democrats favored Iran and reduced security guarantees that were set up since president Franklin Delano Roosevelt met the Saudi King in 1944 aboard an American ship during the war. The turn of events with Russian invasion of Ukraine with Chinese support have created risks of a China invasion of Taiwan with aggressive action of China. President Biden has made this clear and stated straightforwardly the American position on Ukraine- Russia winning by invading a neighboring country sets the precedent for a Chinese invasion of Taiwan. This is why the US remains resolute with its European partners in seeing to it that Ukraine remains as Biden said in the NYT  "independent, sovereign and able to deter invasion and defend itself." For Europe it is about defending its neighborhood from the Baltic Sea to Bulgaria in the Balkans with American support. For the US it is about keeping its leadership presence in Asia in an alliance with Japan, India, Australia and most of South East Asia including Indonesia, Bangladesh with a population of close to 3 billion people. China which was supported by the US throughout the period of colonial dominance since the 18th century preventing its breakup and foreign rule as happened in India, and a major recipient of American aid and investment in the 20th century is now where Japan stood in the two decade period 1925 -1945 with its aggressive expansion under Japanese imperialist rule. In this sense the world is moving back to the days of the Free World's struggle in the days after the Iron Curtain fell over Europe with Soviet expansion in Eastern Europe. Saudis, UAE, and Turkey as part of NATO, are also moving back to the positions they had over a long period for centuries from 1800. Saudi Arabia and UAE came into prominence after discovery of oil and were backwaters to Egypt and Turkey which were supported by Britain to keep Russia from advancing in Asia and Europe during that period. India under the British Empire is now in the Indo-Pacific Framework with Japan which was inward looking and under European influence for most of the last 200 years.  ...

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Senior officials from Russia and OPEC producers meet in Jeddah in April 2018 to work out plans to continue cuts in production to reduce inventories and lift oil prices. The deal was first made in 2016 to reduce the glut then prevailing that led to a slump in oil prices to the $50 per barrel level. The agreement has worked to remove about 2% of world oil production. Healthy demand in 2018 from economies of Europe and America has helped lift oil prices with the cuts in production in place to $70 per barrel. A reinstatement of sanctions on Iran could limit supplies from Iran. Venezuelan production is down in its current economic crisis. Russia says it is 100 percent committed to compliance with the agreement with Saudi Arabia and OPEC countries. It was the lack of agreement between Russia and Saudi Arabia with each going its own way following the Russian intervention in Syria favoring Iran that increased the glut in oil supplies in 2015 leading to a fall in oil prices. For some time this hurt the Russian economy and Russia responded by actively devaluing its currency to maintain economic stability and internal growth. The Saudis were hit too by the fall in oil prices limiting new investments in the economy. The new agreement between Russia and the Saudis/OPEC comes after mutual interest has prevailed in the relations of OPEC  and Russia over the geopolitics in the region between Iran supported by Russia and the Saudis. It also comes as relations between the U.S. and Russia are worsening, with increasing investments in the military. ...

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Oil traders are pricing in much higher oil prices- with $150 not being inconceivable- because of Mideast unrest. They see this unrest playing out over a long period of time, and do not see this changing even if the Libyan situation returns to normal tomorrow. Saudi Arabia will need to price oil at $85-90 a barrel just to meet the economic demands for a growing population, says Rachel Ziemba, analyst at Roubini Global Economics. Saudi King Abdullah recently promised $150 billion in new housing, higher wages and other benefits to prevent protests. The fiscal pressures are growing in these countries. A $15-$20 premium for unrest is assigned by Paramount Options, a trader at the New York Mercantile Exchange.

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Saudis unilaterally cut prices of crude oil without consultation with other members of OPEC at the beginning of Oct. 2014. Saudi oil minister Ali al-Naimi says there is not much point in talking to other members of OPEC as everyone does as they please. The old cooperation between Gulf states Qatar, U.A.E., Kuwait and Saudi Arabia is breaking down with each country backing different rebel factions against the Assad regime in Syria-Iraq. Ali al-Naimi who normally comes in ahead of the OPEC meetings in Vienna, which meet twice a year, arrived this time at the last minute. He said meetings should be conducted only once a year and consulting can be done remotely. The old style when he guided discussion at OPEC meetings is gone. OPEC now produces about a third of the world's oil, has large spare capacity of 3.8 million barrels a day in 2014 or 4% of global oil supply in a crisis, according to IEA. Yet it faces pressures from the increasing shale production in North America and the decline in demand from Asia. Brent crude is at about $92 in October 2014. OPEC production in August 2014 was split as follows- Saudis 9.6, Iraq 3.0, Iran 3.0, U.A.E. 2.9. Kuwait 2.9, Venezuela 2.3, Qatar 0.7, Libya 0.5, Algeria 1.2, Nigeria 1.8, Angola 1.7 (millions of barrels a day, source: OPEC)...

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Oil prices are forecast to remain above $100 a barrel in 2012 because of higher social spending in Saudi Arabia, Iran and other countries after the democracy protests, and the threat of retaliation by Iran in the Straits of Hormuz. Iranian threats of retaliation for increased sanctions has embedded a $10-$20 premium in oil prices say some experts.

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Western nations including Europe, Canada, Japan and South Korea, are members of the International Enerrgy Agency, which has 1.5 billion barrels in reserve. The IEA will release oil from its reserves to support president Biden's plan to release 180 million barrels over the next 6 months. OPEC that includes Russia plans to increase production by only about 432,000 barrels a day.  During the Trump administration Saudi Arabia and Russia were at odds on production levels leading to Russia increasing production to higher levels than OPEC would allow. This led to a temporary collapse of oil prices to levels as low as $30. To help the US oil fracking industry which could not operate at these low prices president Trump brought the two sides together into what is now OPEC+. The Biden administration has ties with both Iran and Saudis, and aims to revive the Iran nuclear deal, withdrew support for Saudi air strikes on Yemeni Iran backed Huthi rebels. In this geopolitical situation Saudis are reluctant to respond to US calls to increase production as they have done in the past. With climate change and the COP26 agenda in Glasgow there is a plan to shift away from fossil fuels such as coal and oil that are supplied by OPEC and Australia. This means that a shift away from Russian or Saudi oil is also a shift towards renewable energy such as wind and solar which is needed to combat climate change. The Ukraine war and efforts to wean Europe away from Russia sourced energy will accelerate the changes needed to tackle climate change, even though the US fracking industry will step in to increase production at oil prices at $100+ in 2022. After 2023-2024 the push for conservation and renewable energy from today's crisis and Glasgow COP26 commitments, sharp slowdown in China and renewable focused India is likely to bring down oil prices to reasonable levels for a transition period to renewable energy. ...

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The benchmark price of U.S. crude oil dropped to $31.41 a barrel on January 11, 2016, as oil prices continued to drop sharply following a slowdown in China, appreciation in the U.S. dollar and no cuts in production from Saudi Arabia. Analysts expect a crisis for energy producers that is deeper than ones in 1986, and five plunges in oil price all the way back to 1970. With the oil prices at $30 and expected to drop below $30, the companies that took on a lot of debt have no choice but to keep up production. In the process many may find themselves in bankruptcy. Private equity with capital of $100 billion is likely to come in at this point to buy cheap assets without the debt, say analysts. U.S. banks energy portfolios are small, with Wells Fargo energy exposure only 2% for oil and gas loans in the third quarter of 2015, or about $17 billion. Loans that are rated "sub-standard. doubtful or loss," are projected at 15% of loans to energy producers, about $34.2 billion, in a biannaual review by banking regulators. The unusual aspect of this energy price slump is that production is not declining with falling prices- oil production in the U.S. was estimated by the government at 9.2 million barrels a day in Jan 2016- 1% higher than at the beginning of 2015 when prices were over $40 a barrel....

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A steady decline in the price of Brent crude from $115 to $92 in the period from June to October 2014. Slow or no economic growth in Europe, and declining growth in China was the main reason. A cut in oil price by Saudi Arabia in September with lack of coordination in OPEC to control supplies when prices are declining, and increasing supplies from the U.S., provided additional basis for price declines. This price decline comes as large energy companies invested heavily in mega-projects to bring more oil supplies when prices were up to $128 by mid-2012. Consulting company EY estimate is that there are 163 such mega projects worth $1.1 trillion underway, most behind schedule and over budget. The projects were based on oil prices being over $100. Oil field development costs are increasing rapidly. Douglas Westwood, a consulting firm, estimate is that productivity of upstream capital spending has fallen by a factor of 5 since 2000, declining by 5% a year, as oilfield equipment and services demand exceeds supply. Greater technological sophistication also adds to cost such as Shell's Nobel Bully platform for deep sea drilling. See link- Noble Bully. Oil majors are now cutting spending, and some planned big projects are on hold. About $300 billion in assets may be up for sale. Shell plans to cut spending by 20% in 2014, Exxon and Chevron 5-6%. Shale oil projects in America need about $57 to be profitable with an internal rate of return of 10%, by one estimate. Yet this is an average and does not reflect differing producer costs. This estimate does not reflect the high cost producers, some of whom need closer to $110....

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Turkey is reviving its relations with Saudi Arabia and the UAE. Prince Bin Salman will visit Turkey as part of a remake of Turkey Saudi relations. Turkey's economic crisis has revived the relationship as Turkey badly needs aid for its economy. The pressure on emerging markets is increasing with US central bank raising rates reducing inflows of western money into Turkey even further. Prince Salman has already received visits from French and British leaders. He visited Jordan and Egypt this week and will now be in Ankara. In the summer he will visit Greece and Cyprus. Saudis are modernizing their economy changing culture in relationships of men and women, in women's rights and education, and broadening relationships with the world under Salman. There is an astonishing openness to science and technology in a drive to be modern. The old Saudi monarchy and conservative rule with ancient traditions is giving way to what the Saudis in the group under Salman see as the modernization of Europe and America in the 20th century using science and technology as what they would like to see in their own country. There is also a drive to think independently from the dogmatic positions of the past that have turned the Kingdom into an American dependency with no obligation or incentive to modernize its culture and be open to the world outside.  The US fought a war to ostensibly modernize a backward mountainous remote state as Afghanistan, while being perfectly comfortable with the old Saudi monarchies of the past that made little change in the ancient culture and tradition and in women's rights and education. Such were the contradictions in American policy and the failure to think anew. As president Lincoln said "as our case is new we must think anew, and act anew." President Biden will now visit Saudi Arabia to build a new relationship with an independent nation, which along with the UAE is bringing change to the Middle East through infrastructure development and modernization. Salman's modernization comes as the kingdom also faced a need to make a transition out of dependence on fossil fuels. Salman sees trips to Greece and Turkey as opening up to all sides. Saudis have good relations with Israel and Egypt another part of this openness. The US senses this, India has sensed this. India's Modi government  made sending the Oxford vaccines manufactured in India to Saudis a priority during 2021. The Indian example is also changing the way the UAE and Saudis see infrastructure development and modernization in the region. This is also changing the way the region is looking at itself. For decades Egypt lacking the resources to build infrastructure on its own has languished economically. A helping hand from the Saudis is changing Egypt. The entire rail system is being modernized with the latest technology from Siemens. The Saudis have stabilized the Egyptian economy with a $5 billion deposit in the Central Bank of Egypt. On June 21 Egypt and Saudis signed $7.7 billion in investment deals for infrastructure, logistics, port administration, food, industry, medicine, energy and technology. In the investments in Egypt some of the oil money going to Saudis with $100 per barrel oil price is going to an economy in Egypt that can easily absorb and make good use of the investment to modernize.   The influence of Saudi leverage in fossil fuels which drove the US relationship with Saudis since FDR is being replaced with an independent Saudi kingdom making decisions to modernize across the board in all aspects compared to one that favored a few American companies such as Exxon Mobil and ARAMCO or arms makers such as Boeing and Lockheed that helped recycle American money going to pay for Saudi fossil fuels back to America.    ...

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U.S. president Obama visits Saudi Arabia in April 2016. President Obama presents arguments for forging "a cold peace" between Iran and Saudi Arabia after proxy conflicts in the Middle East. During the visit president Obama will encourage dialogue between Iran and Saudi Arabia, at a time when Saudis are skeptical about U.S. policies in the region. Saudi Arabia has reduced the economic gains to Iran from lifting of sanctions and entering the oil market by ramping up Saudi production to bring down prices. The situation also affects Russia and Venezuela.

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Solomon and Said give a detailed account of the events leading to the steep decline in oil prices to $61 a barrel by December 2014. The steep declines have caused a shock for OPEC and non-OPEC producers. A price decline of this magnitude may not have been anticipated by the Saudis, and there are divisions among Saudi officials and in the royal family about whether such steep cuts are best for Saudi Arabia. The price per barrel of oil for each OPEC country to balance its budget varies widely, according to IMF and IEA, WSJ, sources. For Saudi Arabia this estimate is $106, Iraq 101, for Russia $98. The Saudis have $750 billion in foreign currency reserves. At the high end are Libya at $184, Iran at $131, Algeria $131, Nigeria $122, Venezuela $117. The UAE is at $77, Qatar $60. Norway is at the low end at $40. On Dec. 19, 2014 the price of Brent crude, ICE for Jan. delivery was $61.38.

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Oil prices are at $73 a barrel in Jan 2025. DJT's goal for 2025 is for oil prices to drop to $45 to bring inflation down. To do this requires shale oil producers and Saudi Arabia to increase production. This report in WSJ says Saudis will have a hard time managing budget needs at this price and have indicated they will not increase production. Shale oil producers are also reluctant saying they are in a different phase in the production cycle and are not looking to expand production. 

Prices at the pump have dropped from $5.00 a gallon to $3.10. In 2024 per barrel prices were at $90. 

The new administration hopes that reducing regulations and speeding up the approval process, and new incentives would help increase production.

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Saudi Arabia announces increase of 200,0000 barrels a day which is considered not enough to make a difference for oil prices after the summit in Saudi Arabia. Energy Secretary Bodman says speculators are not a factor in oil price increases and the Saudi King says they are a reason for oil price increases and no new ideas or actions that would be meaningful come up in the meeting.

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Trofimov of the WSJ says the action by Saudi Arabia for execution of 47 persons most of them involved with Al Qaeda from tribes, including a Shiite cleric Nemer al-Nemer who led Arab Spring type protests in eastern Saudi Arabia, was meant as much to appeal to domestic conservative Sunni opinion as it was as a counter to Iran. The government of Saudi Arabia increased spending on social benefits after the Arab Spring in 2011, yet was forced to increase prices of some grades of gasoline by 50% at gas stations to conserve financial resources from its $640 billion sovereign wealth fund. The Saudis and the Russians are on opposite sides of the Syria-Iraq war, with the Saudis holding down oil prices as part of the geopolitics of the region, which led to the budget cuts in Saudi Arabia in 2015-2016. Conservative Sunni opinion in the country favors stronger action by the Saudi government against Russian and Iranian intervention in Syria and Iraq, according to Trofimov.

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Hubbard and Kirkpatrick in this report say Prince Salman, at 32 years one of the youngest rulers in the Middle East, has taken steps that his predecessors had shied away from. It cites the war in Yemen against Iranian faction, blockade of Qatar, and taking power from conservative clerics. This report points out that this could destabilize the efforts at modernizing Saudi Arabia that are needed because Saudi Arabia may find itself overextended in proxy wars, and ambitious projects. The Saudi financial reserves have fallen from $737 billion to $475 billion, with declining oil prices, and the public stock offering of Aramco oil company may be jeopardized. 

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Huge investments to make Saudi Arabia one of the three largest chemical producers in the world. See the groups and links to questions about this investment binge- will it generate enough jobs considering the size of the investments? Is this the most productive use of the money, what are the alternatives and so on. From the standpoint of oil prices the Saudis wouldn't be too receptive to oil price decreases and reluctant to increase oil production if they need the money to finance the investments described here, huge petrochemical complexes and whole new cities.

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Problems facing Saudi Arabia in 2015 as King Salman, 79, takes over are an aging leadership, and lack of new solutions to problems facing the economy overly dependent on oil revenues and social spending. Like other Persian Gulf economies the oil sector makes up a large part of GDP- 44% for Saudi Arabia, and 59% for Kuwait. Under King Salman policies will remain the same as under King Abdullah. Social spending was boosted after the protests and political change in the Middle East in 2012-2013. Even with a drop in oil prices to below $50 a barrel high social spending and reliance on public sector jobs to meet the employment needs of young Saudis will continue. Young people under 25 years make up 47% of the Saudi population of 29 million. No new income streams are being pursued and taxation is not even considered as an option. The private sector is led by non-Saudis and is under financed with most employment generated in the public sector. Growing oil consumption inside the kingdom with its growing population is also likely to reduce the quantity of oil available for export in the long term. Reserves of $750 billion provide a buffer for now, but long term Saudi Arabia faces a structural deficit, says Steffen Hertog, an expert on Persian Gulf political economics, at the London School of Economics. ...

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This NYT report looks at the transformation of Saudi Arabia with the investment projects of Prince Mohammad bin Salman who leads the country in modernization. In the past much of the oil money going from US, EU, China and India went into wars in the Middle East, Salman has focused on development. using the funding opportunities that need to taken to develop the region, funding which will no longer be there after the shift to renewal energy by 2035. The price tags are extravagant the coastal city and historic district of Jeddah remodeled $20 billion. New center of culture Diriyah near Riyadh, $63 billion. Futuristic city Neom. Red Sea tourism projects. 

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Saudis make only a modest increase in production of 200,000 barrels a day taking production to 9.7 million barrels a day for 2008. The global market is for 86 million barrels a day with 40% of production coming from OPEC. Saudis make plans to increase capacity from 11.4 million barrels a dya to 15 million barrels a day with increased investments but this is thought to be ambitious. One former president of Aramco the Saudi oil company Edward Price thinks there are resource limits even in Saudi Arabia, as he sees the big fields topping off at 12 million barrels a day.

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Karen Eliott House was a former publisher of the WSJ. Now with WSJ in Murdoch's News Corporation's hands, she is a fellow at Harvard's Belfer Center. Here she points to the diverging situation between the USA and Saudi Arabia. She thinks the US cannot protect the Saudi monarchy (which dates back to Abdul Aziz and his support from President Roosevelt first by recognition of the new state of Saudi Arabia in 1932 and support during the war), from its domestic challenges. One of these domestic challenges is changing demographics as the young or people below 15 years age make up 40% of the population, rising unemployment, and pressures for modernization which the monarchy has done little to respond to, and the lack of democratic forms which would give people a chance to vent their feelings. For the U.S. the frustration is that the Saudis have done little or can do little for the USA in the way of moderating oil prices as they move still higher, because of speculative trends, decline of production in its own maturing oil fields, and needs to finance huge new plants and cities to provide employment to a growing population. In fact Libyan oil officials has been more of a moderating influence recently than the Saudi oil officials. So it appears that what Karen is saying is that the Saudis are pursuing their own interests in their region and the wider region that includes South Asia and Northern Africa, and the US is pursuing its own interests, which at this time are not as clearly defined, except securing oil supplies and protecting Israel. The 2 countries USA and Saudi Arabia are going their diverging and different ways in a way that is irreversible....