Aramco says it will be offering no fewer than 300,000 barrels of oil a day beyond its "maximum sustained capacity" starting April 1. It says it will be able to produce a whopping 12.3 million barrels a day.
Persian Gulf traders say openly that this is unsustainable. It is. But the House of Saud, in desperation, will be digging into its strategic reserves to dump as much crude as possible as soon as possible and keep the price war full tilt. The (oily) irony is that the top price war victims are an industry belonging to the American protector.
Saudi-occupied Arabia is a mess. King Salman is in a coma. Every grain of sand in the Nefud desert knows Jared of Arabia Kushner's whatsapp pal MBS has been de facto ruler for the past five years, but the timing of his new purge in Riyadh speaks volumes. Princes Mohammed bin Nayef, the king's nephew, and Ahmed bin Abdulaziz, his younger brother, are now really in detention.
The CIA is fuming: Nayef was and remains Langley's top asset. When Saudi regime spin denounced "Americans" as partners in a possible coup against MBS, that word needed to be read as "CIA." It's just a matter of time before the US Deep State, in conjunction with disgruntled National Guard elements, comes for MBS's head even as he articulates taking over total power -- before the G-20 in Riyadh next November.
So what happens next? Amid a tsunami of scenarios, from New York to all points Asia, the most optimistic say that China is about to win the "people's war" against Covid-19 and the latest figures confirm it. In this case, global oil demand may increase by at least 480,000 barrels a day.
Well, that's way more complicated.
The game now points to a confluence of Wall Street in panic; Covid-19 mass hysteria; lingering, myriad aftershocks of Trump's global trade mess; the US election circus; total political instability in Europe. These interlocked crises do spell Perfect Storm. Yet the market angle is easily explained: that may be the beginning of the end of Wall Street artificially inflated by tens of trillions of US dollars pumped by the Fed through quantitative easings and repos since 2008. Call it the calling of the central bankers' bluff.
A case can be made that the current financial panic will only subside when the ultimate black swan Covid-19 is contained. Borrowing from the famous Hollywood adage, "No one knows anything," all bets are off. Amid thick fog, and discounting the usual amount of disinformation, a Rabobank analyst, among others, came up with four plausible Covid-19 scenarios. He now reckons it's getting "ugly" and the fourth scenario the "unthinkable" is not far-fetched anymore.
This implies a global economic crisis of, yes, unthinkable magnitude.
To a great extent it will all depend on how fast China the inescapable crucial link in the global just-in-time supply chain gets back to a new normal, offsetting interminable weeks of serial lockdowns.
Despised, discriminated against, demonized 24/7 by the "system leader," China has gone full Nietzsche about to prove that whatever does not kill you makes you stronger when it comes to a "people's war" against Covid-19. On the US front, there's scant hope that the gleaming Black "helicopter money" Hawk will crash down for good. The ultimate Black Swan will have the last word.
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