Crude Jumps as Saudis Signal Ambition for $80 Oil Price

Oil Price

This post was originally published on Zero Hedge.

WTI crude prices are up overnight, extending post-XI-sprech gains following headlines that Saudi Arabia wants to get oil prices near $80 a barrel to pay for the government’s crowded policy agenda (and costly war with Yemen) and support the valuation of state energy giant Aramco before an IPO.

Bloomberg reports that in conversations with OPEC delegates and oil market participants, Saudi officials had been careful to avoid pinpointing an exact price target. Yet people who have spoken to them said the inescapable conclusion from the conversations was that Riyadh is aiming for $80.

The private discussions, relayed by several people who met the Saudis over the last month and asked not to be named to protect their relationship with the kingdom, chimes with the hawkish tone in public from Saudi officials.

Of course, none of this is new, and is all dependent on Russia playing along (less likely as they are affected by western sanctions) and Shale supply stalling (unlikely if prices rise)…

This echoes MbS’ recent comments in a Time Magazine interview last week…

“We believe oil prices will get higher in this year and also get higher in 2019, so we are trying to pick the right time,” he told the magazine in reference to the IPO. Riyadh, which initially targeted the second half of 2018 for the listing, is now aiming for next year.

We assume ‘hope’ is now a strategy for Saudis too. Simply put, it seems like desperate jawboning from the Saudis as everything else has failed, and as Bloomberg notes, there’s little indication the Saudis are prepared to deepen their oil cuts to achieve $80, at the very least the aspiration suggests they’ll keep with the current measures until the price goal is closer. Riyadh is counting on declining Venezuelan oil production, the likely imposition of new U.S. sanctions on Iran, and continued demand growth to absorb U.S. shale production.

This post was originally published on Zero Hedge.