OIL PRICE WAR..Saudi Arabia/U.S/russiaThis weekend Saudi Arabia dropped the oil bomb. It not only cut its forward crude price to Chinese customers by as much as $6 or $7 per barrel but is also reportedly looking to raise its daily crude output by as many as 2 million barrels per day into an already oversupplied global market. Look out below.
The move by the Saudis is both a market share grab and a loud signal to Moscow that it’s done playing games. The dramatic action is in response to a contentious and ultimately failed, OPEC meeting in Austria on Friday. OPEC members laid out a proposal to further cut oil output quotas by as much as 1.5 million barrels per day.
OPEC itself was aligned on the deal, but non-OPEC member Russia said “nyet,” effectively killing it. A source inside the negotiations tells me that as the two sides worked out production cut plans, in the end, the “red lines weren’t even close.” The source added that the Russians “definitely don’t want to continue to support shale” at least in part because the Rosneft sanctions were still “too raw.”
