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Cartel Business
OPEC+ managed to engineer a modest spike in crude prices after blindsiding markets with a surprise output cut.
Going strictly by the adjectives employed Monday, you'd think oil went through the roof. "Surge" was popular, so was "soar" and I even saw "skyrocket" at one point.
At the highs, WTI was up around 8%. Eventually, markets settled on ~6%, although the situation could look different by the time you read these lines.
If crude does stage a meaningful and durable rally and US gas prices
It should be mentioned that this production cut comes on the heels of the US rejecting any possibility of refilling the SPR, even partially, in 2023.
FT reporting US told Saudis it would refill SPR to keep prices from going too low, then US didn’t do so, oil fell to $70 Brent, and Saudis took matters into their own hands. Another own goal by Granholm.
In their dispute, US persists in playing to Saudi strengths. US needs to target Saudi weaknesses – security.
There are no “Saudi strengths” if the US really wants to push the issue. How about this: “Hello?” “Hi, it’s Joe Biden.” “Oh, hi.” “Yeah, so you’re gonna go out later today and retract that production cut, or we’re going to sanction you personally, and then cut off your weapons supply and cancel all security agreements. If that doesn’t work, we’re going to go after the riyal peg and covertly foment domestic discord including paying people to stage street protests. When you crack down on those people, we’ll sanction the entire monarchy and cut you off from dollars altogether. I’m gonna go now, because I’ve got more important things to do than chat with some backwater dictator and you’ve got oil that needs pumping.” Click
Would that not have significant repercussions for the US/petrodollar as well? It’s not like that threat can be made so explicitly without KSA taking immediate steps to protect itself even if we had no intention of following through.
I think the US, occupied with other problems and lacking a coherent domestic petro-energy strategy, is unlikely to drop a horse’s head on MBS’ bed anytime soon. This is unfortunate, but is one reason I’ve stuck with energy names.
Wouldn’t you like to just say all that? Tells me that our oil exporting days are over for now. Our capacity for bluster like that is a callable bluff.
It’s not a bluff. We could point to all manner of nations we’ve successfully destabilized.
“Ha ha ha. Funny Americans. We have heard of your tradition called April Fool’s. Well, anyway, your jokes made us think that maybe we should be upping the value of our speech to Congress and dark money contributions to $85 and reminding them how important happy defense contractors are to their reelection in your backward, corrupt country. Then we will inform your Fox News audience and Israeli clients how scary a world with no petrodollars can be in a space with Islamic militants ruling from the Arabian Sea to the Mediterranean. Tootles.”
This is actually pretty funny, so I’m going to allow it despite the fact that it was left anonymously by a non-subscriber.
My question to this (clearly gifted) satirist is: Who is it, do you think, funding the Sunni militants? If you answer that question correctly, then you know that the militants are already ruling in the Gulf.
For some reason I’ve been thinking a lot today how this “bombshell” comes on the heels of Trump’s indictment…show of friendly support perhaps…?