“Our goal was to achieve the best interests of the students, and not to stop their educational journey for one day.”
-Saudi Education Minister Dr. Hamad bin Mohammed Al-Asheikh, accompanied by Commerce Minister Dr. Majid Al-Qasabi, in comments while touring the production center for the virtual school in Riyadh on Sunday, “which is serving more than 6 million distance learning students throughout the Kingdom during the period of the suspension of regular education.” [Arab News]
“We are living through a difficult period in the history of the world, but we are fully aware that it will pass despite its cruelty, bitterness and difficulty.”
-King Salman, in a public speech on Thursday as Saudi Arabia announced a $32 billion package to mitigate the economic and commercial costs of the Covid-19 crisis. Saudi Arabia has taken severe measures already including suspending international and domestic flights, Umrah pilgramage, closing mosques, schools, malls and restaurants, and asking people to stop going to work. [Reuters]
“Extensive pain from the oil price shock will accumulate over the course of 2020 and create the necessary conditions for negotiations, compromise, and probably a new production restraint agreement… but [Saudi Arabia’s] long term objective is to be the predominant market manager and price setter.”
-Risk consultancy The Eurasia Group in a research note. The group believes the price war between Riyadh and Moscow is likely to last throughout 2020. [cnbc.com]
“The oil demand collapse from the spreading coronavirus looks increasingly sharp.”
-Goldman Sachs, in a note forecasting a fall in the price of Brent to as low as $20 a barrel in the second quarter, a level not seen since early 2002. The bank also expects a demand contraction of 8 million barrels per day (bpd) by late March due to the pandemic and an annual decline in 2020 of 1.1 million bpd, which it said would be the most on record. [Reuters]
“We’re in a three-way Mexican stand-off with three big players in the room all saying, ‘if you screw that guy over there, you are screwing me over, so I’m going to screw you over. It’s a strange triangular discussion from which no side wants to back down and all are going to feel the pain.”
-Michael Stephens, associate fellow at the Royal United Services Institute, on the current oil price war between Saudi Arabia, Russia, and the United States. [FT.com]
“Even a 20% hit in Europe and North America would mean the loss of about 8 million bpd, though, given that the 2019 BP Statistical Review of World Energy put the two regions’ combined crude demand at about 40 million bpd.”
-Clyde Russell, writing for Reuters considers how far crude demand might fall in the coming weeks. Although China continued to buy overseas crude as coronavirus spread there and cheap oil can be stored in reserves, Russell sees a 10% drop in global demand as, “something of a best case scenario…” [Reuters]
“It’s a problem of an oil price war in the middle of a constricting market when the walls are closing in…Normally demand would solve the problem in a way, because you would have lower prices that act like a tax cut and it would be a stimulus. But not in this case because of the freezing up of economic activity. Low gasoline prices … don’t do much when schools are closed, people are cancelling all their trips, and people are working from home.”
-Daniel Yergin, energy historian and vice chairman of IHS Markit, on oil markets and the global economy. Yergin said it would be “a long time before pressure is eased” on the oil market. [reuters.com]
“After Russia walked out of the meeting last week, Saudi Arabia announced it would produce more oil and lower its prices, especially to Asia, which it hopes will entice China to buy more. This policy is logical…[however] coming immediately after Russia’s refusal to cut and amid the coronavirus fears, the new Saudi policy was seen solely as a hostile reaction to Russia’s actions. In other words, the market took what would have been a reasonable policy on its own and saw the start of a price war. That instilled fears of a prolonged problem.”
-Ellen Wald analyzes the crash in oil prices and comments that while the Saudi decision to increase production makes sense and will likely act as a stimulus package for the Chinese economy, the timing has led to concerns of a prolonged problem. [Barron’s]
“On day one, people were a bit anxious. But since then everything is back to normal … People understand and accept the situation… The only thing is that masks and sanitizers have disappeared from pharmacies.”
–Reuters reports from Qatif in Eastern Saudi Arabia which has been quarantined since Sunday due to a concentration of coronavirus cases [reuters.com]
“The Kremlin has decided to sacrifice OPEC+ to stop U.S. shale producers and punish the U.S. for messing with Nord Stream 2. Of course, to upset Saudi Arabia could be a risky thing, but this is Russia’s strategy at the moment — flexible geometry of interests.”
-Alexander Dynkin, president of the Institute of World Economy and International Relations in Moscow, a state-run think tank, comments on Russia’s decision to decline to cut oil production further. The Kremlin concluded further cuts would be, “a gift to the U.S. shale industry which had had added millions of barrels of oil to the global market while Russian companies kept wells idle. Now it was time to squeeze the Americans.” [Los Angeles Times]
