News update for 8 March 2020: The Putin Stimulus: $30 Oil Will Be Great for the Global Economy
Saudi Arabia in royal purge over 'coup plot'
Oil futures fall over 20% after Saudi Arabia slashes selling prices
________
Source: The Straight Times
Saudis to raise oil output, beginning all-out price war amid coronavirus crisis
March 8, 2020
The world's largest oil exporter started a price war on March 7, 2020, by slashing the prices it sells crude to foreign markets by the most in at least 20 years.PHOTO: REUTERS
DUBAI (BLOOMBERG) - Saudi Arabia plans to increase oil output next month, going well above 10 million barrels a day, as the kingdom responds aggressively to the collapse of its Opec+ alliance with Russia amid a coronavirus shock to demand.
The world's largest oil exporter started a price war on Saturday (March 7) by slashing the prices it sells crude to foreign markets by the most in at least 20 years, offering unprecedented discounts in Europe, the East Asia and the US to entice refiners to purchase Saudi crude at the expense of other suppliers.
At the same time, Saudi Arabia has privately told some market participants it could raise production much higher if needed, even going to a record of 12 million barrels a day, according to people familiar with the conversations who asked not to be named to protect commercial relations. With demand being ravaged by the coronavirus outbreak, opening the taps like that would throw oil market into chaos.
In the first instance, Saudi production is likely to rise above 10 million barrels a day in April, from about 9.7 millions a day this month, according to people familiar with Saudi thinking. "That's the oil market equivalent of a declaration of war," said a commodities hedge fund manager, asking not to be named due to the sensitivity of the situation.
MAXIMUM PAIN
The shock-and-awe Saudi strategy could be an attempt to impose maximum pain in the quickest possible way to Russia and other producers in an effort to bring them back to the negotiating table, and then quickly reverse the production surge and start cutting output if a deal is achieved.
Brent crude, the global oil benchmark, already dived 9.4 per cent to US$45.27 a barrel on Friday, its biggest daily drop since the global financial crisis in 2008, after Russia balked at Opec’s proposed cuts to stabilise prices.
The production increase and deep discounts mark a dramatic escalation by Prince Abdulaziz bin Salman, the Saudi oil minister, after his Russian counterpart, Mr Alexander Novak, rejected an ultimatum on Friday in Vienna at the Opec+ meeting to join in a collective production cut. After the talks collapsed, Novak said countries were free to pump-at-will from the end of March.
"Saudi Arabia is now really going into a full price war," said Mr Iman Nasseri, managing director for the Middle East at oil consultant FGE.
RECORD DISCOUNTS
With jet fuel, petrol and diesel consumption rapidly falling due to the economic impact of the coronavirus outbreak, the energy market now faces a simultaneous supply-and-demand shock.
Please go to The Straight Times to read the entire article.
________
Source: Gold Goats 'N Guns
Russia Just Told the World, "No."
March 6, 2020 | By Tom Luongo
There is real power in the word "No."
In fact, I'd argue that it is the single most powerful word in any language.
In the midst of the worst market meltdown in a dozen years which has at its source problems within global dollar-funding markets, Russia found itself in the position to exercise the Power of No.
Multiple overlapping crises are happening worldwide right now and they all interlock into a fabric of chaos.
Between political instability in Europe, presidential primary shenanigans in the U.S., coronavirus creating mass hysteria and Turkey’s military adventurism in Syria, the eastern Mediterranean and Libya, markets are finally calling the bluff of central bankers who have been propping up asset prices for years.
But, at its core, the current crisis stems from the simple truth that those prices around the world are vastly overvalued.
Western government and central bank policies have used the power of the dollar to push the world to this state.
And that state is, at best, meta-stable.
But when this number of shits get this freaking real, well… meeting the fan was inevitable.
And all it took to push a correction into a full-scale panic was the Russians saying, "No."
The reality has been evident in the commodity markets for months. Copper and other industrial metals have all been in slumps while equity markets zoomed higher.
But it was oil that was the most confounding of all.
Most of 2019 we saw oil prices behaving oddly as events occurred with regularity to push prices higher but ultimately see them fall.
Since peaking after the killing of Iranian General Qassem Soleimani oil prices have been a one-way trade. Down.
Our inept leaders are trying to blame coronavirus as the proximate cause for all of the market’s jitters.
But that masks the truth. The problems have been there for months, pushed to the back burner by incessant Fed intervention in the dollar-funding markets.
The 2008 financial crisis was never dealt with, just papered over.
The repo crisis of last September never ended, it's still there.
And it reappeared with ferocity this week as people sold dollars and bought U.S. treasuries pushing U.S. yields on the long end of the curve to absurd levels.
Credit markets are melting down. Stock markets are the tail, credit markets are the dog. And this dog was run over by a bus.
The Fed intervenes to keep short term interest rates from rising to preserve the fiction it is still in control.
Please go to Gold Goats 'N Guns to read the entire article.
________
More:
Saudi Arabia - As New Budget Problems Arise The Clown Prince Arrests More Family
Saudi Arabia releases images of King Salman after purge of royals
Putin just sparked an oil price war with Saudi Arabia — and US energy companies may be the victims
Russia Breaks With OPEC to Go After US Shale, Brutal Price War for Market Share Set to Follow
Iran: Countdown For Expulsion Of All U.S Forces From Mid-East Region Began On January 3rd
News update for 9 March 2020: Waking up to a new reality: What's going on with stocks & oil?
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.