The smart money in the room is on Saudis. These guys produce between 10 – 12.5 million barrels of crude every day. They have been playing, setting and influencing the market for more than 40 years. They own the swing vote on production right now till Iraq catches up. Two words (production cut or production ramp up) from their press conference and they can change the profile of the global economy.
So if the Saudis think that oil prices are going higher and higher and higher, why are OPEC quota compliance at historical lows. If we will see triple digit oil by the end of the year shouldn’t the Saudis wait. It’s not as if they are earning 12% on their cash in the bank, real rates are certainly negative in the markets Saudis tend to play.
I will believe triple digit oil when OPEC quota compliance ramps up.