Saudi Arabia - Mar 23

[dan_s]

U.S. to send envoy to Saudi Arabia; Texas suggests oil output cuts . Reuters .

The Trump administration plans to send a special energy envoy to Saudi Arabia to work with the kingdom on stabilizing the global oil market, officials said on Friday, as the U.S. scrambles to deal with a price crash so deep that regulators in Texas considered curbing production there for the first time in nearly 50 years. Oil prices have lost more than half their value in the last two weeks as Saudi Arabia and Russia kicked off a price war and the coronavirus pandemic destroyed demand. U.S. oil now trades at less than $23 a barrel. The crash has shocked the oil industry as a pact among OPEC and non-OPEC producers to cooperate imploded, triggering a production free-for-all. The United States is sending a special representative to negotiate with Saudi Arabia, officials said Friday, after the kingdom unleashed production following years of touting its role as a stabilizing force for markets. Saudi Arabia and Russia are locked in a war for global oil market share after their three-year deal to restrain output collapsed this month. The kingdom has vowed to increase production to a record 12.3 million barrels per day, and has chartered numerous tankers to ship oil around the world, pushing prices to near 20-year lows this week.

Saudi Arabia’s oil price war is backfiring . OilPrice.com
Saudi Arabia and Russia must have anticipated an oil price crash when they broke up their three-year-long romance to push up oil prices. Two weeks later and nearly 4 million bpd of total promised additional oil supply to the market next month, and Riyadh and Moscow are now counting the cost and trying to adjust government spending. The friends-turned-foes expect sharp drops in oil revenues in the near term, not only because Brent Crude is barely managing to cling to the $30 mark these days, but also because the coronavirus pandemic is leading to huge demand destruction. Saudi Arabia announced this week that it is reducing government expenditures by US$133 billion (50 billion Saudi riyals), or nearly 5 percent of its budget spending for 2020 after the government approved “a partial reduction in some items with the least social and economic impact.” These measures were approved “in light of the noticeable development in the public finance management, and the existence of the appropriate flexibility to take measures in the face of emergency shocks with a high level of efficiency,” says Saudi Minister of Finance and Acting Minister of Economy and Planning, Mohammad Al-Jadaan, the official Saudi Press Agency reported.