Oil

April 20th, 2020, is a day that will go down in history. Not because of wars or even because of the Coronavirus but simply because it was the first day ever where oil prices were negative. Yes, they were actually paying to try to give it away. Last month we said, that Saudi Arabia’s Oil Price War Is Backfiring. They picked a very bad time to boost production in order to drive prices down just as the Coronavirus stalled the world economy and drove demand to historic lows. It appears that Monday’s price fall is the culmination of that disastrous decision.

Saudi Arabia and Russia must have known an oil price crash would result when they broke up their three-year-long bromance designed to push up oil prices.    Two weeks after the break-up and nearly 4 million bpd of total promised additional oil supply to the market next month, and Riyadh and Moscow are now counting the cost and trying to adjust government spending.

Saudi Arabia isn’t buying the peak oil demand narrative. OPEC’s largest producer continues to expect global oil demand to keep rising at least by 2040 and sees itself as the oil producer best equipped to continue meeting that demand, thanks to its very low production costs.