Saudi Arabia got what it wanted out of this weekend's OPEC+ meeting, but oil prices still dropped on Monday.
. What happened? Essentially, Saudi Arabia got what it wanted out of the OPEC+ videoconference this weekend, and then the Saudi oil minister made the oil prices fall by giving imprudent answers at a Monday morning press conference. But, in truth, Saudi Arabia’s doesn’t really care that the prices dropped a little on Monday. Here’s Why:... [+]
center, and Russian Energy Minister Alexander Novak, attend a news conference after an OPEC meeting in Abu Dhabi, United Arab Emirates, Thursday, Sept. 12, 2019. OPEC's Joint Ministerial Monitoring Committee met Thursday in Abu Dhabi as estimates of lowered crude oil demand in 2020 have the cartel considering additional production cuts. Before the meeting started, Prince Abdulaziz again called for"cohesiveness" in OPEC.
On Monday morning, OPEC+ held a press conference at which the Saudi and Russian oil ministers answered reporters questions via videoconference. When asked about how the organization would compel Iraq to comply with production cuts this time around, the Saudi oil minister, Abdulaziz bin Salman, did not provide confidence to the market.
This is a great lesson in the difference between the prices of oil on the exchanges and the actual prices at which oil companies sell their product. Aramco does not sell its oil based on the price you see on the ticker. It sets its own prices, informed by the exchanges and agreed upon with a purchaser. The Saudi oil ministry may want higher oil prices, but he does not care about the trading price on a given day as much as an oil trader behind a terminal does.
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