Saudis, Russia in Tentative Deal for Gradual Oil-Output Hike
Comment of the Day

July 01 2021

Commentary by Eoin Treacy

Saudis, Russia in Tentative Deal for Gradual Oil-Output Hike

This article from Bloomberg may be of interest to subscribers. Here is a section:

“The last thing Saudi Arabia and the United Arab Emirates, even Russia, want is $85 a barrel, much less $100 a barrel,” Bob McNally, president of Rapidan Energy and a former White House official, told Bloomberg Television on Thursday. “So far in Washington, it’s been quiet. As we get closer to $80 a barrel, it’ll set off alarm bells” about the risk it poses to the economic recovery, he said.

Eoin Treacy's view

The big question for investors is what price retards growth potential in the economy. That number is going to be different for every country. For the USA, as an exporter, the potential for higher oil prices will support parts of the economy and challenge others. That suggests there is a happy medium where unconventional supply is profitable but not too profitable. $70-$80 might be that balance point where everyone can tolerate prices.

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