How Saudi Arabia Can Save the Global Oil Industry
It's time for a crystal clear take-it-or-leave-it ultimatum. If that doesn’t work, oil prices will drop to single digits.
Don’t let this last chance go up in flames.
Photographer: Bloomberg/BloombergThe global oil industry is on its knees. Without action from producers to reduce supply, the situation will get much worse as the world runs out of places to store crude pumped out of the ground that nobody wants. A big production cut could delay reaching that breaking point, perhaps for long enough for demand to start to pick up again. But it won’t happen unless everybody plays their part.
The oil market got quite in a flap over President Donald Trump’s Thursday tweet that Saudi Arabia and Russia had agreed to cut production. But it’s quite clear from subsequent comments out of Riyadh and Moscow that nobody had pledged any such cuts; not of 15 million barrels, nor 10 million, nor even anything at all. In fact, the leaders of Russia and Saudi Arabia hadn’t even spoken with each other. Perhaps Trump was just getting his ducks in a row — setting up a fictional promise of cuts that wouldn’t materialize, which would give him an excuse to resurrect his Tariff Man persona and slap duties on imports of their oil into the U.S.