SuspendedCap@ContrarianCurse
April 2020 neg prices was caused by the Saudis RAMPING capacity to 12 mmbpd into global lockdowns because of a falling out with Russia
The lowest cost producer will sit on a balanced market but when prices soften they will rationally not sit or be the one to take off capacity and let competitors scale - they do the opposite and ram supply higher to push prices down and the worst cost structures out
Basically the Saudis have single handedly kept prices down by under pumping post 23 and at least OPEC was stable
now when 1) UAE has already said fuck it they are done 2) other opec countries sustained damage under the support of the Saudis 3) us majors are ripping supply on far lower prev cycle breakevens 4) Iran likely pumps above prev capacity 5) Venz likely ramps 6) China demand is actually structurally not going to be great -
I think they all say fuck it and rip supply higher until we actually get a true cycle again. Great balance sheets are a double edged sword in commodities because though it keeps you out of distress, it also can elongate a cycle because people will try to absorb some losses before giving up (see trucking last 5 years)
So I see reflexive downside. War gets a deal. Supply is going to come back, prices go down, OPEC fractures as people want to pump to rebuild, they all go, and prices crash
There is a little out of consensus oil content for ya on a Saturday
