President Trump is stepping up his attack on Iran. He’s now planning the long-game for maximum pressure. The news that Trump quietly asked Saudi Arabia to ramp up output by 1 million barrels a day is the key.
From the analysis at Oilprice.com:
Saudi Arabia and some of its close Arab allies in the Gulf, as well as the leader of the non-OPEC nations taking part in the production cut deal—Russia—are the only producers that have the spare capacity to increase production. So, in case of increased production from OPEC and allies, the potentially lower oil prices would hurt the other OPEC members that don’t have the spare capacity to boost output.
The point here is to begin dropping oil prices now that the U.S. has blown out Turkey’s finances and helped Saudi Arabia improve its fiscal position for the rest of the year with high oil prices.
Turkey is a net energy importer and $75+ per barrel oil is a huge drain on its finances at a time when its currency and bond markets are under serious pressure from a strengthening U.S. dollar. Don’t think for a second the Turkish lira wasn’t helped in its fall. This is a classic hybrid war attack on a country not playing by U.S. rules.
But, now that Trump’s U.S. economy is threatened by high energy costs, he’s looking to improve that situation while also putting a strain on Iran’s finances through the double whammy of losing not only up to 1 million barrels of production per day but also getting $20-25 less per barrel.
And right on target, oil shorts are piling on because that’s what happens when the markets are told which way policy is heading.
…click on the above link to read the rest of the article…