US “Secret” Deal With Saudis Backfires After Oil Minister Says US Should Cut First | Zero Hedge.
Who could have seen this coming? With oil prices holding at 4-year lows, heavily pressuring around half of US shale production economics, the “secret” US deal (see hereand here) with Saudi Arabia to crush Russia via oil over-supply in a slumping demand world appears to be backfiring rapidly for John Kerry and his strategery team. Capable of withstanding considerably lower prices for longer, Saudi Arabia’s oil minister Ali al-Naimi proclaimed “no one should cut production and the market will stabilize itself,” adding rather ominously (for the US economy and HY default rates), “Why should Saudi Arabia cut? The U.S. is a big producer too now. Should they cut?”
OPEC leader Saudi Arabia signaled on Wednesday it was unlikely to push for a major change in oil output at the producer group’s meeting this week, a day after Russia refused to cooperate in any production cut. Saudi Oil Minister Ali al-Naimi said he expected the oil market “to stabilize itself eventually.”
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Iranian Oil Minister Bijan Zangeneh said some OPEC members, although not Iran itself, were gearing up for a battle over market share and insisted that non-OPEC producers needed to participate in any OPEC-led output cut.
“The most important thing for all of us is the unity and solidarity of OPEC, and in this situation I believe we need to have the contribution of non-OPEC producers for managing the market,” Zangeneh told reporters.
“Some OPEC members believe that this is the time where we need to defend market share … All the experts in the market believe we have oversupply in the market and next year we will have more oversupply,” he added.
Which led the Saudi Minister to comment…
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