Trump Sends Crude DMs to Crown Prince 📲
Trump Sends Crude DMs to Crown Prince
On a normal day, the world drills about one hundred million barrels of oil. It consumes about the same, so we have an equilibrium. That equilibrium keeps prices stable. But if supply and demand get out of balance by just a few hundred thousand barrels, things get messy indeed.
Thanks to coronavirus and gung-ho drilling from kleptocrats in the Middle East, these are not “normal” days. We’re currently running up a two-billion-barrel surplus of Brent. Not good. That’s toothpaste out of the tube, nobody can force it back in, and Russia, Saudi Arabia, Congo, and Nigeria are the main culprits. This was no accident!
Their villainous goal is to crush oil prices because if they succeed (as they are currently), shale stocks will plummet as those companies starve. They need higher oil prices. The Saudis have been preparing a kill-shot of maximum output capacity drilling, and if shale falls completely, the Lukoils, Gazproms, and Saudi Aramcos of this world will hit it big on their respective stock exchanges.
Whiting Petroleum has already collapsed, and you can bet there’s more suffering coming down the pipeline (and more oil). It was only a matter of time before the West retaliated in this war, and Trump spoke.
You don’t need to see the tweet. You can guess. He called the Saudi Crown Prince a “friend” of his and promised the desert drillers would cut back production by ten million barrels per day. This jolted the price of oil. It rose an incredible 25% in eight minutes. However, the level didn’t hold after the Saudis rebutted. They said they agreed to no such cutback.
Diplomacy can be very hit and miss, and although Trump likes cheap gas at the pump to keep voters happy, there’s a very real crisis in oil storage. It’s no wonder he’s “friends” with bin Salman over the negotiating table right now. However, that could all change if production cuts aren’t forthcoming.
If President Trump is to get his way another way, be it through trade barriers or troops on the ground, think of how many more stocks could get dragged into the mix!