RE:Is MBS trying to drain the SPRs?Partly right.
The Saudis will set the floor in the oil price, and the Chinese will set the ceiling.
China has amassed record amounts of crude, and has rapidly built even more additional crude storage. They have taken advantage of Biden's US SPR releases, and the low prices from Russia, Iran, and Venezuela.
China crude including SPR:
If the oil price gets higher, they would be insulated from it as they will draw from their reserves rather than buy on the market which will limit oil from shooting up too high too fast. China still requires imports for their needs, depending on them far more than the US does as the US both exports and imports.
India has no reserves, and lives hand to mouth when it comes to crude. Very vulnerable to rising crude prices.
OPEC along with the Saudi and now Russian voluntary cuts will support the oil price from falling too low. The cuts and OSP hikes are made to allow the market to sop up all the extra crude oil floating around, and create the inventory draws that will cause the shorts to cover and raise the prices. it is in theoir interest that this happens sooner rather than later.
Net crude positioning is now at extreme lows, right at the start of the Q2 draws, so a geopolitical event may shake the shorts out in an explosive rally.
The Chinese are prepared for this event, the rest of the world is not.
Rarely have conditions been so good for a massive rally in oil stocks.
Stand on the sidelines at your peril.
Clemxb7 wrote: I see the consensus is that the only way the Saudis would extend their July cuts is if they see softness in the oil markets ahead.
I can see an alternate view that also makes sense:
MBS craves power. OPEC predicts a roughly 2 million barrel a day deficit second half of 2023. Another consensus prediction is China will cap the rise in oil prices by selling from their SPR once prices hit ~$85 Brent.
What if MBS is tired of getting outfoxed by NATO when prices were supposed to spike with the Ukrainian war through instead dropped due to the US (and other) SPR's?
Some guy on titter from the Gulf was on Twitter yesterday saying Saudis will continue the cuts for months yet.
Why? MBS wants to drain the SPR's and finally get control over the world oil price. That’s why the Saudis unilaterally cut.