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April Meeting On Oil Has A First

Summary

Saudi Arabia is now on the back foot.

US fracking companies are getting efficient.

Participants do not have too many choices.

Saudi Arabia for more than 50 years enjoyed unprecedented prosperity, thanks to oil. They used this enormous wealth to buy the best of goods and services and became one of the most affluent countries in the world. Holding the world's largest oil reserves enabled them to influence supply and demand, and they were able to pin oil price to whatever price that was convenient to them.

A black swan event called "Fracking" happened and increasing solar penetration, softening demand and a surge in adoption of electric vehicles as people become more environmentally conscious accompanied it. In financial markets, it is observed that volatility comes in clusters, and it seems to be true for countries as well.

Saudi Arabia has lots of internal problems as well. There is radicalization and IS at its door steps, millions of its citizens are not used to competition at all, their youth who are now well read and informed wants freedom of speech, and their reserves are dwindling as the oil prices are falling and they spend...


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