“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]
“Saudi society is one that may still remain a mystery to some, but through this series I shed light on successful Saudi women in their homes, with their families. FacesOfSaudi.com is one of the best expressions of what we do: Pulling the veil off the world’s misconceptions of the Kingdom.”
-Rawan Radwan, a Saudi journalist with Arab News and the paper’s regional correspondent discusses the launch of an Arab News website marking International Women’s Day and dedicated to highlighting Saudi women. Fifteen Saudi women are featured in the debut edition including Dr. Yasmin Altwaijri, Basma Alshaalan and Dina Alfaris. [FacesofSaudi]
“What I would say is that transformation and reform isn’t a straight line. I would also say that, yes, while there are those women being held, 11 million women are being positively impacted by all of the regulations. … They weren’t just impacting a woman in the workplace. They were impacting her in her home. They were impacting the day-to-day life of a single woman, a married woman, a divorced woman. … It’s not just about a woman driving – it is to be self autonomous, totally, and to have the right to make the decision and then act on the decision. That is the massive shift in our country.”
-HRH Princess Reema bint Bandar, in an interview for the Wyoming Tribune Eagle during her visit to Wyoming. The ambassador also discussed the potential for business partnerships among other topics. [Wyoming Tribune Eagle]
“The kingdom’s mortgage market is considered one of the lowest when it comes to delinquency — 0.6%…While that rate will increase, Saudis are committed to their loans; they’re very serious when it comes to liability.”
-Majed Al-Hogail, Saudi Housing Minister, in a Bloomberg interview, regarding the Saudi Real Estate Refinance Company — the state-owned equivalent of Fannie Mae and Freddie Mac in the U.S. [Bloomberg]
