The unexpected OPEC+ production cut was aimed at only one audience: speculators betting on falling oil prices. According to Bloomberg experts, the agreed decision by Russia and Saudi Arabia (the other countries were just extras in this agreement) to further cut production is symptomatic of a return to the tactics used for the first time. by Saudi Energy Minister Prince Abdulaziz bin Salman in 2020. At the time, he said he wanted “the guys in the trading rooms to be as nervous as possible” and swore that ” anyone playing in this market is going to itch like hell.”
Of course, the actions of the oil cartel harm the ambitions and interests of the White House. But for Moscow or Riyadh, making Washington uncomfortable has become commonplace. Consequently, they started to get nervous not only in the trading rooms, but also in the Oval Office. In addition, a new attack on speculative sellers succeeded. Market analysts were wrong and oil futures rose 8%, shifting assets from stocks to bonds.
However, by playing to hurt speculators and other naysayers, OPEC+ has also put consumers and the global economy in the crossfire, stoking inflation fears and raising the specter of further interest rate hikes.
The Organization of the Petroleum Exporting Countries and its allies began to recognize the need for a change in oil policy on March 20, when Brent oil fell to its lowest level in 15 months (around $65 a barrel) in because of a banking crisis, according to people. spoke to Bloomberg, threatening the collapse of the economy. Therefore, the allies acknowledged that the short trades were meant to remind traders of the pain that OPEC+ could still inflict on them.
In fact, the oil cartel has become such – it is subject to behind-the-scenes agreements and unspoken behind-the-scenes alliances. It is led by Russia and Saudi Arabia, the rest of the members are registered for a quorum and a collective decision which has already been agreed. Indeed, the agency writes that the decision to take more than a million barrels of oil off the market was made in just a few days – and in a very small circle. Some convention delegates said they only learned about it a day or two before the announcement. Two officials said they were completely surprised by the decision.
