From an article in the Wall Street Journal, “A sweeping palace crackdown in the dead of night under the Arabian stars: it’s the stuff of teenage adventure novels and, apparently, oil investors’ dreams.”
“Oil prices are now up 3% since Thursday’s close. Driving the action: slowing supply growth in the U.S., and a lightning strike against potential rivals by Saudi crown prince Mohammed bin Salman Saturday night, which left more than sixty Saudi royals and other elites in detention, including the former head of the country’s National Guard,” reports the article.
“Oil markets seem to be interpreting the arrests as a sign of the crown prince’s strength, and that makes it more likely the initial public offering of Saudi Aramco—his pet policy—will go ahead. An Aramco float would fly better if oil prices are high so the Saudis, under their assertive leader, will be more likely to carry out production cuts,” according to the Journal.
“Or so the theory goes…the legal and technical barriers to Aramco’s IPO remain formidable… [and]…even if Prince Mohammed successfully consolidates power, there is no guarantee U.S. shale drillers will sit on their hands as prices move higher…a triumphant crown prince and desultory supply growth in the U.S. next year would indeed be bullish for Aramco and for oil – but it’s still early to conclude that both of those chickens are hatched,” says the Article.
Click here to read the original article from The Wall Street Journal.