Saudis post price and then sell whatever quantity their buyers want at their posted prices. That means their output fluctuates with net global demand.
So this chart shows there’s been no drop in net global demand. And why the Saudis decided to cut price recently remains a mystery to all be a privileged few.
If Iran cuts back further this month, only the Saudis have the capacity to replace it, and if, as some believe, they don’t actually have excess capacity, control of price on the upside will be lost.
Meanwhile, the Seaway pipeline seems to be (irregularly) eliminating the WTI discount.
I’m pretty certain that the Saudis (Sunni muslims) cut the price to put massive pressure on the Iranian (Shi’a muslims) economy. With the only other Shi’a vestige (Syria) under extreme pressure the Sunni’s have a great opportunity to rout the Shiites; squeezing the Iranians hard by dropping the price is an ingenious method in achieving that.
The Iranian move today to threaten a closure of the Strait of Hormuz is just them playing their card to get prices back up.
There is some strategic thinking to the effect that the Saudis see this as a proxy war with Iran, with the US being the proxy.
“why the Saudis decided to cut price recently remains a mystery to all be a privileged few.”
It is to keep the American peasants will all the guns happy. Obama meets King Abdullah this week, upcoming US Presidential election.
Don’t the Sauds always lower prices just in time for the American presidential election ?
Bush bowed to the oil King, now so Saudi Obama.
Ron Paul would not bow, so you fools are resigned again to argue and vote for Tweedledee vs Tweedledum again.
Both Bush and Obama bow when meeting King Abdullah, starting with JFK. I force Abdulluh to publicly read the bill of rights prior to meeting me.
@Jason, “bill of rights” is a misnomer. It’s actually an enumeration of specific prohibitions which presume certain rights will be respected, unless there’s a good reason not to. Those good reasons aren’t just attested by warrants from the judicial branch but, most recently, by the overriding “national interest,” an impersonal amorphous concept which hides a lot of sins.
The Founders who wanted to stick with the specific directives of the main body of the Constitution had good reason. Prohibitions are much easier to evade.