Saudi Arabia surprised the market with a large cut in crude production, an assertion of primacy over the global oil industry that came directly from the kingdom’s de-facto ruler.
The move papered over cracks in the OPEC+ coalition and was a U-turn from some recent Saudi oil-policy priorities, but those things paled in comparison next to the global impact of the decision. Crude prices jumped to a 10-month high and shares of energy giants in London and shale drillers in Texas surged.
“We are the guardian of this industry,” Saudi Energy Minister Prince Abdulaziz bin Salman said as he gleefully announced the cut on Tuesday. “This gesture of goodwill made by our leadership, in the name of His Royal Highness the Crown Prince Mohammad bin Salman.”
Since the start of the week, the oil market has been focused on the meeting between the Organization of Petroleum Exporting Countries and its allies. Since late December, Russia had been pushing for a supply hike of about 500,000 barrels a day for February, and there was reason to think it would prevail.
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