From Breakingviews - OPEC’s oil cut is less surprising than it looks
Saudi Crown Prince Mohammed bin Salman’s latest gambit is certainly eye-catching. When OPEC and associated allies like Russia pledged to cut 2 million barrels of daily supply in October, it was an official decision by the so-called “OPEC+” grouping that controls over 40% of global output. Sunday’s equivalent was an off-the-cuff “voluntary” announcement by a select subset.
More broadly, major international forecasters like the International Energy Agency expect the oil market tolater in the year as Chinese demand recovers. That could prop up crude prices anyway. Meanwhile, Saudi’s long-term reliance on the United States as a major guarantor of its regional security would normally mean it wouldn’t take a rash step that could send U.S. pump prices higher.
Yet MbS has multiple economic reasons to ruin U.S. President Joe Biden’s day. Bank collapses on both sides of the Atlantic sent oil prices down by 15% to $73 a barrel in March. That’s uncomfortably close to the level at which Saudi’s budget. More importantly, while a Chinese post-Covid demand recovery should boost oil prices, it’s not totally clear by how much. Unlike Europe and the U.S., Chinese oil consumption is more led by industry than travel, and the former has yet to properly pick up.
Saudi might still have held fire on fresh cuts had it feared it would lose market share or create a political stink. But the reduction in flows of Russian crude to the West and a relative lack of investment in new U.S. shale have given OPEC greater pricing power. MbS is in the happy position of being able to cut production without big hits to market share.
If Chinese demand starts to soar and banking fears recede, then oil prices could motor – Rystad Energy thinks they could exceed $100 a barrel by the summer. That could drag up inflation and thus interest rates in the West, where central bankers
Norge Siste Nytt, Norge Overskrifter
Similar News:Du kan også lese nyheter som ligner på denne som vi har samlet inn fra andre nyhetskilder.
Saudi Arabia to invite Syria's Assad to Arab leaders summit, sources saySaudi Arabia is planning to invite Syrian President Bashar al-Assad to an Arab League summit that Riyadh is hosting in May, three sources familiar with the plans said, a move that would formally end Syria's regional isolation.
Les mer »
Saudi Arabia, OPEC+ producers announce voluntary oil output cutsThe Saudi energy minister said it was a precautionary measure to support the stability of the oil market.
Les mer »
Saudi Arabia to invite Syria's Assad to Arab leaders summit, ending regional isolationSaudi Arabia is planning to invite Syrian President Bashar al-Assad to an Arab League summit that Riyadh is hosting in May, three sources familiar with the plans said, a move that would formally end Syria's regional isolation.
Les mer »
Egypt's Sisi heads to Saudi Arabia amid financial pressure, regional realignmentEgyptian President Abdel Fattah al-Sisi is travelling to Saudi Arabia on Sunday, according to three diplomatic sources, as Cairo continues to seek financial inflows to ease pressure on its currency and bolster a faltering economy.
Les mer »