President Donald Trump has told foreign leaders that “America First” means he will always put the needs of America ahead of the needs of other nations — and that they should do the same for their own country.
Vast wealth and the promise of dramatic change make for cautious optimism concerning Saudi Arabia, the chief executive…234 Views | the publication reaches you by | Saudi Arabia Today
Last week, Saudi Arabia disregarded Trump’s public pressure campaign to keep pumping at full throttle and cut fuel costs. The kingdom instead persuaded two dozen oil producers to cut output and announced a steep drop in Saudi production over the next two months.
“Saudi Arabia today had a ‘Saudi first’ policy,” Helima Croft, global head of commodity strategy at RBC Capital Markets, said on Friday. Hours earlier, OPEC, Russia and several other producers agreed to take 1.2 million barrels per day off the market beginning in January.
The decision marks a reversal in Saudi energy policy. Over the last six months, the Saudis ramped up production by more than 1 million bpd — a move cheered by Trump. Now, the kingdom will endeavor to cut about 900,000 bpd in just two months.
On the surface, the decision looks like a stinging and risky insult to a critical ally. It comes as U.S. lawmakers are threatening to punish the kingdom after Saudi agents killed U.S. resident and Washington Post columnist Jamal Khashoggi in Istanbul in October.
But with oil prices mired in a bear market, few commodity analysts doubted Saudi Arabia would cut production. The kingdom needs Brent crude to rise about $25 a barrel just to balance its budget, according to the International Monetary Fund.
It was also clear that
, which produces twice as much oil as the next-biggest OPEC producer, would have to contribute the largest cuts.
The Saudis produced below their quota when OPEC reached a deal with Russia and other producers to cut output beginning in 2017, and the kingdom’s production hikes have dwarfed increases from other producers since the alliance agreed to raise output in June.
Meanwhile, many other OPEC members are producing at or below the levels they agreed to in 2016.
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