Wild Oil price swings on an OPEC rumor followed by a denial

West Texas Intermediate Crude plunged from $80 to $75.20 then back again on a rumor then a denial of the rumor.

The Wall Street Journal reports OPEC+ Eyes Output Increase Ahead of Restrictions on Russian Oil

Saudi Arabia and other OPEC oil producers are discussing an output increase, the group’s delegates said, a move that could help heal a rift with the Biden administration and keep energy flowing amid new attempts to blunt Russia’s oil industry over the Ukraine war.

After The Wall Street Journal and other news organizations reported on the discussions Monday, Saudi energy minister Prince Abdulaziz bin Salman denied the reports and said a production cut was possible instead.

The White House said the production cut undermined global efforts to blunt Russia’s war in Ukraine. It was also viewed as a political slap in the face to President Biden, coming before the congressional midterm elections at a time of high inflation. Saudi-U.S. relations have hit a low point over oil-production disagreements this year, though U.S. officials had said they were looking to the Dec. 4 OPEC+ meeting with some hope.

The denial 

Just minutes after the WSJ article now revised to include the denial, Reuters reported Saudi denies oil output hike discussion, says OPEC+ may cut if needed

Saudi Arabia on Monday said that OPEC+ was sticking with oil output cuts and could take further measures to balance the market amid falling prices, denying a report it was considering boosting output, according to state news agency SPA.

The Wall Street Journal earlier on Monday reported an output increase of 500,000 barrels per day was under discussion for the next meeting of OPEC and its allies, known as OPEC+, on Dec. 4. The report cited unidentified OPEC delegates.

“It is well-known that OPEC+ does not discuss any decisions ahead of the meeting,” Saudi Arabian Energy Minister Prince Abdulaziz bin Salman was quoted by state news agency SPA as saying, referring to the group’s next meeting in December.

The WSJ said talk of a production increase has emerged after U.S. President Joe Biden’s administration told a federal court judge that Saudi Crown Prince Mohammed bin Salman should have sovereign immunity from a U.S. federal lawsuit related to the killing of Saudi journalist Jamal Khashoggi.

It’s difficult to say if the team Biden sponsored this rumor or if it was some sort of trial balloon by OPEC. 

Either way, the reaction was not welcome by OPEC. 

Meanwhile the Biden administration Presses Allies to Tighten Up Sanctions Enforcement on Russia

“There are public reports that Russian money laundering is active in the Arab world,” Ms. Rosenberg told a Union of Arab Banks conference late last month, using unusually pointed language that U.S. officials say was intended as a warning. “This is something we all have a vested interest in preventing, investigating and eliminating.”

Western officials and some senior compliance officers are concerned that banks in Austria, the Czech Republic, and Switzerland—a non-European Union member that has adopted the EU sanctions—are taking a relaxed view of sanctions enforcement. 

If you want much higher oil prices then you should be cheering team Biden here. If not, well, you figure it out.

Comments of the day

President Biden, the UN, and the climate lobby seek to spread more fossil fuel misery

In case you missed it, please see President Biden, the UN, and the Climate Lobby Seek to Spread More Fossil Fuel Misery.

China says it needs more coal power for energy security and, unlike Europe and the U.S., it won’t commit climate suicide.