Don’t Count Your Barrels

Don’t count your barrels before they are pumped. As oil prices in the U.S. languished over fears of another supply increase and today WTI option expiration, Brent crude rallied on a  Platt’s report that talks between Saudi Arabia and Kuwait, over two shared oil fields, had broken down after months of promise, shutting in some 500,000 b/d of anticipated oil production for the foreseeable future, sources close to the projects told S&P Global Platts.

This was disappointing because many were hopeful that this supply would have been brought online quickly to replace the impending loss of Iranian barrels next month. It is also more intriguing because it comes as Saudi Arabia and mainly Crown Prince Mohammed bin Salman is coming under more scrutiny because of the murder of Jamal Khashoggi.

In fact, according to the Platts report, the Crown Prince was involved in the talks with Kuwait that broke down. Platts said workers involved in the Neutral Zone fields’ restart are no longer optimistic that any resolution will occur, the sources said, as a recent meeting between Saudi Crown Prince Mohammed bin Salman and Kuwaiti Emir Sabah al-Ahmed failed to resolve issues of sovereignty over the long-contested area. “Dead as a doornail,” a source said, of prospects for the fields’ return, adding that the only hope may be through international arbitration. “It will not be easily fixed,” another source said of the dispute.

The Crown Prince is not really known for his diplomacy skills. If you remember, MBS as he is called, angered all the OPEC members and Russia when he reneged on a deal to cut production in Doha in April of 2016 when Russia and all the other counties flew there to sign the deal. He later fired the Saudi Oil Minister Ali Naimi and of course, later arrested members of the Royal family. Now many are accusing him of the murder, but as President Donald Trump points out you are innocent until proven guilty. The President told the AP  “Here we go again with: you know you’re guilty until proven Innocent.”