Saudi Arabia’s Oil Strategy
Yesterday we learned that Saudi Arabia is altering their strategy regarding the export of oil around the world.
Saudi Arabia’s strategy historically has been to control the supply of oil in order to drive up price. By not flooding the market with oil, they kept supply low which leads to higher prices. They targeted $100/barrel.
This strategy has now changed.
Now, they say that they are done limiting supply and are instead focused on gaining market share. In other words, they are going to be exporting much more oil, which should drive the price of oil down in the long-term.
Where to Focus As a Result
With this shift in strategy, here is what you need to know:
Generally this is bullish for US equities. 2/3 of GDP is affected by crude oil. With lower prices, we should see an increase in productivity.
Tankers will benefit as the price of tankers increases and demand for their services also increases.
Keep an eye on stocks such as STNG, TNK, FRO
Additional themes will emerge as a result of this shift in strategy from Saudi Arabia.
For more details on it, watch this video: