saudi free market rationale

[k1f]

Al_Naimi hewed to GOP free market doctrine today in pledging to let "the Market" resolve the oil crisis. No relief there:

HOUSTON (AP) — Saudi Arabia's oil minister says production cuts to boost oil prices won't work, and that instead the market should be allowed to work even if that forces some operators out of business.

Ali Al-Naimi said Tuesday that production cuts by big, low-cost producers like Saudi Arabia would amount to subsidizing higher-cost ones — an apparent reference to U.S. shale oil drillers.

Booming U.S. production effectively ended oil trades at more than $100 per barrel in that were taking place less than two years ago. A barrel of U.S. crude is now hovering around $30, a price at which many shale operators are assumed to be losing money.

"The producers of these high-cost barrels must find a way to lower their costs, borrow cash or liquidate," Naimi said. "It sounds harsh, and unfortunately it is, but it is the more efficient way to rebalance markets."

[dan_s]

As I pointed out in the newsletter, Saudi Arabia sees the global market tightening all by itself over the next six months. Production falling + Demand increasing = Balance coming

[k1f]

Right. This is free market rationale. It means we hope no accidents, manipulation,
or unshared information muddle the outcome we hope for.

[Brian44]

Isn't this really where the rubber meets the road?: http://www.reuters.com/article/saudi-de ... SL8N164348

Anita Yadav's job got much harder the last two weeks. "Paying more basis points to the money lenders will not stand, man!" (Please use Jeffrey Lebowski voice when saying the quote in your head.)