In what was meant to be a masterful plan by Kerry and team to drive oil down (with the help of the Saudi Kingdom) and destroy Russia, is now looking like a big fat boomerang fast approaching Kerry, Obama and the US shale oil miracle, smack in the head.
Who could have seen this coming? With oil prices holding at 4-year lows, heavily pressuring around half of US shale production economics, the “secret” US deal (see here and here) with Saudi Arabia to crush Russia via oil over-supply in a slumping demand world appears to be backfiring rapidly for John Kerry and his strategy team. Capable of withstanding considerably lower prices for longer, Saudi Arabia’s oil minister Ali al-Naimi proclaimed “no one should cut production and the market will stabilise itself,” adding rather ominously (for the US economy and HY default rates), “Why should Saudi Arabia cut? The U.S. is a big producer too now. Should they cut?”
Here’s who faces problems…
With prices expected to drop to $60 on no cut, maybe the “unequivocally good” news for the US economy from lower oil prices should be rethunk.
More Obama consequences…the only question is who is Obama trying to punish?