I thought the war was going to crush Vlad. He's making more money? Those bastards India and China not playing by the US playbook. This is an outrage.
I say we stay the course and keep supporting the war in Ukraine. Eventually, the nation will end up looking like Afghanistan and Putin will leave. And of course, oil prices will fall.
Not to worry.
$100 Oil? What a Price Spike Could Mean for Markets and Geopolitics
Analysts see Brent crude climbing to levels last seen in the first months of the Ukraine war after Saudi Arabia and Russia extended production cuts.
By Andrew Ross Sorkin, Ravi Mattu, Bernhard Warner, Sarah Kessler, Michael J. de la Merced, Lauren Hirsch and Ephrat Livni, NY Times
Published Sept. 6, 2023
Updated Sept. 7, 2023, 2:48 a.m. ET
Saudi Arabia won’t walk away from oil production cuts anytime soon.Credit...Ahmed Jadallah/Reuters
How oil’s surge is upending the global status quo
Brent crude oil was trading on Wednesday morning at around $90 a barrel for the second straight day, and is up 25 percent since June thanks to the prospect of more production cuts by leading oil exporters.
The surge is sending ripples through the global stock and bond markets. And the prospect of higher prices at the pump and throughout manufacturing may spur diplomatic efforts to increase supply and tamp down any inflationary effects on the global economy.
Saudi Arabia and Russia are behind the price increase. The two said on Tuesday that they would extend their oil production cuts — equivalent to a combined 1.3 million barrels a day — through year-end. The duration of the cuts surprised market watchers, as did Saudi Arabia’s hint that it may make even deeper cuts in the coming months.
Nadia Martin Wiggen, a director at Svelland Capital, told Bloomberg this morning that Brent could hit $100 a barrel, a level it frequently surpassed in the first months following Russia’s invasion of Ukraine.
There are wild cards to consider. China’s sputtering economy could sap demand for oil, keeping prices down. And Saudi Arabia has little interest in seeing triple-digit crude prices crash the global economy, Jorge León, an economist for the research firm Rystad Energy, told DealBook.
Costlier oil could affect interest rates. “Higher oil prices will only increase the likelihood of more fiscal tightening, especially in the U.S., to curtail inflation,” León said.
Investors have sold off government bonds, including 10-year Treasury bills, over the past two days on fears that central banks will be forced to stay hawkish on interest rates to blunt the inflationary effect of higher energy prices. (A geyser of corporate-bond issuances this week is also roiling the debt markets.)
Global leaders may seek relief from sanctioned oil exporters. Iran’s oil exports have surged since Saudi Arabia began cutting its production this summer, and Bloomberg reported last week that Tehran and Washington have held back-channel talks to keep crude flowing to make up for supply reductions elsewhere. Venezuela, another exporter under sanctions, has reportedly turned to Beijing to help it revive production.
For the Biden administration, “the only thing they can pretty much do to counteract Saudi cuts is to bring more oil into the market from other countries,” León said. “Iran and Venezuela are the best candidates,” he added, even if it’s politically unpalatable to fully reopen talks with them.
The United States may have few other options. Domestic producers of oil from shale won’t fill the void in the short term. And Washington is unlikely to tap the nation’s strategic petroleum reserve, after doing so last year brought it down to levels last seen in the 1980s, León said.
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