Saudi Energy Minister Warns Oil Bears To “Watch Out”

Bearish speculators were warned Tuesday morning by Saudi Arabia’s top energy official to “watch out,” a little more than one week before a planned Organization of the Petroleum Producing Countries and its allies (OPEC+) meeting to decide the future of oil policy. 

“Speculators, like in any market they are there to stay, I keep advising them that they will be ouching, they did ouch in April I don’t have to show my cards I’m not a poker player …but I would just tell them watch out,” Saudi Arabia’s energy minister Prince Abdulaziz bin Salman said at the Qatar Economic Forum hosted by Bloomberg. 

Saudi Arabia’s energy minister tells oil speculators to “watch out.”

“I keep advising them that they will be ouching — they did ouch in April,” H.R.H. Prince Abdulaziz bin Salman Al-Saud says @QatarEconForum https://t.co/qT2oLuXpWc #QatarEconomicForum #منتدى_قطر_الاقتصادي pic.twitter.com/FHCdqPlKjk

— Bloomberg Live (@BloombergLive) May 23, 2023

Abdulaziz is likely referring to the rapid increase in bearish bets made by money managers. This is shown via the COT (Commitments of Traders) data. 

Brent prices have tumbled nearly 39% in about a year from $120 a barrel to around $76 this month. 

Even with Riyadh and its partners slashing crude production last month to stabilize prices, bearish speculators continue to swarm oil markets amid increasing fears that a US recession is nearing. 

On Monday, Standard Chartered told clients in a note that OPEC+ might slash production based primarily on soaring bearish oil bets over the last month. 

“We think the latest build-up in short positions significantly increases the probability of further production cuts when OPEC+ meets on 4 June,” said Standard Chartered. 

The note highlighted that Saudi Arabia has consistently expressed strong opposition towards short sellers in the oil market, such as the comments made earlier this morning. Today’s comments show that $75 might be the “floor” the cartel is determined to defend. 

Bloomberg noted, “While several delegates have said there’s no need for further action now as curbs already in place will help tighten global markets, Prince Abdulaziz has been known for orchestrating surprise interventions.”