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#OOTT | 🇸🇦🇷🇺🇺🇸🌎 The end of the diplomatic alliance between #Saudi Arabia and #Russia will have significant consequences:
➡ #Oil prices are likely to remain low longer than expected which would be positive for advanced economies mainly net importers such as Eurozone countries.

➡ Meanwhile, #oil exporting countries will be forced to cut public spending in order to balance budgets.
➡ Latest indications suggest that #Saudi is now ready to cut prices dramatically and fight both #Russia and U.S. exporters in terms of market share, which implies that U.S. exports should decline soon.

➡ A meaningful shock in #oil prices could lead to geopolitical tensions.

*See Caldara, Dario and Matteo Iacoviello, “Measuring Geopolitical Risk,'' working paper, Board of Governors of the Federal Reserve Board, December 2019 Image
➡ With #WTI below 45$, in the U.S., banks will be obliged to limit loans to shale gas companies which should result in tighter credit conditions and defaults.
➡ Tighter credit conditions in the U.S. #oil industry and a downside shock in inflation (through gasoline prices) will offer more room for the #Fed to cut rates.
➡ Based on market conditions, it suggets that #China will have less interest in buying U.S. energy products and reinforces my view that Beijing won’t meet both 2020 and 2021 targets defined in "#PhaseOne deal".

#OOTT | #Oil Drops 31% in Worst Loss Since Gulf War as Price Fight Erupts - Bloomberg
*Link: bloom.bg/333wK1x Image
🇸🇦 #SAUDI ARAMCO'S CEO SAYS COMPANY WILL SUPPLY ITS CUSTOMERS WITH 12.3M BPD ❗ IN APRIL - RTRS
🇸🇦 🇷🇺 #OOTT | My latest contribution to @TrackInsightETF | A Permanent Break Of The #Russia-#Saudi #Oil Alliance Could Have Significant Consequences
*Link: ⚠ bit.ly/2TEthDC ⚠ Image
🇸🇦 #OOTT | *#SAUDIS MAKE RARE SUPERTANKER BOOKINGS TO CARRY FLOOD OF #OIL - BBG Image
🇸🇦 #Saudi Arabia Pledges to Expand #Oil Output Capacity - Bloomberg
bloomberg.com/news/articles/…
🇨🇦 Energy company layoffs expected soon in #Canada's Alberta - premier - Reuters
reuters.com/article/canada…
🇺🇸 U.S. shale urges service firms offer 'at least' 25% price cuts - executives, letter - Reuters
reuters.com/article/us-glo…
🇺🇸 #Texas Weighs Curtailing #Oil Production for First Time in Decades - WSJ
wsj.com/articles/texas…
🇺🇸 🇸🇦 🇷🇺 U.S. Considers Intervention in #Saudi-#Russia #Oil Standoff - WSJ
wsj.com/articles/u-s-c…
🇸🇦 #SAUDI ARABIA'S BUDGET DEFICIT NOW EXPECTED TO REACH 7-9% OF GDP - BBG
*OIL PRICES, CORONAVIRUS WILL AFFECT BUDGET DEFICIT: FIN MIN
*SAUDI TO BORROW MORE THAN PLANNED IN 2020
🇺🇸 🇸🇦 #OPEC, U.S. #Shale Producers Open Talks Amid Oil Rout - WSJ
wsj.com/articles/opec-…
🇺🇸 Tens of Thousands Are Getting Laid Off in U.S. #Shale Patch - Bloomberg
bloomberg.com/news/articles/…
#Oil Demand Catastrophe Is Making the Price War a Sideshow - Bloomberg
*Oil traders see 2020 global demand contracting as much as 20%.
bloomberg.com/news/articles/…
Exxon notifies contractors, vendors of spending cuts over coronavirus - Reuters
reuters.com/article/us-hea…
Energy Giant Total Cuts Shareholder Returns, Spending After #Oil Collapse - WSJ
wsj.com/articles/energ…
Junk bond default rate to triple within 12 months, S&P says - CNBC
*S&P Global Ratings said the default rate for high-yield, or junk, bonds is heading to 10% over the next 12 months, more than triple the rate of 3.1% that closed out 2019.
cnbc.com/2020/03/20/jun…
*CHEVRON CUTS 2020 CAPEX PLAN BY $4B, SUSPENDS SHARE BUYBACKS - BBG
Pipelines Ask U.S. #Oil Drillers to Curb Output as Tanks Fill Up - Bloomberg
bloomberg.com/news/articles/…
#OOTT | #Oil-rich wealth funds seen shedding upto $225 billion in stocks - Reuters
uk.reuters.com/article/uk-hea…
#OOTT | *WHITING PETROLEUM FILES FOR CHAPTER 11 - BBG
🇺🇸 #Trump to Meet With #Oil CEOs About Helping Industry (on Friday) - WSJ
wsj.com/articles/trump…
🇺🇸 🇷🇺 🇸🇦 #Trump says expects #Russia-#Saudi #oil deal soon, invites U.S. oil chiefs to White House - Reuters
reuters.com/article/us-glo…
🇸🇦 *#SAUDI ARABIA CALLS FOR URGENT OPEC+ MEETING: STATE-RUN SPA
*SAUDI SAYS OPEC+ DEAL TO RESTORE NEEDED BALANCE IN #OIL MARKET
*SAUDI ARABIA SAYS OPEC+ SHOULD SEEK FAIR DEAL
🇸🇦 🇨🇦 🇲🇽 🇺🇸 🌎 *Saudis Want US Producers, Canada, Mexico and Others in G-20 to Join Any Cuts - Sources - DJ
🇺🇸 #Trump does not plan to ask U.S. #oil producers for coordinated cuts -official - Reuters
uk.reuters.com/article/global…
#OOTT | #OPEC+ IS PREPARING FOR MEETING, IT'S POSSIBLE NEXT WEEK: TASS - BBG
*TASS CITES UNIDENTIFIED PERSON ON OPEC+ MEETING
#OOTT | OPEC+ MAKES PREPARATIONS FOR IMMINENT MEETING: DELEGATE - BBG
#OOTT | #OPEC+ MEETING IS PLANNED FOR APRIL 6: RIA CITES AZERI MINISTRY - BBG
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Christophe Barraud🛢
@C_Barraud
🇸🇬 🇨🇳 #SINGAPORE PLANS 2 PACKAGES, TOTALING S$5.6B, TO SUPPORT ECONOMY - BBG
*SINGAPORE PLANS S$800M FROM BUDGET TO COUNTER VIRUS EFFECTS
*SINGAPORE TO GRANT CORPORATE INCOME TAX REBATE OF 25% FOR 2020
🇰🇷 #SouthKorea's president calls for 'all possible measures' to help virus-hit economy - Reuters
reuters.com/article/us-chi…
🇪🇺 #Eurozone ministers discuss fiscal boost options as virus worries weigh - Reuters
reuters.com/article/us-eur…
Read 5 tweets
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Christophe Barraud🛢
@C_Barraud
🇺🇸 Equities | My understanding of investors' sentiment following multiple discussions:

1/ Reality is that investors are not looking at Macro or Earnings right now. They were trapped last year and most of them don’t want to miss again any upside move.
2/ They remember that SPX increased by ~30% in 2019 despite Global GDP was revised downward by ~0.6ppt and SPX earnings growth was cut by >8%.
3/ The upside mainly came from a dramatic switch in liquidity expectations and the same phenomenom is happening right now with #PBOC relaunching the party worldwide.

Read 8 tweets
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Christophe Barraud🛢
@C_Barraud
🇨🇳 #China (1) | The question is no longer if, but how hard, the #coronavirus will damage Chinese economy (and its trading partners) in 1Q20.
🇨🇳 #China (2) | A blockage of 16 cities (~50 million people) coupled with the extension of the Lunar New Year holiday and prohibition for Cos to return to work soon implies that 1Q will fall below 6% for the first time since QoQ figures are recorded.
🇨🇳 #China (3) | The impact will probably broaden from retail sales, tourism/transportation...

Read 93 tweets

Related threads

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David Fickling
@davidfickling
What Saudi Arabia is trying to do with the oil market, at a time when coronavirus is crippling crude demand, is weirdly like what your body tries to do with a fever. #OOTT
A fever is an act of self-harm: Raise the temperature of your body to the edge of biological survivability with the intention of killing off the infection spreading through your cells before you yourself succumb.
That's what's going on here: Saudi is flooding the market with supply, hoping that low prices will kill off its rivals first and force them to cut production, leaving it with an enhanced position in a tighter oil market.
Read 9 tweets
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Nirav Kanodra
@niravstoons
6. Oil and Gas trends for 2020s

If there was a big event in 2010s was the rise of Shale Oil
Now US is the worlds largest producer of oil (12 mio barrels per day) ahead of Saudi Arabia and Russia.
This will keep the oil prices capped for the next decade
Saudi Arabia was producing 10% of the worlds oil consumption, and the OPEC was controlling 30%
They could change production and hence influence oil prices.

But US going from 5% to 13-14% of world production - Shale is the swing producer
Oil Demand is very inelastic
1% cut in supply lead to 8% rise in prices.
Thus OPEC could manipulate output to manage prices where they wanted.
That monopoly is broken with US fracking
Read 11 tweets
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Anas Alhajji
@anasalhajji
Thread on the return of #oil production in the #NeutralZone between #SaudiArabia and #Kuwait

The thread discusses the impact on the oil market with some historical perspective and some technical issues

1- "Neutral Zone" Was established in 1922 between Saudi Arabia and Kuwait
2- In 1922, a border agreement was reached after 6 days of intense negotiation between Abdulaziz, Sultan of Najd (later king of KSA), a British representative of Kuwait, another British representing Britain in charge of Gulf region &a representative of King Faisal of the of Iraq
3-However, they could not agree on certain areas where Bedouin tribes move back and forth seasonally. Negotiators agreed to create two shared zones: one between Saudi Arabia and Kuwait and another between Saudi Arabia and Iraq, on the hope that issues will be resolved later.
Read 23 tweets
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Big_Orrin
@Big_Orrin
1. biggest problem with releasing from US SPR is the crude is in the wrong place for refineries in the short term.

First, It will take 2 weeks for the first SPR crude to hit the market after Trump permitted its release.

#OOTT
2. The second: most similar crude from other producers will already have been allocated making it difficult to cover any short fall in Saudi crude until the November programs.
3. Third Literally if you look at a map Saudi Arabia is right in the centre of oil logistics. The US is not. it is at the extreme. For a importing country it is not a big problem but as a producer it is a problem being at the extreme.
Read 8 tweets
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Eddie Du
@Edourdoo
Saudi Arabia created a new ministry for industry and mineral resources, separating it from the kingdom's colossal energy ministry, and replaced the powerful head of the royal court.
news.yahoo.com/saudi-arabia-s…
In reality, Saudi Arabia’s long-term oil export and production strategy is unlikely to change dramatically as market fundamentals have forced the Oil Kingdom into a corner. 
oilprice.com/Energy/Energy-…
Khalid al-Falih power position, which until now had been fully supported by MBS, has been cut down dramatically.

Last week’s split up of his main power base was evidence that cracks were emerging in his hold on power.
Read 37 tweets
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Kyle Orton
@KyleWOrton
#Saudi Arabia says #Canada's statement on the arrest of activists in the Kingdom is an unacceptable interference in its internal affairs, expels the Canadian ambassador and freezes all future trade. bbc.in/2vs6crl
"In her first public response to Saudi Arabia's actions, Foreign Minister Chrystia Freeland said on Monday: 'Let me be very clear ... Canada will always stand up for human rights in Canada and around the world, and women's rights are human rights'." aljazeera.com/news/2018/08/s…
Direct investment was already down in #Saudi Arabia after some of the recent disturbances; this spat with #Canada is unlikely to help. on.wsj.com/2OgITYl
Read 6 tweets

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