There are certain benefits when the president of the US is BFFs with the ruling Saudi regime, especially when the price of oil rises so high it threatens to not only undo the US president’s tax reform, but to slowdown the overall economy even as said president is injecting a $1 trillion fiscal stimulus in it. We saw that in practice moments ago when Saudi energy minister Khalid Al-Falih said OPEC is prepared to adjust policy in June, and that it is likely that there will be a gradual oil supply boost in the second half.
- FALIH: LIKELY TO BE A GRADUAL OIL SUPPLY BOOST IN SECOND HALF
- FALIH: `WE WILL DO WHAT IS NECESSARY IN JUNE’ OPEC MEETING
The reason: “The anxiety of consumers is now a concern to us”, translated: between the IEA’s forecast of demand destruction the higher the price goes and Trump’s periodic reminders to pump more, Saudi Arabia had no choice but to take the first step toward undoing the Vienna oil supply cut agreement.
- AL FALIH: DEMAND GROWTH WILL LIKELY MODERATE AT CURRENT PRICES
- DAIMLER ERASES GAINS ON XETRA AFTER REPORTS OF POSSIBLE RECALL
And while his Russian peer, Energy Minister Novak said it is too early to talk about the possible scale of easing production cuts, he added that easing production cuts would make sense in Q3 2018, confirming that it is now just months before OPEC starting pumping extra oil into the system to offset the decline from both Venezuela and, soon, Iran.
As a result, Oil has tumbled, sliding below $70/barrel, and down to $69.25 last, the lowest price since June 8 when Trump announced the US withdrawal from the Iran nuclear deal.
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