carriers, and it lives much longer than normal outside of the body, even up to nine days on hard surfaces. Think about that! it will be so hard to track where infections came from and who then got it. The West will panic when they realise, they must find how to discover who is infected, and then get all the testing, tracking, equipment, and treatment centres in place it will also take time.
Even when they do put shutdowns in place (their weak leaders may well hesitate to implement a shut down and for sure will be reluctant to enforce one.) They do not have the control over their people like we do, and many will disobey so it will take much longer for them to control the COVID-19 than us. We can continue to work on understanding the COVID-19 and recovery and planning from now so that we will already know. This preparedness and early start for us will hopefully mean that we could control the outbreak as in a short possible time for ourselves and are open for business before all the other countries are opening their businesses and at a lower cost.
There is a huge opportunity here for me to deliberately lower the Oil price to a level much lower than that at which the American shale boys and most of the industry can make a profit. Hopefully this will severely curtail the rest of the worlds producers (not ones in the OPEC plus Cartel) from overproducing and make the Oil price much more stable and higher for the future as people will have fear of what can happen, what we can do, having seen this huge drop in price and the consequences.
There is a great advantage to doing this during shut down as we estimate that the demand for Oil in a world that has major shut downs in place would be less than Two Thirds of the current production this means we would need to cut over fifteen million barrels a day off the current production which with OPEC alone is virtually impossible and would lead to OPEC in any case having a lower market share and less influence in the future. Our cutting without agreements with America and other countries outside of OPEC plus would also allow continual growth of the them and still a weak Oil price.
The only way we can improve our situation is to be the key to the price as OPEC was designed to be but making a larger OPEC where other partners traditionally non co-operative are forced to co-operate. This world shutdown would offer a unique opportunity to alter the balance sheets of many of these countries making them much weaker and alter the balance of power for air transport, world transport and many other consequences that we can then take opportunistic advantage of. We must make a concerted effort including with the OPEC countries to ensure that this Oil crisis although not too short lived is extremely damaging in all areas by using the COVID-19 shutdown to maximum effect. There will be millions of additional deaths, so we need to protect areas where these are not in our longer-term best interests.
Later the same day the President of Russia is calling the Saudi King of Saudi Arabia.
(Again, the call is managed, as the call with China was earlier in the day, to allow for the best result in different languages over a video link and mostly in sections, rather than free flowing conversation.)
I am glad to be having this call, I am very keen to talk to you on what I think is a very important matter as I am sure that you are aware we are to work on the Oil price to have an agreement by March this year, I want to agree a road map for this with you as I think that the road is complex. I don’t know what you think but inventories are high again (above 5 year averages) and we are losing market share with the cuts which don’t seem to be working and will be required to be even deeper this time. A straight cuts strategy does not seem to be working in the right direction and we need to discuss how to turn this around or include more countries in the cuts somehow as you have done with us Russians in the OPEC plus deal to date. This will be exceedingly difficult to negotiate as many of the non-OPEC countries are not friends of each other and some of them desperately need the Oil revenue in the short term.
The King of Saudi Arabia - I am sure that what you have said has an awful lot of merit I am not sure what is the best way to go about this, as we did try to overproduce and put the shale Oil companies out of business in 2014 as you know. I think we agree that it did not work as we did not get the Oil price low enough for long enough, but we did suffer an awful financial loss. We never expected the shale Oil companies to rebound so quickly and taking even more Oil share, then other countries outside of OPEC not agreeing to any cuts and deliberately overproducing whilst there was a gap in the market but we have learnt.
With modern technology there seems to be an awful lot of places where hydrocarbons can be found over the next 15 to 20 years. Renewables will take a larger part and therefore make hydrocarbons less valuable. I believe the consumption of Energy will still outpace the ability to grow renewables which can be harvested especially with the use of electric cars and other infrastructure which is power hungry However in the short term I believe there’s a space for as much power as we can generate using all the current methods; I mean they’re still even using coal in some places of the world which is about the worst thing you can use for the climate.
We need to get a strategy to somehow balance supply and demand and have some form of agreement over market share, because I understand my economy and now it requires around $81.00 per barrel to balance. infrastructure growth is needed because of the youth population.
I have been trying for many years to get over the hump. I have to create an infrastructure here which costs less to run, maybe build infrastructure with solar power in our un-modernized society and to unleash to a greater better educated and motivated workforce, get better worldwide acceptance, but to date I’m nowhere near the point that I want to be.
We also do need to build a renewables infrastructure for the countries’ future Energy requirements which even in our excellent sunny climate will cost us dearly. This means that any attempt I make to modernise and secure my nation’s future will need loans I cannot guarantee to repay, in other words I’ll be bankrupt unless the Oil price is stabilised soon and for the next 10 years or so at $80 per barrel, or maybe $70 would also be ok depending on budget cuts and loan rates but not much less.
Today I have an agreement with the Americans of course that I can supply them Oil and should do so at any rate they request for as long as my country continues to be able to produce Oil. This is in order for the Saudi Royal Family to be protected by the Americans (more like a protection racket scam than an agreement) I am of course referring to the agreement with Roosevelt back in the mid-1940s. I wonder if I could somehow use that against America as well in order to depress the prices in America for longer maybe even focusing in that area rather than other countries?
President of Russia - I agree with all of your points we cannot simply continue to reduce to affect our market share and we certainly need to have a harder stop in order to reduce levels of production to the point where they could possibly be effective.
We can commence for example by noisily pulling out of the OPEC next accord agreement and immediately start to overproduce, this coincides with what I believe will be a lower demand cycle because of some events that you may be aware of occurring in China.
The strategy will cause a double blow, we continue to flood the American market with Oil in Very Large Crude Carriers (VLCCs) that will maintain the crude Oil price low for an extended time and can maintain it close to historic l I think you must target America by overproducing and send Oil to them on tankers stored off the coast until each tanker is emptied, two million barrels of Oil each will ensure that the Oil price there stays low, for longer. maybe even to a negative Oil price.
The great advantage we have now is that the American president believes that he is omnipotent in the extreme for this I will be able to utilise my current good relationship, shall we call it, with him in order to keep him off guard. Until the potential overall effects of the China shut in and the Oil situation is much more severe than he would like.
There is a danger that he will become extremely unstable as we lead up to the American elections so we must ensure that to some degree his economy recovers prior to the month of November
