Saudi oil optics

The release of the March Official Selling Prices begins to illustrate Saudi Arabia's complex and calculated moves in the global oil markets. After years of trying to figure out the market dynamics of the brave new world with US shale and testing market responses to various signals, it knows that cutting its own production is not the only thing that matters (not to mentioned damaging to its own market share). In fact, targeting data points that...

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Saudi and Russia dominate gossip columns in run up to June OPEC meeting

As we approach the June OPEC meeting, all eyes on Saudi Arabia and Russia for any clues on the direction they will go on 22nd June. With the sanctions on Iran and imminent collapse of Venezuela, Trump has asked the two power weights to step in to avoid oil prices going any higher. This in itself is ironic as the US has been trying to wean itself off imports and attain energy independence from OPEC, yet it is now openly asking Saudi Arabia to...

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OPEC may extend yet

Saudi Arabia has been working tirelessly behind the scenes and appears to be gaining good momentum with the major actors of OPEC + 1 (i.e. Russia) for extending the OPEC output agreement beyond April 2018. Saudi Arabia and its new ally, Russia, are keenly in favour of maintaining the cuts until June 2018 and several other producers have recently signaled their support for an extension as well. Iran: Initially one of the tougher partners at the...

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Saudi Arabia - joining the dots: Part 6 - Emergency meeting

Saudi Arabia - joining the dots is a series of blog entries exploring Saudi Arabia's role in the oil markets with a brief look at the history of the royal family and politics that dictate and influence the Kingdom's oil policy. Part 6 - Emergency meeting OPEC's traditional strategy has been to cut production to maintain prices, but recent behaviour of the cartel or at least that of its largest member (and swing producer) shows a marked deviation...

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Saudi Arabia - joining the dots: Part 5 - Breakeven, OPEC's downfall

Saudi Arabia - joining the dots is a series of blog entries exploring Saudi Arabia's role in the oil markets with a brief look at the history of the royal family and politics that dictate and influence the Kingdom's oil policy. Part 5 - Breakeven, OPEC's downfall The above chart, taken from the Wall Street Journal, paints a grim picture.  It shows the oil price required by the various OPEC members to meet their budgets. As of 10 October...

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Saudi Arabia - joining the dots: Part 4 - The price wars, defending market share

Saudi Arabia - joining the dots is a series of blog entries exploring Saudi Arabia's role in the oil markets with a brief look at the history of the royal family and politics that dictate and influence the Kingdom's oil policy. Part 4 - The price wars, defending market share The sudden fall in the oil price in the middle of 2014 and the subsequent lack of response by OPEC is a stark reminder of its members' policy of defending market share,...

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