That the Kingdom is floating the idea of a Saudi Aramco IPO speaks volumes to the magnitude of the issue, though. Mauldin et. al. hold that the Saudis didn't lower production precisely because fracking costs more than Saudi oil, but that the Saudis miscalculated poorly enough on the fracking breakeven that now they're trapped in a death spiral. The number I heard was $50 a barrel yet here's breitbart claiming $25. $40 a barrel killed the fuck out of arctic drilling. I guess $20 kills tar sands. So I don't know that I agree with the "price floor" metaphor. Better to say that the lower prices go, the more suffering certain geopolitical players face. Russia at $120 a barrel sure ain't fighting ISIS. Saudi Arabia at $80 a barrel isn't executing Shia to prove they're in control. They sure as fuck ain't floating an Aramco IPO. I agree with you on your main point - the article looks like an April Fool's spoof. I'll also paraphrase a quote from Winning the Loser's Game - "no one ever got rich predicting prosperity."
I read that about Aramco in the piece you posted the other day, and I have to admit that I was shocked. I also think perhaps it's some kind of ruse. Could it be? If so, for what purpose? Would the royal family really publicize that kind of sensitive information? It sure makes them look like they're in dire straights. My boss was recently offered a collaboration with a Saudi scientist. I told him to say no. I don't want any part of working with those people. He can't even go visit their lab until he gets a new passport, as they won't let anyone in the country who has a stamp from Israel. If there's any place that's way over due for a popular uprising...
Call me jaded, but I suspect that if the Saudis were better at manipulation and intrigue they'd have a lot more influence. As it is, they're deep pocket extremists whose most successful project to date is the Taliban. That particular pigfuck hasn't gone very far since the Americans pulled out. They're also less than a year into a new King. There's also this. By rolling upstream operations entirely into the Ministry of Oil, it gives the ministry total control over oil production and much greater oversight over global oil price trends. But most important of all, I've received word that Ali Naimi, the current Minister of Oil (and a non-Royal, remember), is going to be replaced by Abdulaziz bin Salman, another of King Salman's sons. This means that, for the first time in Saudi Arabia's history, the country's oil is going to be controlled by a Royal. Dunno. I've said a few times that Saudi Arabia is basically Texas run by hyper-religious Kardashians. Seems like the new guy wants more bling. "My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel." Rashid bin Saeed AL Maktoum, one of the founders of Dubai If you know that the gig is up, if you know that the die is cast, you might as well bust it out. Not that the Saudis have ever been particularly austere. But if Saudi oil is going to be worth less in the future than it is now, the time to sell is now.I've received word that Aramco is actually going to be entirely restructured, and that the initial reports of a separation from the Ministry of Oil are oversimplified. From what I know, Aramco is actually going to be split, with downstream operations (refining and processing crude oil into various products) being merged with SABIC (a Saudi commercial behemoth, involved in petrochemicals), and upstream operations (oil exploration and extraction) being rolled entirely into the Ministry of Oil.