I’ll be really quick. I’ve been saying this for a while now: a couple of words from Khalid al-Falih are enough to drive oil prices up or down. At first glance, it’s understandable in light of the fact that Saudi Arabia is the world’s number-two producer. At second glance it pays to follow his comments and then just stop paying attention because:
#1 In early November last year, after two months of intense negotiations, al-Falih said the OPEC oil production cut agreement was imperative.
#2 In late November he said a cut was not actually necessary. The glut could shrink if demand in the US improved. Sure it could. Everything is possible hypothetically.
#3 In March, a government official from his ministry said that US shale boomers should not assume OPEC will extend the cut. By March it was pretty obvious the cut wasn’t working, by the way but OPEC was trying hard to ignore the fact.
#4 Last week, al-Falih and Novak announced they’re both backing an extension. A nine-month one.
I bitterly regret failing to start making a collection of al-Falih quotes in September but, alas, I wasn’t aware how exciting the next few months will be. I’m going to start collecting them now. It should be fun.
PS I just saw this blog post from last June. June 2016. Glut over. Right.