Saudi Arabia Likely to Extend Oil Output Cut: Atlantic Council

Saudi Arabia is likely to extend its voluntarily 1mbpd output cut into 2024, Ellen Wald, Senior fellow at the Atlantic Council said in a Bloomberg interview.

• “What is likely is that Saudis going to continue this 1mbpd cut but they would want to wind that back at some point in 2024,”Wald said.
• When asked about the possibility of a Saudi output cut extension, Wald answered: “If you are looking at Aramco’s latest earnings, their revenue was down and that is largely due to they are selling less oil but it was not down all that much, I do not think they are in some kind of revenue crunch, I do not think MBS is breathing down their neck to get oil prices up.”
• “I think it will be hard press to get Russia to agree to a production cuts, a production cut they plan to adhere to.”
• Wald also said it could be that OPEC plans to introduce new cuts in 2024, but it could also be that they decide a cut is not warranted at this point and they may would want to ait and see how the market will recover from these short sellers.
• “The big drop [in oil prices] that we saw last week was largely a financial one, we saw a futures options expiration, we saw a lot of short sellers moving to cover their positions, take profits, so that definitely explains the drop”
• “We are in a particular time right now when oil prices tend to be lower, so seasonally it is to be expected, but at the same time we are seeing softer economic data from China, this is a concern of a lot of traders, we are also seeing very strong production from the United States and then we have got the Saudis who are saying all of these problems are due to speculators, by our calculations supply and demand are pretty good, we’re looking for higher demand next year and supply will be able to cover it. The market is not really driving with what they are saying.”