Posts
Doha
Is Done: Saudi Prince Drops Bomb - "No Deal Without Iran...We
Are Selling At Every Opportunity"
15
April, 2016
In
what appears to be a Doha party-pooping statement, Saudi deputy
crown prince Mohammed bin Salman stated unequivocally that The
Kingdom won’t restrain its oil production unless
other producers, including Iran, agree
to freeze output at
a meeting this weekend in Doha. This a major problem because - if you
remember - this week's melt-up in oil (and thus stocks) was
predicated on an anonymous diplomat cited by Interfax saying a deal
will get done without Iran (which the Russians refused to confirm).
All that hope crushed by a reality that has been painfully obvious
that no side will be given in the Iran-Saudi tete-a-tete... and now,
as Citi warned "expect
a sharp sell-off."
As
Bloomberg reports, the world’s biggest crude exporter would cap its
market share at about 10.3 million to 10.4 million barrels a day, if
producers agree to the freeze, Prince Mohammed bin Salman said during
an interview on Thursday at King Salman’s private farm in Diriyah,
the original home of the Al Saud royal family.
“If all major producers don’t freeze production, we will not freeze production,” said Prince Mohammed, 30, who has emerged as Saudi Arabia’s leading economic force.
Adding
- rather pointedly that...
“If we don’t freeze, then we will sell at any opportunity we get.”
“If prices went up to $60 or $70, that would be a strong factor to push forward the wheel of development,” Prince Mohammed said. “But this battle is not my battle. It’s the battle of others who are suffering from low oil prices.”
Prince Mohammed also said that Saudi Arabia isn’t concerned because “we have our own programs that don’t need high oil prices.”
Simply
put, "no deal," given
Iran is sending a junior minister in a clear message that it will do
nothing.
It
seems more than a few people "knew" nothing would come of
this and that the epic squeeze-fest early this week was all false...
As
Citi warned earlier,
If there is no agreement, then expect a sharp oil market sell-off on Monday. If there is an agreement in name but market participants realize it has no teeth, except a slower sell-off. Main oil-producing countries, but especially Russia, have been stirring the market since late 2015 with talks of a potential agreement and the market has responded frequently, creating periodic froth to prices, only to see prices come off when no agreement has been forthcoming.
Money manager net (and gross) length is around record highs on ICE Brent, giving some scope for position liquidation following any ‘disappointing’ headlines and adding to downside risk.
At
this rate we may not even get a "gentlemen's agreement"
over efforts to freeze production... and Sunday night will be a
bloodbath!
StockBoardAsset
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