And so the great “oil production freeze” rumor, which helped halt oil’s plunge after it hit a 13 year low in early February and forced a 50% short squeeze higher, dies.
Moments ago, Bloomberg released details of a 5-hour long interview with the Saudi deputy Crown Prince Mohammed bin Salman in which he said that the Saudis would freeze production only if Iran joined. “If all countries agree to freeze in production, we’re ready,” the deputy crown Prince said, adding that “if there is anyone that decides to raise their production, then we will not reject any opportunity that knocks on our door.”
When asked if Iran needs to join freeze, his response: “without a doubt. If all countries including Iran, Russia, Venezuela, OPEC countries and all main producers decide to freeze production, we will be among them.”
As a reminder, Saudi Arabia is among big producer countries meeting this month in Doha to conclude a plan to freeze output; whether Iran needs to participate hasn’t been clear because country is in process of restoring output after years of sanctions. And while Iran’s oil minister is attending Doha meeting, the country has said that it won’t join a production freeze.
Salman adds that the oil price slump doesn’t pose a threat to Saudi Arabia, as short-term budgetary benefits need to be evaluated against “threat to the lifespan of oil” adding that “for us it’s a free market that is governed by supply and demand and this is how we deal with the market.”
And since we, and the market, both doubt this story is part of an elaborate April fool’s joke, the price of oil just tumbled as suddenly market participants realize they have been manipulated for the past 2 months and that the structural oversupply in the market will persist.
This particular section which is of highest interest to the market and has already pushed the price of Brent and WTI lower, comes as part of a major Bloomberg story which also reveals that Saudi Arabia is “getting ready for the twilight of the oil age by creating the world’s largest sovereign wealth fund for the kingdom’s most prized assets.”
