It was ugly Sunday in the catch-up trade from Wall Street’s late-week bloodletting.

Regional losses in the Mideast were meaningful, to put it politely, with Saudi stocks leading the way lower.

The Kingdom’s benchmark plunged almost 7% in (by far) the worst session since the early days of the pandemic.

Aramco shed nearly $100 billion in market cap at one juncture.

It took the better part of two days for economists and market participants to come to terms with just how surreally ridiculous the math behind Donald Trump’s “Liberation Day” tariffs really was, and once they did, the read-across for the global economy was poor indeed.

The specter of a global recession — and the demand destruction that’d go along with it — weighed heavily on crude Thursday and Friday at a time when prices were already attempting to incorporate a surprisingly large OPEC output hike.

On Sunday, Riyadh cut Arab Light crude prices to Asia by the most since 2023.

I’m not sure what the rationale is for deliberately oversupplying a market that’s staring down the biggest threat to global growth (i.e., demand) since the pandemic, but if Riyadh’s trying to curry favor with Trump even at significant risk to their own fiscal stance, they’re advised that he’s burned them on this before. (In 2018, Trump “‘duped,’ ‘tricked’ and ‘snookered'” the Saudis — to quote one of the funnier mainstream media headlines from that episode — into ramping up supply ahead of the US mid-terms, only to grant a series of waivers to Iran, driving prices even lower.)

It’s possible — likely, according to some of the “smarter” analysts — that the Saudis are doing what they did in February and March of 2020, namely trying to enforce compliance with cartel quotas by hiking output and cutting prices to turn the screws on over-producing members. We all know how that turned out back then.

The Saudis can take a lot of pain, but generally speaking, ~$65 Brent won’t work, not forever, and certainly not if MBS wants to build his Jetsons city and keep up with state subsides (remember, the monarchy essentially pays the locals not to rise up and kill them). Ideally, Riyadh needs something like $100 a barrel, but they can ride out periods of sharply lower prices, and even outright price collapses, if it’s in their geopolitical interests.

Anyway, this is a delicate juncture. That’s the point. As one CIO told Bloomberg Sunday, “the GCC [is] not immune to global sentiment. The correlation is there.”