OPEC In A World Of Hurt -- June 6, 2023

Locator: 44849B.

If you have time for only one energy story today, this is is. 

From the link:

Saudi Arabia over the weekend slashed 10% of the kingdom’s oil output to boost prices, and the returns so far suggest it could be a costly bet.

After warning speculators that OPEC+ could cut oil production again, Saudi Energy Minister Prince Abdulaziz bin Salman announced Sunday that the world’s biggest crude exporter would reduce 1 million barrels of its own output in July after other cartel members refused to join the effort.

The Organization of the Petroleum Exporting Countries and its Russia-led allies account for close to half of the world’s oil production.

An output cut was expected to prop up prices amid concerns about a slowing global economy crimping energy demand. On Monday, oil prices opened sharply higher but gave up most of those gains. Brent crude, the international oil benchmark, rose 0.8% to settle at $76.71 a barrel.

Oil prices remain about 18% lower than they were when OPEC+ first jolted the market in October with output cuts, which some members, including Saudi Arabia and Russia, expanded in April.

Saudi officials familiar with the matter acknowledged that Monday’s increase in oil prices was less than expected by Abdulaziz, who privately defended the move to cut output and push back against short sellers after the contentious meeting, they said.

In other words, Abdulaziz remains an unhappy camper.

The two big stories today:

• OPEC+ is really, really in a world of hurt.
• Apple's headset.

OPEC+:

• Saudi's inability to raise prices. Link here.

• Citi: oil prices unlikely to hit $80 despite Saudi's production cut. Link here.

• Russia: takes huge hit in May, 2023. Link here. So much for all that talk about futility of sanctions. This is from Charles Kennedy so you know it's good and it's important.

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How Bad Is It?

Previously posted:

Locator: 44842SA. 

Link here.

The "y-axis" has been changed from last month's posting making things look better than they really area.

Today's one year view:

The five-year view is better and other time-spans also show how badly Saudi Arabia must be hurting.

Years ago, Saudi's budget was based on $100-oil. From there it went to $80-oil. Currently running about $75 but could be selling oil at greater discounts.