Fundamental changes in the global oil market led to a paradox when relatively low prices became an issue. The situation is characterized by a duality: low quotes are both helpful and harmful when viewed from different angles by industry market participants.
The result that OPEC failed to achieve through the expected and familiar production cut mechanism was achieved by mere words from the de facto ruler of Saudi Arabia. Prince Abdulaziz bin Salman has shown in practice that the comments and direct threat from the top oil official of the world’s largest crude oil exporter should not be ignored.
After stating that speculators (so-called short sellers who are not involved in the production of commodities) should beware, commodities overcame the downtrend of the past few months and showed growth. According to the representative of Riyadh, the life and activities of brokers will never be the same again – free. Oil prices instantly rose almost 2% in early trading on Tuesday.
There’s still time, if you can – change your mind, your behavior is being watched
- Ben Salman turned to pure traders, spoiling the deal not only for producers, but also for buyers of raw materials.
Following his verbal attack, quotes for WTI oil, the US benchmark, rose 1.93% to $73.44. Brent Crude was trading at $77.29, up 1.71% from the previous session just a day ago.
According to ING strategists Warren Patterson and Eva Mantey, quoted by OilPrice, oil speculators will now be wary and avoid being fooled by too many short trades, while fearfully anticipating the next OPEC+ meeting on June 4 .
It is likely that OPEC was desperate to find in the raging and unbalanced oil market this still valid tool of influence, and thanks to the personal initiative of the representative of Saudi Arabia, they received a secondary but effective method to intimidate hype-ridden bidders.
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