By Spencer Jakab The Wall Street Journal Mon., Nov. 12, 2018
The oil market’s latest message should seriously worry Saudi Arabia. While no single crude producer in the 100 million barrel a day industry is big enough to dictate prices, it has long been an article of faith that the kingdom could tip the scales.
There is a reason why the phrase, “the Saudi Arabia of (fill-in-the blank),” exists, though it usually exaggerates the power of the quoted producer. Brent crude futures rose an uninspiring $1 (U.S.) to $71 Monday, a surprisingly weak reaction to a statement by Saudi Energy Minister Khalid Al-Falih that the market needed to cut output by a million barrels a day and that the country would unilaterally cut production by half as much next month.
The question of the day may be whether Saudi Arabia is the Saudi Arabia of oil any more. In barely a month, the international benchmark price had dropped by $16 a barrel, dipping below $70, at a time when some were predicting that sanctions on Iran would push them above triple digits. Part of the reason is that Saudi Arabia is, for now at least, on its own. Russia, by far the largest exporter outside the Organization of the Petroleum Exporting Countries, quickly undercut the initiative.
Until next month’s OPEC ministerial meeting in Vienna, the cartel’s official stance will remain unchanged. Saudi Arabia often acted successfully on its own in the past.