A Reduction on Oil Production in Saudi Arabia

Saudi Arabia could begin easing its production cut sooner than oil market participants believe as the world’s top crude oil exporter wouldn’t risk demand destruction through too high prices, consultancy Rapidan Energy Group says.

Due to the Saudi and OPEC+ cuts and falling commercial crude inventories in the U.S., oil prices climbed to their highest levels in months in early trade on Thursday —the U.S. benchmark jumped to a 13-month high and Brent hit the highest price since November 2022 and a new high for 2023.

Early this month, Saudi Arabia extended its 1 million bpd cut through December. The production levels would be reviewed each month until the end of 2023.

According to Rapidan Energy’s president Bob McNally, Saudi Arabia could start easing the cuts sooner than traders realize as it wouldn’t want to overheat the market.

“They do not want to deliberately over-tighten the market, because if you get a spike, then you get a demand collapse, and you get a bust,” McNally told Bloomberg Television in an interview on Thursday.

“The real sensible way to bring prices to heel is for Saudi Arabia and OPEC+ to say: ‘We’ve made our point, we’ve scared away the speculative shorts’,” the energy expert added.

Last week, Warren Patterson, Head of Commodities Strategy at ING, said that even though the oil price rally had “more room to run,” a break above $100 per barrel for Brent wouldn’t be sustainable.

“OPEC+ will also want to be careful about overtightening the oil market. They will be shooting themselves in the foot if they push prices to levels where we start to see an increased risk of demand destruction,” Patterson wrote in a note.  READ MORE...

Electrifying America's Roads

Within weeks of the Russian invasion of Ukraine, the average price for a gallon of gasoline reached its highest point in American history—a range where it has largely remained as the economic isolation of one of the world’s largest petroleum exporters looks to persist for months, if not years.

Ninety-one percent of American households own a car, meaning that almost everyone will feel the sting of elevated fuel prices when they fill up their tanks for the foreseeable future. However, the roughly 2 million owners of electric vehicles (EVs) will be spared the pain at the pump.

An oil shock of the magnitude not seen since the 1973 Arab Oil Embargo has sent Google searches related to EVs surging by 300 percent in the last few months. Thirty-six percent of Americans now say they plan to buy or lease an EV or are seriously considering doing so. The time is ripe to electrify American roads.

Increasing the ownership and production of EVs presents a strategic opportunity to not only insulate the public from price spikes in oil, but also boost the clean manufacturing workforce and decarbonize the transportation sector—the largest source of CO2 emissions in the United States.  READ MORE...