Why The Saudis Suddenly Agreed To This Mega Oil Deal | OilPrice.com

Why The Saudis Suddenly Agreed To This Mega Oil Deal | OilPrice.com:

Strange, is it not, that an agreement has suddenly been reached between Saudi Arabia and neighbouring Kuwait on the oil and gas fields that they share in the ‘Neutral Zone’ after a bitter dispute that showed no sign of ending after nearly five years? Aside from the pure peculiarity of this sudden announcement, there is the fact that the deal will throw another 500,000-600,000 barrels per day (bpd) of oil into an already saturated market, against a declining demand profile, at a time when Saudi for one needs the oil price around US$84 per barrel just to allow this year’s budget to break even.

Add to this the fact that half of the new output will be added to Saudi Arabia’s production figure (and the other half to Kuwait’s) at a time when Saudi is supposed to be setting the primary example on compliance with the latest OPEC+ oil production deal and we seem to be entering the ‘Alice In Wonderland’ world in which nothing is as it seems. Actually, this is right, it is not what it seems at all, but OilPrice.com knows why.

The first part of the reason (there are two key parts) dates back to 14 September when two of Saudi Arabia’s key oil facilities – the Abqaiq refinery and the Khurais oil field – were attacked by drones fired by rebel Houthis (and/or Iran). This caused both the suspension of 5.7 million bpd of oil production and an unusually brazen bout of lying and/or market ignorance from the Saudis on such a scale that even the usually collusive credit ratings agencies could barely keep up.