One can understand how the Saudi princes might think producing more oil would increase their balance sheets. The Saudi economy is not doing well at all. Its size increase last year was less than half a percent. So selling more oil would help. But it wouldn’t help at all if oil prices dropped by a lot. That’s the problem. $31 is probably not the bottom. Some oil experts think the price could go down to $20.
How the Saudis could increase oil production, though, is a head scratcher. They’ve completely locked down the Qatif province out of #Coronavirus fears. That province is mostly Shia and apparently some of these Shia picked up the virus on pilgrimages to Iran. That province is also home to a huge chunk of Saudi oil production. Thousands of engineers, administrators and skilled operators won’t be able to get to work and oil production will suffer.
Curiously Donald Trump, MBS’s bosom buddy, hasn’t had anything to say about this. As of 10 a.m. today none of his tweets have mentioned the oil price drop or market rout. Will he get Russia (an OPEC honorary member) and the Saudi’s to get together?
The genocidal attacks in Yemen have not roused the U.S. public. The murder of Khashoggi ended up with "what can you do". Will Americans be so placid about a Saudi greed inspired recession?
14 Million on the Brink
Saudis Crash the Markets
Noon March 9. The genius prince Mohammad Bin Salman (MBS) decided that the middle of a pandemic was the best time to start an oil price war with Russia. So he effectively broke up the OPEC oil cartel by announcing that Saudi Arabia would end any limits on Saudi oil production. Oil prices that were in the $50 per barrel range, fell to $31, a huge drop. Stock markets plunged all around the world. The famous DOW Jones index for a while crashed an unheard of 2,000 points.
The noted stock picker Jim Cramer tweeted the signals are for an “imminent recession” which means sharp drops in jobs and profits.