This Isn’t a “Saudi-Russian” Oil War. It’s a Saudi & Russian War on Shale
This Isn’t a “Saudi-Russian” Oil War. It’s a Saudi & Russian War on Shale by Marko Marjanović for Anti-Empire
MBS couldn’t get Russia to join him in aggressive cuts, so he forced it to join him in aggressive pumping — but Russia is not his target
At OPEC+ in Vienna Russia offered to extend the current cuts for another three months and then meet again. Saudi Arabia instead wanted to take another 1.5 million bpd from the market.
When Russia balked the Saudis made a 180-degree turn and declined the extension of existing cuts, slapped a big discount on their oil, and started warming up their spare capacity to start flooding the market come April 1st when the current OPEC+ quotas expire.
The 67-year old Putin wanted to continue the current neither here nor there approach. The 34-year old MBS wanted to try something radical and new. At least ostensibly he wanted more cuts that could lift all producers for which he needed Russia’s cooperation. When he couldn’t get it he instead went the flooding route for which he did not.
The media did MBS a huge favor by failing to notice it was he — the supposed US ally — who blew up the OPEC+ cuts and not Putin. (A typical headline: How Putin spurned the Saudis to start a war on America’s shale oil industry)
The media committed another mistake. It keeps deluding itself this is “Saudi-Russian” war where US energy is merely collateral damage:
- Saudi-Russian price war sends oil and stockmarkets crashing — The Economist
- How a Saudi-Russian Standoff Sent Oil Markets Into a Frenzy — The New York Times
- Putin just sparked an oil price war with Saudi Arabia — and US energy companies may be the victims — CNBC
- The U.S. Oil Industry Was Already Struggling Before Saudi-Russian Price War — NPR
This is silly. Just because MBS started flooding after talks with Russia didn’t go his way the media assumes his pumping is directed against Russia. When in fact every indication is that he wanted Russia as a partner, if not in radical cuts for which he needed its acquiescence, then at least in radical pumping for which he did not.