Lower Oil Prices Force Saudis to Widen Their Circle of Friends

Any one who predicts crude oil prices is running a fool's errand. Chevron CEO, a couple of years back when there was no sky high enough for oil prices, predicted (his precise words),"$120 a barrel is the new normal." Two months later, the world witnessed a spectacular collapse where no floor was low enough. And this is a CEO. I worked for 45 years in the oil industry. Some work involved budget planning. Our cycle would start in earnest in spring. Crunching numbers for all kinds of investments with oil kinds of price scenarios. After many late night sessions, the Board would eventually approve this budget in October to be implemented in January. Almost without exception, every January, word from the Board was, "never mind. Prices have shot up, so spend like no tomorrow. Or, prices have tanked, cut everything by so many percentage." As to the Saudis, what they are lacking is ability to threaten the world with an embargo. Just like American auto companies learned with their butting heads with the Japanese who moved to America and beat us at our own game. Ditto here with the Saudis. If they will ever have a regret it will be the oil embargo. It spurred their biggest customer, U.S. to embark on a program so we are never at their mercy. As to listing of ARAMCO - what do they say on the Wall Street - buy on rumors and sell on news. No one will ever "invest" for a long term like our oil companies. But for short term gains or insider tradin, sure.

FWIW the price of crude oil is at its highest level in nearly three years. Nevertheless, Chris is correct. The prices of all natural resources tend to decrease in real terms as newer and less expensive alternatives become available. It happened to whale oil, it happened to coal -- yes President Trump, coal is not an economically viable energy source -- and it is happening to oil.

High oil prices are never coming back. Just as coal is dying now, so shall be the near term fate of oil. Things change. Energy can be gotten in ways and used in ways that don't depend on Saudi Arabia or Russia or Venezuela. Electric cars are 5-10 years from beating ICE cars in price. When this happens the battery technology that drives them will become so cheap that it will be cost effective to store solar and wind electricity. There are a lot of pundits on this topic who listen mostly to those who would not benefit from oils decline. Although, China may need the oil to make the cheap and toxic plastic materials they know we are addicted to. However, that demand is still way below the demand that includes using oil as a major source for automobile fuel. Yep, cheap electric cars and self driving vehicles. If you are under 60 years of age, you will see it in your lifetime.

Russia and Saudi Arabia are natural allies: they both are oligarchies and they both want a high oil price to fund the lavish lifestyle of their elites.

Agree with last two paragraphs, however, REAL point is how they'll define "transparency" and "valuation" to satisfy major investors/private sector. Other geopolitical points, e.g. Russia and China guaranteed to "partner" across various influential/controlling energy capacities, e..g SA building new energy infrastructures outside, e.g. Asia/Africa huge refineries, bolstering oil valuations with more direct influence, since OPEC is beyond weak, while Russia/China gains more equity with Aramaco since Chine really needs its oil exports, knowledge base, etc...will be fascinating on how (fast?) this evolves to change the power axis and reliance...of our global energy/geopolitical landscape...USA and its "reserve currency" will increasingly be out of the equation on all fronts. Its a China/Russia axis on this powerful commodity. China's increased SA role, may also weaken pace of China's renewables at least in the short term, due to economies of scale and control of their SA investment in Aramaco, relating refining entities. Separate, the SA "royals" releasing their immense shares of wealth, should but won't be cut back. Totally ridiculous when one looks at its just being a blood line inheritance, not on merit/talent!

'' While Saudi Arabia is still a major energy producer, it must compensate for its lost revenue... '' Translation ~ They can no longer run their kingdom as a walled off society run by men and abusing people's human rights ( mainly women ) considering their oil and prices are on par with other areas of the world now. They can no longer dictate ( politics and otherwise ) and they are now scrambling. If they do not choose to adapt ( and grant people equal rights ) then their society with wither away into the sands of time. It is that simple.

The correct valuation of the company - using legacy accounting methodology appropriate to today's world - is precisely USD 0.00 . If one were to apply emerging accounting standards appropriate to a world facing the existential threat of climate change, the valuation would be a very large, NEGATIVE number. This company is what is known as a stranded asset - it is worse than absolutely worthless, it is the biggest financial liability in the world today. The purpose of the IPO is nothing more than an elaborate bail-out for a large number of spoiled, entitled, unemployable brats who have never done an honest day's work in their lives.

Playing the field? I would be happy if Saudi Arabia stopped funding international terrorism. Yes, they buy a lot of US weaponry but are they really our allies? I think not.

Well one of the reasons Saudi Aramco might not want to list in the U.S. is because of corporate reporting and disclosure requirements. The royal family has been nursing on the teat of Aramco for decades, and that would not be tolerated if it had to behave like a real corporation. It also funds, for example, the annual camel beauty contest, which is not trivial: 30,000 camels this year. ARAMCO used to be a private company. When it was convenient for the Sauds it got nationalized. That could happen again. This IPO is for suckers.

Saudi oil politics when prices were high have played havoc worldwide in terms of over two decades of Islamic terrorism. Through their charities the Saudis have exported their extreme religious ideas and practices to cultures where such practices are totally alien. Most of the 9/11 terrorists were Saudis who misused American friendship to easily obtain visas. All this the West has overlooked in its thirst for oil. As oil prices plummeted so have the fortunes of ISIS and Al Qaeda! Isn't that amazing? President Trump's harsh campaign talk was promptly followed by his visit to the Saudi Royal tent! Pathetic!

Washington doesn't care what Saudi Arabia does or doesn't do. Just like Israel, Saudi Arabia can do whatever it wants. Heck, Saudi Arabia got away with 9/11. Now, they own penthouses all around the NYC skyline.

As solar prices drop rapidly and as people move to electric cars, the Saudis are just hoping that they can get one last flush of cash and leave someone else holding the bag. The most recent solar power auctions were going for less than 2c/kWh! Even if Saudi Arabia wasn’t a secretive and opaque state, and even if I didn’t care about climate change, I still wouldn’t buy this stock.

The US produces 10 million barrel a day but used 18 million. Sorry at that level the US will never be a major exporter. Any exports are probably refined products from local and imported oil and maybe some that is cheaper to chip out than move long distances. Out reduction in imports from increase production and efficiency not our exports is the problem these countries face. Energy efficiency was as Important as increased production. Something the GOP fails to understand. Energy efficiency worldwide is probably the worse problem they face.