The chill after OPEC's hot weekend
The White House and crude traders both had shrug-emoji responses to Saudi Arabia's oil production cut.
🏃🏽♀️Catch up fast: A contentious weekend OPEC+ meeting brought Saudi plans to slash output by 1 million barrels per day next month — and possibly longer.
- In addition, the wider group will extend its 2023 output limits through 2024.
State of play: Oil prices briefly jumped on the news before paring gains. Early this morning, Brent crude prices were trading below Friday's close (as of late morning they're slightly above).
- Meanwhile the White House — which was furious at cuts last fall — did not criticize the move.
- "We are focused on prices for American consumers, not barrels, and prices have come down significantly since last year," a White House official told Axios.
What they're saying: Ben Cahill, an oil analyst with the Center for Strategic and International Studies, said traders had been anticipating a cut, noting the Saudi oil minister recently warned speculators to "watch out."
- "The small price bounce on Monday shows the trend that is frustrating the Saudis: Negative sentiment is keeping prices down, even after multiple OPEC+ cuts," he said via email.
- "They’re fighting speculators and so far they’re not winning."
The intrigue: Barclays analyst Amarpreet Singh wrote in a note that the measured market response stems from "lack of clarity" on what would prompt the Saudis to extend their unilateral reduction beyond July.
Quick take: The White House has reason to avoid inflaming tensions with the Saudis.
- As Axios' Barak Ravid reports, U.S. Secretary of State Antony Blinken is visiting Saudi Arabia this week as the U.S. seeks a Saudi-Israel normalization deal.