I’m back from a 10-day whistle-stop tour of the UAE, Bahrain and Saudi Arabia. I’ve already filed some stories, but bigger projects are an Iran update and a piece on Saudi Arabia’s domestic situation.
Writing about the kingdom isn’t easy. I spent an afternoon with a key contact in the oil ministry, who gave me a full download of Saudi Arabia’s marketing strategy. There’s a forthcoming PE piece, in which I explain why another supply pledge from the kingdom doesn’t necessarily mean more oil — or a price reaction from the market. Saudi Arabia doesn’t play the spot market and it doesn’t usually discount its oil. “The word ‘discount’ is never heard in the same room with Ali Naimi,” says one insider, talking of the Saudi oil minister’s stance.
It’s more of a slow-burn strategy: inflate global stocks, build up the kingdom’s gas production (to increase oil-export capacity), and keep assuring the market that there’s enough supply — and then some — to go around.
No one should doubt, though, that Brent above $100 a barrel is annoying Naimi.
The other side to the Saudi story — the risks of internal unrest in the largely Shia Eastern Province — is far more difficult to navigate. That’s part of what I’m working on now. If anyone has any information, please get in touch.