The surprise OPEC+ production cut was aimed squarely at one audience: speculators betting that oil prices would fall.
It’s a return to the tactic first used by Saudi Energy Minister Prince Abdulaziz bin Salman in 2020, when he famously said he wants “the guys in the trading floors to be as jumpy as possible” and vowed that “whoever gambles on this market will be ouching like hell.”
The new attack on short sellers was successful. Markets were wrong-footed and oil futures surged as much as 8%, repricing assets from equities to bonds. Yet OPEC+ also caught consumers and the global economy in the crossfire, spurring concerns about inflation and prompting bets on further interest rate hikes.
The Organization of Petroleum Exporting Countries and its allies began to see the need for a change in oil policy on March 20, according to people familiar with the matter, when Brent crude slid to a 15-month low near $70 a barrel as a banking crisis threatened to hobble the economy. The Saudis reflected that short sellers were due a reminder of the pain OPEC+ can still inflict on them, the people said.
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