So just another oil update here. Things seem to be coming to a head quickly as major oil refiners like Exxon are opting to reduce refinery output. This might prove problematic for Saudi Arabia’s strategy of flooding the market with oil as there’s literally no one to buy it and their decision to reserve a huge number of tankers has made freight rates too expensive.
Additionally so far there has been no increase in product supplied out of Saudi Arabia, which is technically in line with their guidance and maintenance of the prior cut agreement but might is bringing some doubt about their willingness to follow through. Article: www.reuters.com/article/us-oil-saudi/despite-opec-deal-collapse-saudi-oil-exports-yet-to-rise-sources-idUSKBN21A321
Additionally Russia might already be backtracking a bit from their previously aggressive posture about immediately raising production in April.
Saudi Arabia and the United States are also in talks to find some other way to stabilize the oil market which might include an alliance between the two: www.reuters.com/article/us-global-oil-usa-saudi/u-s-saudi-alliance-one-of-many-ideas-being-discussed-u-s-energy-secretary-idUSKBN21A2WW
We’re still early into this by any measure but it does seem like it’s less and less likely that anyone has the resolve or really the ability to actually hike output in the current demand environment. I suspect we might see everyone reapproaching the table sooner than expected if the US can get shale producers to reduce output by even 5-10% which they might be doing anyways at this point given the cuts to capex budgets and layoffs we’ve already seen. Things could fall apart again tomorrow but it does seem like there’s some reasons to believe this might not end up being quite as bad as previously threatened at this point.