By Sam Boughedda
Bloomberg reported on Monday that OPEC+’s surprise production cut was aimed at speculators betting on falling oil prices, representing a return to a previous tactic used in 2020.
The report said Saudi Energy Minister Prince Abdulaziz bin Salman famously said at the time that he wanted “the guys on the trading floors to be as nervous as possible”. He also promised that “anyone who gambles on this market will be punished with hell.”
So far, the move to hit short sellers appears to have gone according to plan: Investors have been taken by surprise and oil futures have jumped as much as 8%. However, it has also raised concerns about inflation again.
Citing people familiar with the matter, Bloomberg wrote that OPEC+ began to see the need for a change in oil policy on March 20, as the oil hit a 15-month low on banking sector uncertainty. threatened the economy.
The publication’s sources added that the Saudis believed short sellers should be given a reminder of the pain OPEC+ can still inflict on them, as the group withheld more than a million barrels of oil from the market in a decision made in a few days in a “very close circle”.
Bloomberg added that some delegates only learned about it a day or two before the announcement, with two officials “completely blown away by the decision.”
The report said Sunday’s announcement was chosen for maximum impact, despite earlier comments suggesting that output would be held steady throughout the year.
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