Saudi Arabia has detonated a metaphorical nuclear weapon in the global oil marke...
LAUNCESTON, Australia - Saudi Arabia has detonated a metaphorical nuclear weapon in the global oil market, blowing up prices and trade relationships with its decision to slash the cost of its own crude while ramping up output.
Given its current output is around 9.7 million bpd, this means as much as an extra 1.3 million bpd could flood the market next month - just as demand is taking a major hit from the economic fallout of the global coronavirus epidemic. The OSP for Saudi Aramco’s benchmark Arab Light grade was cut by $6 a barrel for Asian customers, the destination of about two-thirds of the kingdom’s exports. This was the largest monthly cut in Refinitiv records stretching back to 2003.
But there was nothing subtle in the eventual Saudi actions - the largest cut to the OSP in at least three decades and a threat to deluge an already swamped oil market.
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