0 $
2,500 $
5,000 $
3,205 $
7 DAYS UNTIL THE END OF MAY 2020

U.S. Closing 52% Of Oil Rigs, As Both It And Saudi Arabia Slip Into Deeper Crisis

Donate

U.S. Closing 52% Of Oil Rigs, As Both It And Saudi Arabia Slip Into Deeper Crisis

Click to see full-size image

The reduction in global fuel demand has led to the fact that the number of oil rigs in the US has dropped to a historic low, Reuters reported, citing data from Baker Hughes.

According to data on the week ending on May 17th, the number of towers decreased by 35, to 339.

This is the lowest figure since 1940, when Baker Hughes began to publish relevant statistics.

The reduction in the number of towers affected West Texas and the eastern part of the state of New Mexico, where the main oil and gas production in the USA is conducted.

There, their number decreased to 175, which is the lowest number since 2016.

Since the beginning of the year, the number of operating rigs in the United States has declined by 52%. More than 400 installations stopped working.

The suspension of activity began in mid-March, when oil prices fell sharply after disruption of the OPEC + deal.

Analysts suggest that this process will continue in the near future. Simmons Energy suggests that 215 drilling rigs will remain in the country next year and their recovery will be very slow. For comparison: in 2019, 943 units worked in the USA.

It is expected that global consumption will drop from a record 100 million barrels. per day up to 92.6 million barrels.

On May 18th, the cost of a barrel of North Sea Brent was $34.51, Texas WTI – $32.13.

At the same time, this drop in crude oil prices, Saudi Arabia may be forced to reduce how much money it spends on weapons. This is significant since, Riyadh’s weapon purchases are a way to increase its influence around the world.

According to experts, Saudi Arabia may have to abandon new arms contracts and postpone already agreed arms purchases, as the kingdom is plunging into a financial crisis.

The expected delay in the conclusion of new arms deals can have long-term political consequences for a country under the rule of Crown Prince Mohammed bin Salman, who is waging a war against the Houthis in Yemen, and is losing, even with full investment.

“I have no doubt: this is the end of an era. The era when the Persian Gulf had all this money is over,” said Bruce Ridel, a CIA veteran and senior researcher at the Brookings Institution.

Last year, Riyadh spent about $62 billion on weapons, ranking fifth in the world in military spending.

Although this figure was lower than in 2018, it still amounted to about 8% of Saudi Arabia’s GDP. Thus, the country spent on weapons an impressive share of its wealth – more than the United States (3.4%), China (1.9%), Russia (3.9%) or India (2.4%), based on Stockholm International Peace Research Institute (SIPRI) data.

For decades, military spending has strengthened Riyadh’s political influence in the world, the newspaper notes.

“If Saudi Arabia were not one of the largest buyers of weapons, then probably it would be impossible to count on support devoid of criticism from the powerful Western powers. One of the outcomes of arms purchases is that you buy relationships,” said Andrew Feinstein, an expert on corruption and the global arms trade.

This economic crisis Saudi Arabia is in is characterized by three blows that it suffered:

  1. The first of them was inflicted by an unprecedented drop in oil demand on world markets, which, in turn, led to a drop in commodity prices and a reduction in the country’s income from oil.
  2. The second blow is those extraordinary measures that the state should have taken to combat the epidemic of coronavirus and which actually led to the complete cessation of trade and economic activity within the country, which ultimately led to the actual cessation of “non-oil” exports and, again, the cessation of economic growth.
  3. The third blow to the economy of Saudi Arabia is the unplanned expenses of the country, associated again with the epidemic of coronavirus, and those measures that were supposed to strengthen public confidence in the health sector.

Essentially, it would appear that the Saudi-initiated crude oil price war backfired heavily, and the two parties suffering the most from the rapid drop in prices and the on-going crisis are Washington and Riyadh.

MORE ON THE TOPIC:

Donate

SouthFront

Do you like this content? Consider helping us!

  • pp

    Saudi arabia is weakened which is a ggod news.This will weaken the muzlim world :D These assholes are fighting with uae in yemen. The muslim world is about to collapse and this will result in the destruction of muzlims :D Im already celebrating :DIndia will capture more land from china and pakistan soon. Israel will capture half of the arab world :D

    • Zionism = EVIL

      Shithead you are not an Indian so post crap just to get attention. You are desperate fraud who posts total retarded kiddie crap. Now fuck off and quit spoiling adult conversations.

    • Jens Holm

      Most muslims not even live in ME.

    • Ashok Varma

      Imposter fool.

    • JIMI JAMES

      No,it means the us hegemon dollar will be obliterated to back to hell where it truly belongs,
      that’s the real deal ignorus!USA has no other choice but to foresake their vile+ evil ponzi scheme
      as for you kweer brigades,israels last hope (us dollar) will be finished do israel must take heed!
      Sorry to burst you fake bezos billionaires bubble,but these days anyone can be bezos (period)

  • Zionism = EVIL

    The moron Trump gave the Saudi dickheads some real fine advice.

    • Jens Holm

      Haha . Trump saved Russia for at least some time.

      • JIMI JAMES

        The opposite is true infact!

        • Jens Holm

          I jave written it already. The only winners are the consumers

  • BMWA1

    Sounds like all is well!

    • JIMI JAMES

      Only because russia gave trump a lifeline usa seem normal,but reality will be too powerfull for usa,opec and saudie manipulators to ever put it over russian power again,will they all learn?

  • d’Artagnan

    Saudi Arabia is a small weak backwater which was trying in vain to punch above its feather-weight and that broke the proverbial camels back. The Saudis have been acting like spoilt brats, largely due to their oil resources which were once essential for voracious western economies, but now as we move past peak oil, Saudi oil is basically worthless and they have become a embarrassing liability. Saudis were also part and parcel of western, especially US global Wahhabi terror proxy wars which have now inflamed the region and threaten to destroy the corrupt family run kingdom. Almost all terror attacks can somehow be linked to Saudi Arabia and Wahhabist extreme ideology, including so-called 911 in conjunction with the Zionists and the recent attack at Pensacola flight school.

    The Saudis have also proven to be tools of Zionist regional destabilization strategy and were goaded into the destructive and counter-productive quagmires in Yemen and Syria. Trump and the self-promoter Zionist shill Kushner sealed the Saudi fate by entrapment by goading a uneducated, mentally unstable clown Prince MBS to wage a oil price war against the Russian Federation, the largest energy producer in the world with a high-tech diversified economy. Russia with ample resources, deep Forex reserves, a powerful nuclear armed military and a reservoir of high-technology did not blink, but was prepared for a long term energy war. Now the Saudis are saddled with vanishing resources and a lost war that is literally eating up their financial reverses. With friends like Americans, who needs enemies.

    • alejandro casalegno

      Yes……….confront Russia never ends well…………………….

      • Jens Holm

        Haha. Russia is declining and they according to estimates will be even in much biger trouble under 40 dollars pr barrel.

        • alejandro casalegno

          Yeah……Russia is weak, Russia will fall easy, Russia is doomed……….many people say it for centuries…………..we know how ended……

          • Ashok Varma

            This Jens is crazy, so please ignore him as he spams.

          • Jens Holm

            I tell You how it is. We must be millions of crazy people because I mainly tell what 1000s of links tell too.

            Much like You think I in a cave but I am out, and You are in.

            And of course You not even has a single explanation or link for, I am wrong.

          • John

            There is a lot of bullshit in the world Jens. Quantity never equals veracity.

          • Jens Holm

            Maybee You are to fat for being in a T34

          • Jens Holm

            Dont You have internet. Look up. There are several 1000 links about the Russian economy and its dependendy to oil and gas and the magic 40 dollar pr barrel.

            And all You can is – Its bullshit.

          • John

            Jens you need to climb out of your little bubble baby. How the heck can you ask me if I have internet, when I read your comment and responded to you on the internet? Sometimes, you are too ridiculous. That is why people treat you like a stupid asshole. Clean it up a bit and you will get some respect. My take Jens. Fare thee well out there.

          • JIMI JAMES

            History proved you fascist christian haters lost all wars,russian bears rip ye lame sorry asses up in two,my god imagine todays russians against sick hato kweers:

          • Jens Holm

            I am also no fascist and christian hater. You seemes not even familiar with, what those two things are.

          • Jens Holm

            I did not say doomed. I wrote declining and has decriebed the main problems they not even try to solve again and again.

            The dont share their country with many good Leaders and strange enogh can only find one of 144 mio. By that they are very bad organized and by that they dont produce well as well irts very visible a lot of money dont come bacck to the taxpayers, to pension or fx hospitals.

            They dont make the votal m,iddleclass by educating many more much better. They are the main producers making advanced things. They are the ones being able to have a good infrastructure fx for distribution for almost anything.

            I have descriebed several other countries and among them my own. Many has problems but many of those has systems, which can make the needed changes. Russia has not.

          • Superfly

            Do you ever post in comprehensible English?

          • John Wallace

            It never gets any better . We need to get one of these and see if it helps . No not his comments , make me feel better . Nothing helps his comments. ://uploads.disquscdn.com/images/989886caabe8024c36b0e9c8cddd545eecdb7f19fb5f67b75d94aa87cc88d302.jpg

          • Jens Holm

            I know the photo. Its Putin making the last Russian car.

          • Jens Holm

            Obvious You are fobidden to debate things at all or too stupid for it.

          • Wayne Nicholson

            Every economy in the world in declining including Russia, the USA and China, no one is escaping this recession. What matters at this point in the cycle isn’t who is hit the hardest but who is in the best position to weather the storm and recover.

            The USA and Europe both carry enormous debt loads because instead of letting companies fail like capitalists are supposed to and let more competitive companies rise they keep bailing out failed banks and corporations with the hope that they can correct the instability in the financial markets before the next recession hits.

            Russia OTOH has managed to shield their economy from the financial contagion that the USA and Europe have been buying their way out of since 1998. They have a self sufficient economy, a population that deal with crisis better than any other nation on earth and low debt levels.

            I don’t have a crystal ball. Well find out in about 18 months or so whether this is the recession that breaks the back of the western economies and if Russia gets dragged down with them but on paper at least Russia looks to be in a good position to recover stronger than most nations.

          • Jens Holm

            I disagrre a lot. Very much of the debt of Ours are based in investmenrts for production as well as relative high living standard, which give us opportunities to change and regain.

            A very vital difference to Russia is a well educated and flexible workforce, where up to 80% work.

            I allow me to look at the GDP as well. Danes can decline from 55.000 dollar pr inhabitant but it much more difficult to decline from fx Russia making 11.000 dollar each even dollars are worth much more in Russia.

            I do see big companies failevery day. But its no catastrophe because they often are bought by others. Therefore we dont make the same kindof noise in the capitalistic systems of ours.

            The Danish DSV fx is a big tranporter and has bought Transalpina and restructure to be more effective.

            And You also dont get, that we from 1998 has grown in GDPs as well as we do have inflation. Therefore loans are not as big as they seemes to.
            ……………………………….

            Of course we all are in a recession now and it will take time to regain beacuse corona has added a lot to it.

            As written before I fell fine if we go back to 2005 standards for many things. The suddering ones are the ones, which already are poor here and in the rest of the world.

            I needed, we will invest in them and try some Marshall plans for them, so they at least has food and food.
            ……………………………………..

            Some here also forget China is not taking much from the Western Economies and we have to stop that Chinese attitude.

            BUT China also makes the cake to share bigger. As cild I heard they always was starving there. I partly remeber the Mao nightmare, so I like they now can feed their own better.
            …………………………………………

            Russia is so depended in exports of fuel and bread.

          • Wayne Nicholson

            “Very much of the debt of Ours are based in investmenrts for production as well as relative high living standard, which give us opportunities to change and regain.”

            It doesn’t matter what you borrowed the money for debt is debt.

            Debt is fine when you have a growing economy. In order to pay off debt you need growth of income. In the absence of growth you can only pay interest out of savings or borrow more money to stay solvent.

            This is why you see the USA print money at the rate of Trillions a week ….. they are insolvent ….. they can’t cover their debts so they print money in the hope that the world continues to use the USD as a reserve currency.

            This is working for now but there is on average an 18 month lag between the event that triggers a recession and the effects to be fully felt. The 1929 stock market crash didn’t really bite until 1933 …. that’s when people started losing their houses and businesses. The 2006 housing bubble didn’t trigger the financial meltdown until 2008.

            Our current economic slowdown started around in mid February with the Covid-19. Every day that we have negative growth the interest payments are piling up. Right now the US fed is fending off the crisis by printing money and artificially holding rates to 0.25% ….. would you lend money to airlines and cruise lines today for a return of 0.25% given that they have no hope of paying you back until their business not only returns to their pre Covid-19 levels but to growth?

            We’ll meet this time next year and you can tell me again how debt doesn’t matter as long as you use it for investments.

            ………………………………..

            “Russia is so depended in exports of fuel and bread.”

            Poor Russia …. stuck with nothing but an abundance of food, fuel, fresh water, lumber and minerals that feed a self sufficient diversified economy that managed to provide Russia with all they need for nearly 100 years.

            What on earth are Russians going to do with all that food, water and energy when they can no longer afford Kentucky fried Chicken, Levis jeans and BMW’s?

            I’ll bet in a couple of years they’ll wish they were a resource poor importer saving their pennies for a good feed at McDonalds instead being stuck with all that food to eat and oil to heat their houses.

        • JIMI JAMES

          Ha ,ha you know sht,thats about it (period) Russia can drill oil much cheaper than anyone else on earth,assflogged,infact they have over 75 real deal trillion bucks worth of future resources,assflogged,you will never put it over russian power!!!
          YOU LOST THE COLD WAR,LOSERS AND YOU STILL JUST DON’T GET IT!

        • Superfly

          Are your mental health medications hard to get these days?

  • alejandro casalegno

    Saudi arabia is a “Paper Tiger”, they have the best weapons than money can buy……and are losing aganist the Houthis………..thet are barefoot, but full of courage!!!!

    • Jens Holm

      I dont see that. Saudis are the seize they have.

      • John Wallace

        Saudis are the seize they have. WTF does that mean or even meant to mean.

        • Jens Holm

          I will try again. So many act as Saudi´Arabia is a big state. But they are not.

          But so many people try to trick themselves, so they can use Saudis as a big excuse too and repeating it many times for themsleves, make them believe it too.

  • Jens Holm

    As consumer I love alnost free oil and gas from Russia. They started it and did it well. Thank You Puttie.

    Maybere he was the first one having double Corona there.

    • JIMI JAMES

      khazar pro gorbachev moscow asswipes need to sort out their nazi sht,not putins fault but no secret since that stupid stop/go check card along with bunching up the sheepies was when the virus spead,unlike prior where putin was infact in control,sad but true russia like usa has the same enemys linked with cia/mi6/browder/soros/moscow times and the rest of the fascist turds!
      They say 60% of cases happened in moscow alone!

  • Ashok Varma

    Saudis have destroyed themselves with suicidal policies and fanning terrorism.

    • Jens Holm

      I dont think they have destroyed themselves. They have big probpems having made big mistakes. There are hopes for, they can learn. I never liked extremists like them.

  • JIMI JAMES

    In 95 when us chevron bought into caltex to close up Australias premium (Australian motorists petrol)
    Ampol,we became subject to their carnage,however now that the USA is doomed they bailed out an left caltex in tatters,whom daved only by local real wealth buisness peoples,whom filled the void and forced calyex to drop its name for good,in favour of bringing back the famous AMPOL name and the fake rich canuk sects whoms medias boasted yet again fake billions were exposed as invalid compared to the other real deal independant investors,whoms far fewer billions was more than ehough to crush the nwo facists blowjob contingents,much to the delight of patriotic Australians thus eliminate nwo/nazi weeners,
    Trends like this are happening on global scale,see there’s no future to depend of fake bank bonds,and the focus now shall be on Local biased investors forcing caltex to commence developing future fuel reserves for Australian supplys,which includes removing the chevron/nazi/nwo red tape to begin to drill
    and supply local fuel storage cells across the great land,thus great victory for Australian Independance!

  • Peter Jennings

    The saudis wanted a cut in production, to keep their opulent lifestyles, but it hasn’t quite worked out for them.

    They also have american missiles being fired at their oil plants. Not a good year so far for the invaders of Yemen.

  • IggyBundy

    ya baby!!! down with al queda and gang.. ISIS gets prostated..

  • John Wallace

    Saudi Arabia having financial problems won’t be able too afford more weapons. How sad , I really feel for them. Hold on while I go and get a hammer to smash my fingers to generate a few tears for them.