The US imposed sanctions on companies working on Russia’s massive flagship gas pipeline project to Germany. Putin has now retaliated:
“The Kremlin has decided to sacrifice OPEC+ to stop U.S. shale producers and punish the U.S. for messing with Nord Stream 2.”
Two article below explain the drama. Kurt Richard Haskell summed up what’s going on:
I don’t think they’re blaming two separate parties. Saudi Arabia wanted to raise prices but Russia said no, we’re keeping prices at $45 per barrel, which resulted in the first article. Later, Mohammed Bin Salman and Saudi Arabia threw a temper tantrum over this and decided to drop prices way lower than what Russia wanted. Saudi Arabia responded to Russia by making prices so low that its competition will go bankrupt. It’s now a race to the bottom in the oil industry. One article is before Saudi Arabia responded and one article is after it responded.
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First ZeroHedge article posted by Tyler Durden on Sat. 03/07/20 – 15:44
Putin is fully blamed:
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OPEC+ is no more, after a torrid 24 hours in which Russia overturned the balance of power in the oil world, leaving the members of OPEC+ dazed and confused….
With global fears over coronavirus already severely impacting the oil market (down 30% since the start of the year), and with the Russians surprising oil ministers gathered at OPEC headquarters by suddenly abandoning a plan meant to keep oil prices steady, the biggest shock was felt by the Saudis, because as Bloomberg puts it, Putin has just effectively dumped crown prince MbS to start a war on America’s shale oil industry:
Alexander Novak told his Saudi Arabian counterpart Prince Abdulaziz bin Salman that Russia was unwilling to cut oil production further. The Kremlin had decided that propping up prices as the coronavirus ravaged energy demand would be a gift to the U.S. shale industry. The frackers had added millions of barrels of oil to the global market while Russian companies kept wells idle. Now it was time to squeeze the Americans.
After five hours of polite but fruitless negotiation, in which Russia clearly laid out its strategy, the talks broke down. Oil prices fell more than 10%. It wasn’t just traders who were caught out: Ministers were so shocked, they didn’t know what to say, according to a person in the room. The gathering suddenly had the atmosphere of a wake, said another.
… Bloomberg quotes Russian state-run think tank Institute of World Economy and International Relations president Alexander Dynkin as saying, “The Kremlin has decided to sacrifice OPEC+ to stop U.S. shale producers and punish the U.S. for messing with Nord Stream 2.”
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Second ZeroHedge article posted by Tyler Durden on Sun, 03/08/2020 – 12:33 [I saw it originally posted Sat. 03/07/20 – 17:–]
Mohammed bin Salman blamed instead this time:
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With the commodity world still smarting from the Nov 2014 Saudi decision to (temporarily) break apart OPEC, and flood the market with oil in (failed) hopes of crushing US shale producers (who survived thanks to generous banks extending loan terms and even more generous buyers of junk bonds), which nonetheless resulted in a painful manufacturing recession as the price of Brent cratered as low as the mid-$20’s in late 2015/early 2016, on Saturday, Saudi Arabia launched its second scorched earth, or rather scorched oil campaign in 6 years. And this time there will be blood.