According to analysts from Rabobank, the big question regarding the oil market is whether the Saudis will follow through on this threat to flood markets given their objectives have largely been met already.
Key Quotes:
“Looking forward we expect the oil market to remain under pressure in most scenarios given the historic demand destruction taking place, however, we also expect supply-side developments will have a meaningful impact on the price formation in the weeks ahead. We see prices following two very different trajectories depending on how the current price war plays out. To that end, we will be closely monitoring Saudi crude oil production and exports as we approach the April deadline for the huge supply increase.”
“Our base case is for the price war to end in the not too distant future given the political pressure that is building on Saudi Arabia and the poor optics of destabilizing markets during a period of global pandemic. If the price war persists though, then the price outlook is far worse and all bets are off as to how low crude oil can go.”
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