Saudi Arabia Could Ramp Up Output Soon Amid Spiking Prices: Rapidan Energy

Rising crude oil prices toward $100/bbl could incentivize Saudi Arabia to revive output again, rather than risking a further price surge that damages the economy, Rapidan Energy President, Bob McNally said.

• Traders are underestimating “that the Saudis will take their foot off the break sooner,” McNally said. “They do not want to deliberately over-tighten the market, because if you get a spike, then you get a demand collapse, and you get a bust.”
• Global oil markets are “getting squeezed hard,” especially for fuels like diesel and heating oil as peak winter consumption approaches, McNally said. With a particularly fragile economic backdrop, that poses dangers for central banks like the Federal Reserve, he added.
• “The real sensible way to bring prices to heel is for Saudi Arabia and OPEC+ to say: ‘We’ve made our point, we’ve scared away the speculative shorts’,” McNally said. “We’re not there yet, but we’re getting closer.”
• The next OPEC JMMC Meeting is scheduled for 4 October.