In essence, the world is on the verge of greater calamity than happened in 2008. As a matter of fact, it will be orders of magnitude worse, as governments are tapped out and will be unable to step in and "save the system" this time around, as all of the bad debts and financial scams that they covered up in '08 are just resurfacing with bigger numbers attached to them. How long it will take to reach our shores is anyone's guess, but given the interconnection between the world financial system, probably not long.
It depends upon how levered the companies are. At some point you need free cash flow to service debt. If you don't have it, you default on your debt, file BK, and your assets are sold off to pay creditors. If someone can't buy it cheap enough, or have deep enough pockets to pay input costs, they don't produce.The Saudi's have run up the price so high it became profitable for other countries to come up with ways to extract their oil. So those countries need to buy a lot less Saudi oil. And some countries doing so well they can actually export.
Some talk about not profitable below $80/barrel. Below that may not be profitable for further development but certainly is for already operating wells.
It depends upon how much oil revenue is used to support transfer payments to the people. In countries such as Venezuela, Mexico and Brazil, or others with .gov owned oil infrastructure and large social welfare programs, expect large amounts of unrest. Canada, Norway, Britain, not so much, even though StatOil (Norway) is state owned.^ +1 to both above
The demand side is slacking..how low can it go? Oil producing countries are getting spanked. It may be a race to the pricing bottom.
Curious if the low price carnage/impact to Russia, Venezuela, Nigeria, Mexico, Canada (tar sands) , and to the North Sea producers is enough to foment societal unrest or just bankrupt a few companies?
Another questions is this a/the deflationary pressure that sets off a bigger economic bust? … oil on sale and nobody buying /able to buy?...
ISIS is fully funded by the Saudi's and the Qatari's, with our help. Their entire raison detre is to destabilize and overthrow Bashar al Assad, and install someone more amenable to putting in a natgas pipeline to the Med through Syria, something that Assad has resisted because it hurts his allies the Russians-read GazProm.Wonder what horse trading the OPEC nations are wanting for their external and public support against ISIS, or whatever the next terrorist group of the month will be.
Internal (USG) resistance to the Keystone project? More EPA regulations that keep strangling the oil/coal/petroleum industry?
Follow the money.
I haven't, but the strange thing is that the status of the petrodollar is in doubt. The Saudi's have been making nice with the Chinese of late, and I'm expecting some type of announcement that they will be accepting all currencies for oil, not just FRN$'s.Don't forget about the petrodollar.......