RE:Here comes NOPEC and all that comes with itGreat points. Excellent post and food for thought.
Interesting that you mention, the narrative about Saudi Arabia being an ally of Russia. I was in the car yesterday listening to Bloomberg and they had a whole segment on just that topic. They also outlined the potential for a significant withdrawal of US military aid to Saudi Arabia and redirecting that aid to Ukraine and how MBS is making a big mistake not helping the US and Europe in their time of need. Frankly, until I listened to that segment I was comfortable with the scenario that I had developed and my plan to deal with it. With this wrinkle, I am not so sure anymore.
If the US were to reduce aid and military advisors to the Saudis, it would change the whole power balance in the Middle East potentially leading to Chinese control in the areas as they fill the vacuum left by the US. This would be a move into shark infested uncharted waters for the whole world. But none of that would happen overnight.
In terms of oil prices, people can't forget that Saudi Arabia is also a major player in the oil paper market and so they could well profit from a decline in oil prices by using the right derivatives in the oil market. As Migraine has pointed out many times, the oil paper market is about 10X the physical market. So while people (including me) focussed on OPEC moves to affect the world oil price, the Saudis are very good and sophisticated at covering themselves through derivatives.
How the Saudis decide to play this is anyone's guess and if you have to guess in such an important market then it's a tough situation to be in. Guess right and you make a bundle. Guess wrong and you get wiped out.
Frankly it is hard to anticipate how this will all play out and so if anything, caution is the watch word.
The question for me now is whether any of this changes my underlying scenario and the associated investment strategy/portfolio allocations. This will be the subject of some deep thought over the next few days.