Saudis Blowing Smoke

5 Jun 2017   Saudi Arabia

It was a dismal day for OPEC when it met in Vienna to extend its output deal. Despite an agreement to limit supply for another nine months — a move it had signaled well in advance — the price of crude fell by around 5 percent. The one bright moment came when Saudi Energy Minister Khalid Al-Falih announced that his country would cut crude sales to the U.S. Prices rallied briefly, adding as much as 50 cents. But a closer look at his comments reveals they may lack teeth. Unless the Saudis get serious about depriving customers of crude they want to buy, pessimism on OPEC’s ability to rebalance the market is warranted. Here’s what he actually said during the press conference after the meeting between the group and its friends on May 25: “As a result of certain marketing developments, including separating the assets of Motiva and Aramco […]

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