The oil producers are rapidly learning from the central banks how to jawbone markets higher. With both Brent and WTI sliding as recently as ten minutes ago, suddenly a buying frenzy was unleashed following a Bloomberg headline which cited the Saudi Press Agency, according to which the world's largest crude exporter was ready to pull a Draghi and would do "whatever it takes" for a stable oil market, and that it would cooperate with OPEC and non-OPEC members for stable prices.
Here is the Bloomberg take:
- SAUDI GOVT READY TO DO WHAT IT TAKES FOR STABLE OIL MARKET: SPA
- SAUDI READY TO COOPERATE WITH OPEC, NON-OPEC FOR STABLE PRICES
Which however is somewhat different from the actual SPA press release, which says [6]"The Cabinet stressed the Kingdom's role in the stability of the oil market, its constant readiness and continuing pursuit to cooperate with all oil producing and exporting countries."
Which just happens to be something the Saudis have said on countless prior occasions already. So just another "lost in translation" attempt to jawbone prices higher, in the finest of ECB traditions?
Also whether this means that Saudi Arabia, which has been pumping record amounts in recent months will slow down, is unclear: after all the entire strategy by the Saudis has been to put marginal, high cost producers out of business. So did they just wave the white flag of surrender? We seriously doubt it.
If anything, this is more of a market test to see just how much impact jawboning has on market prices. And judging by the immediate reaction, it is substantial.
Draghi would be proud.
Of course, whether the Saudis will actually do anything, well that's a different story.
