For about two years they have forced it to remain just below the production cost of US shale oil, lowering the price as US efficiency improved. The point is to prevent companies that cannot afford to maintain losses from entering the market and to ensure that it does not become a viable export.

Just as importantly it keeps the Iranian economy in recession which places internal pressure on the Mullahs who are forced to justify the costs of supporting Assad, Maliki, Hezbollah and the Houthis to an angry populace. The effect that this has upon Iran, Russia and Venezuela is why the US does not object to their erstwhile ally undermining their energy sector, it is a cost both nations are willing to bear in order to achieve strategic goals.

Oil is the Saudis major strategic weapon and they use it well.

Increased pumping by OPEC as Chinese demand appears to be slackening could drive oil to the lowest prices since the peak of the financial crisis.


"The familiar theme of oversupply and shaky demand is getting punctuated today," said Again Capital partner John Kilduff, who has expected WTI to aim for $30 per barrel. WTI futures for September fell more than 4 percent Tuesday and traded below $43.26 per barrel, the March 17 low.

Kilduff said, "$42.03 is going to be key. Then we'll be back to extrapolating back down to the low 30s from the financial crisis." The intraday low in 2015 was $42.03, also reached in March. Brent futures, meanwhile, were just below $49 per barrel.

Read More OPEC signals supply from rivals resistant to low prices

"Overall, I think this devaluation by the Chinese suggests maybe the slowdown in economic growth is greater than people anticipate, and that's where fear on the demand side is coming from and driving us lower," said Gene McGillian, analyst with Tradition Energy.

Crude oil is tumbling Business Insider 5 hrs ago
OPEC's oil production spiked to a 3-year high in July Business Insider 6 hrs ago
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He said if oil breaks $42.03, the next target is in the upper $30s at about $36, and then $32. The question is how fast could oil spring back, if it does reach the lows set in 2008 and 2009 during the financial crisis.

"There's no positives on the supply side, and there's bearish fears on the demand side," McGillian said.

Read More Oil collapse couldn't come at worse time for industry

OPEC on Tuesday upped its forecast of oil supply from nonmember countries in 2015. Oil prices have been more unpredictable because of the unknown factors around the impact on U.S. shale production, a relatively new phenomenon.

Production increased by about 600,000 barrels a day in the U.S. this year and has been holding steady at about 9.4 million barrels for several months. Typically, the shock of falling prices shakes out producers that find it difficult to fund operations, but the U.S. industry has kept drilling.

Oil's collapse has been rapid and outpaced the predictions of most Wall Street forecasters. One factor has been that the weaker prices are taking longer to impact U.S. shale producers than previously thought. OPEC has also been pumping more than it has in several years, and reported a 2.87 million barrel a day global oversupply in the second quarter.

At the same time, OPEC said its production rose to a three-year high this summer. OPEC said it pumped 31.5 million barrels a day in July, up 100,000 barrels on higher output from Iraq, Saudi Arabia and Angola. OPEC also said global demand growth should pick up in 2015 by 90,000 barrels a day.

In its monthly report Tuesday, OPEC raised its forecast for non-OPEC supply this year by about 90,000 barrels per day. OPEC also raised its estimate of 2015 world oil demand growth by 90,000 bpd, but due to rising supply expected from other producers, demand for OPEC crude remains at 29.23 million barrels per day.

Saudi Arabia told OPEC that it trimmed output by 200,000 barrels a day to 10.36 million barrels in July, after a record high in June.

"That's more seasonal. They're using less crude for their own power generation," said Kilduff of the Saudi cut. "They're getting their lunch eaten a little by the Russians and Iraqis in Asia." Saudi Arabia has reportedly slipped into second place exporter to Japan after falling from the top spot in both China and India.

Meanwhile, Iran was reported to have raised its oil production to 2.86 million barrels a day, the highest level since sanctions against the country were strengthened in June 2012.

Iran is supposed to wait for congressional approval of the nuclear deal before it moves to return its oil exports to world markets, but Kilduff said Iran could move sooner. Iran has an estimated 40 million barrels of oil stored in tankers, and Kilduff expects Iran to be aggressive in selling it.

"Over 2 million barrels of their floating storage is already gone. They're going to ramp up markedly. They want market share," he said.

Because import costs, government tax, weak currency etc :(

Why is everyone talking about cheap petrol when the price in Melbourne is over 140c a litre. I want cheap petrol :(

This part is exactly what I heard from an Exxon exec in a conference I worked on, so I believe it, although it seems more likely that the motivation for it is purely commercial.

The Saudis are forcing the price down to increase the pressure on the US domestic production of shale oil

it's either fucked or will bounce up again in the future. with Shale about to hit the fan you never know, oil prices might jump high again in the future.

Oil is such a speculative industry, no one really knows what will happen.

It's 0.24c per litre in my part of Melbourne, just because you made me look it up.

0.47c a litre is still more expensive than tap water but it's getting pretty close!

petrol price in USA is a low as 0.47c USD per liter :d what is it in Australia ?

http://news.yahoo.com/video/nation-shocked-gas-prices-reach-005502792.html

Looks affordable too.

-PB

Tesla Model S' S P90D is capable of making the sprint to 60 mph in a supercar-shaming 2.8 seconds,

http://finance.yahoo.com/news/reaction-teslas-ludicrous-mode-insane-184044246.html

Yep sure except it's likely to be 20 years before we have enough renewable infrastructure to physically start replacing our 'Sabotaging machines.' That's what people are too thick to understand. We don't just click our fingers and the coal plants disappear. There is a hell of a lot of work (as in 10 years +) into getting this stuff up and running. Research and development, feasibility, manufacturing, installation, construction, connecting it to a grid.

I do work as a consultant for the Logan City Council and their sewer/water infrastructure projects. I've been on a project for 2 years and they've built about 6 pump stations and 4km of sewer rising main infrastructure. This isn't a pissing contest but this example is intended to give you an idea of how long infrastructure projects take to construct. Government projects are always always bogged down with paperwork and red tape.

I support renewables 100% but we're 20 years behind on building infrastructure for them. People who have no idea what they're on about seem to think that replacing our grid is a formality that will just roll out. How long did it take to get to the construction phase for the NBN?

It's not hard for me to realise that point mate I'm just very realistic about the challenges associated with doing it. Maybe if you thought about the how instead of the what you'd come to the same conclusion rather than making irrational statements as a personal attack to other members?


Edited by benelsmore: 22/7/2015 11:32:07 AM

The double edged sword is, as alternative energy sources increase and take away from the oil sources they will just raise prices to keep up.
The plastic that goes into your tvs and xboxs will become super expensive and we may go back to an age were tin lunch boxs are more economical like we are in the 50's.

Because plugging it into a socket fed by burning coal and native Tasmanian forests is wayyyy better....

The double edged sword is, as alternative energy sources increase and take away from the oil sources they will just raise prices to keep up.
The plastic that goes into your tvs and xboxs will become super expensive and we may go back to an age were tin lunch boxs are more economical like we are in the 50's.

Or how about: Investment in renewable energy instead of using coal? Is it seriously that hard for people like you and Ricey to realise that humanity doesn't actually need to sabotage itself?

And what about mining the rare earth metals??????

Because plugging it into a socket fed by burning coal and native Tasmanian forests is wayyyy better....

Because plugging it into a socket fed by burning coal and native Tasmanian forests is wayyyy better....

buy electronic car, and stop looking at petrol prices

Edited by adrtho: 21/7/2015 08:47:54 PM

why the battery go shit?..what do you do when your mobile phone battery goes shit?



Edited by adrtho: 21/7/2015 10:11:38 PM