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Saudi Arabia’s Oil Ambitions and America’s Reserve Realities
Historically since the 1970s, every time Saudi Arabia and its OPEC alliance cut production to prop up Oil prices – the United States would immediately respond by releasing more Oil out of its Strategic Petroleum Reserves in a bid to defend market share. But more importantly, to slam Oil prices back down.
However with America’s Strategic Petroleum Reserves now drained to the lowest level since 1984, unfortunately, on this occasion, America won’t be coming to the rescue any time soon.
That’s bullish news for Commodity traders, but bad news for inflation!
Throughout August, Oil prices have been on an absolute tear – racking up double digit gains on a consecutive weekly basis, following Saudi Arabia’s announcement to extend its 1 million barrel per day production cut.
As a result of the Kingdoms on-going endeavours to sign expensive footballers like Cristiano Ronaldo and build futuristic megaprojects such as the $500 billion Neom City – Saudi Arabia requires higher Oil prices to pay for its ambitious economic plans.
In order to breakeven, Saudi Arabia needs Oil prices trading above $85 a barrel. Anything below that puts them into deficit. This ultimately means, Saudi Arabia’s desired “sweet spot” for Oil prices is between $90 and $100 a barrel – and as we have already seen, they are prepared to do whatever it takes to achieve their goal!
Unprecedented Surges in Energy and Agriculture Markets
Elsewhere in the Energies complex, the real star performer last week was European Natural Gas.
European Natural Gas prices soaring over 40%, in a single day alone. That’s the European benchmark’s biggest daily percentage gain since Russia’s invasion of Ukraine.
While Energies are grabbing all the headlines right now, one of the best kept secrets in the Commodities sector that nobody is paying attention is Agriculture.
The disruptive effects of Global Warming and Climate Change combined with unprecedented demand for safety, diversification and high returns on offer in this new economic landscape – have skyrocketed a long-list of Agricultural Commodities from Orange Juice, Coffee, Sugar, Corn, Wheat, Cocoa, Soybean and Rice prices to all-time record highs.
Orange Juice prices have quadrupled this year and are setting new record highs almost every week. So far this year, Orange Juice prices have tallied up an impressive gain of 572% from their 2020 lows.
Elsewhere, Cocoa prices have risen 400%, while Sugar prices have racked up a phenomenal gain of over 450% from their 2020 lows.
During the previous Commodity Supercycle in the early 2000s – Agriculture prices posted a whopping gain of 4000% within a 10-year stretch.
If history is anything to go by, then this is just the beginning!
Commodity Price Forecast
Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:
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