Saudi’s Oil Cut Surprise Is All About Squeezing the Market Harder - Bloomberg
Prince Adbulaziz bin Salman, Saudi Arabia’s oil minister, often talks up the virtues of surprising the market, warning short sellers that they risk an “ouching,” as he likes to put it.
The market was caught off guard yesterday. Traders expected the Saudis to extend its unilateral 1 million barrel-a-day output cut by a month into October, but Riyadh announced a three-month rollover instead. Oil popped above $90 in London for the first time since November.
The move was coordinated with Russia, which promised to extend its own 300,000 barrel-a-day export reduction for the same length of time. While the market can be certain Saudi Arabia will make good on its promises, there will be skepticism about the Kremlin’s commitment.
Nevertheless, the move underscored the strength of the alliance between Riyadh and Moscow.
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