Oil Soars To New 2023 High and other stories
Oil Soars To New 2023 High After Saudis, Russia Surprise With Extended Production Cut
Just days after we said that Saudi Aramco floating to sell up to $50 billion in new stock meant that oil is about to soar much higher…
Oil is going higher https://t.co/34CQ08p6uU
— zerohedge (@zerohedge) September 1, 2023
... moments ago oil exploded higher after first Saudi Arabia and moments later Russia surprised markets by announcing that the recently implemented production cuts would be extended through year-end, well beyond the 1 month that was widely expected by the market.
Just after 9am ET, Saudi Arabia said it would extend the voluntary cut of 1 million b/d of for another 3 months, from October until the end of December, well beyond the expectation of just 1 more month. Saudi press agency SPA notes that the voluntary cut decision will be reviewed monthly to consider deepening the cut or increasing production. The extension of cuts is meant to reinforce the precautionary efforts made by OPEC countries with the aim of supporting the stability of the oil market. The Saudi announcement came a shock to market as 20 of 25 traders and analysts surveyed by Bloomberg last week had predicted the additional cutback would be continued for just one additional month.
And then, literally seconds after the Saudi decision, Russian deputy PM Novak said Russia would also extend its reduction of oil exports until the end of the year, reducing its oil output by 300kb/d in voluntary cuts until December 2023.
Similar to the Saudis, Russia said that the decision to reduce oil production to be reviewed monthly to consider possibility of deepening reduction or increasing production depending on situation on the world market.
Defending the price of oil has come at a cost for the Saudis. The kingdom suffered the sharpest downgrade to economic growth projections by the International Monetary Fund because of the sales volumes it is losing. Yet this appears to be an acceptable price for the kingdom, which may need an oil price of almost $100 a barrel to cover the ambitious spending projects of Crown Prince Mohammed bin Salman, according to Bloomberg Economics.
“There is no sign that Saudi Arabia will shift away from its current price-over-volume strategy,” said Bjarne Schieldrop, chief commodities analyst at SEB AB. “Price over volume is the name of the game.”
Following this announcement Brent Nov’23 lifted from USD 88.50 to above $90 for the first time in 2023, while WTI Oct’23 rose from USD 85.55/bbl to USD 87.00/bbl, also the highest price of the year, and about to crush the Fed’s hopes for a decline in headline inflation.
Bottom line: we now know that a year and a half later, the OPEC+/BRIC+ reaction to Biden’s weaponized dollar is weaponized oil; may the least hopeless man win.
As for Biden, we wish him the best of luck refilling the SPR now that oil is about to hit $100 and rise above the price where the senile president sold most of the US strategic oil.
Russia shocks global oil markets
Russia will extend its voluntary cut in oil exports by 300,000 barrels per day (bpd) until the end of the year, Deputy Prime Minister Aleksandr Novak announced on Tuesday.
“The additional voluntary reduction in oil supplies for export is aimed at strengthening the precautionary measures taken by the OPEC+ countries in order to maintain stability and balance on the oil markets,” the official stated.
Russia will review its voluntary cuts monthly, in order “to consider the possibility of deepening the reduction or increasing production, depending on the situation on the world market,” Novak added.
The measure was taken “in addition to the voluntary reduction previously announced by Russia in April 2023, which will last until the end of December 2024,” the deputy prime minister explained.
The world’s second largest oil producer has been cutting oil output and exports in lockstep with fellow heavyweight oil nation Saudi Arabia. In a separate statement on Tuesday, Riyadh extended its voluntary production cut of 1 million barrels per day until the end of the year, the SPA news agency said, citing an energy ministry official.
The latest round of oil cuts comes on top of voluntary reductions of 1.66 million bpd that some OPEC+ members had first declared in April, and then agreed to extend until the end of 2024.
The reductions are described as voluntary because they are outside the official policy of OPEC+, which obliges every non-exempt member to a share of production quotas.
OPEC+, a group comprising the Organization of the Petroleum Exporting Countries and allies including Russia, which pumps around 40% of the world’s oil, has been cutting output since November 2022.
Prices of the international benchmark Brent blend jumped above $90 per barrel on the news for the first time since November 2022.
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Niger expects quick French withdrawal – post-coup PM
Niger expects a quick withdrawal of French troops after relations between France and the West African country deteriorated following a coup in July, military-appointed prime minister Ali Lamine Zeine has said.
“The government has already revoked the deals that allow for the French troops to operate on our territory,” Zeine told reporters in the capital Niamey on Monday.
The French forces are in Niger “illegally,” he clamed, adding that “talks are underway, which should allow for a swift withdrawal.”
Paris withdrew troops from Burkina Faso earlier this year after the country’s military rulers asked them to leave. France also pulled its forces out of Mali following tensions with the military government following a coup in 2020.
Protests calling for the withdrawal of the French Army from Niamey have increased since the ouster of President Mohamed Bazoum on July 26.
Earlier last month, Niger’s coup leaders announced the cancellation of military agreements that allowed French forces to fight jihadist insurgents in the Sahel region, giving the former colonial power only a month to pull out its 1,500 troops.
The military authorities have also ordered the “immediate expulsion” of France’s ambassador, Sylvain Itte, after he refused to meet with the military leaders, whom France has repeatedly labeled “illegitimate.”
Paris has disregarded the orders to remove its troops and envoy, and instead expressed support for ECOWAS (Economic Community of West African States) sanctions and a possible military intervention to restore Bazoum’s regime.
The French military reportedly warned on Friday that it was ready to respond if renewed tensions in Niger targeted its base and diplomatic facilities.
On Monday, the military-appointed prime minister said military action by ECOWAS did not have the backing of all its member states.
“Out of the 15 ECOWAS members, maybe three or four are behind a military intervention,” Zeine said, as quoted by Bloomberg. “All the dispositions are in place, and we’re ready to defend ourselves if it comes to it.”
However, he added that the new rulers, whose proposal for a three-year transition was rejected by ECOWAS, “have hopes of reaching an agreement” with the bloc in the “coming days.”
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