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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Saudi Rhetoric Sends Oil Prices To Two-Year High

Comments made by Saudi Arabia’s Crown Prince Mohammed bin Salman (MBS), sent Brent crude to its highest in more than two years, to US$59.30 a barrel, Reuters reports. West Texas Intermediate was more impervious to the comments, but it also gained a few cents, to close at US$52.64 a barrel—the highest in six months.

The comments themselves are of the Saudi garden variety, and include a) a stale reassurance that the Aramco initial public offering is still on track for its scheduled takeoff in the second half of 2018; b) a vague pledge to do whatever it takes to support oil prices; and c) a vow to quit its oil dependency and move beyond fossil fuels at some point.

No matter that the assurances have all been made before—the comments add to the already growing optimism about OPEC’s production cut deal, which will almost certainly be extended until the end of next year, after Russia’s Vladimir Putin and now MBS have backed an extension.

As for what will happen after December 2018 in case of an extension, that’s still a mystery, but this seems to be too far in the future for anyone to care about right now, or almost anyone. Saudi Arabia’s Energy Minister Khalid al-Falih said earlier this week that “When we get closer to that (five-year average) we will decide how we smoothly exit the current arrangement, maybe go to a different arrangement to keep supply and demand closely balanced so we don’t have a return to higher inventories.”

These comments suggest that the lower production may become something permanent as long as everyone in OPEC and its external partners agrees, but this is unlikely: Russia’s Alexander Novak publicly said that there are plans to boost oil production next year with or without an OPEC/Russia deal extension.

By Irina Slav for Oilprice.com

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Leave a comment
  • Raj on October 27 2017 said:
    It was Saudi Arabia and Prince Salman who caused the problem 2 years ago by over producing. Now he is trying his best to correct the situation without owning up to his mistake
  • Brandon on October 27 2017 said:
    Rhetoric is not always bearish, you see... ;)
  • the masked avenger on October 27 2017 said:
    More oil company garbage. Simply put,high oil, falling market. Basic economics. Push it up, watch the frail economy skid to a halt. The only people making money on high oil is speculators and oil execs. Yawn.
  • Akmaa on October 28 2017 said:
    Raj i don't know what u been smoking , the problem started when USA lifted sanctions on Iran and market was flooded with 3 million oil bpd suddenly
  • Rob on October 30 2017 said:
    Take a look at the historical US rig count, go back to 2010, who ramped up drilling/production and created the glut??

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