Sell Oil Short? You’ll Be “Ouching” Says Saudi Arabia

Posted on 05/24/2023

Short sellers are once again taking the blame for economic woes as the face of JPMorgan Chase, Jamie Dimon, famously said regulators should consider a ban on the practice of short selling weeks ago. Not since 2008 have short sellers been in the crosshairs of the government and business leaders in such a highly publicized fashion.

Saudi Arabia is also wary of short sellers, with Saudi Energy Minister Prince Abdulaziz bin Salman declaring: “I keep advising them that they will be ouching. They did ouch in April.” He also said he was not going to reveal his intentions or forecast OPEC+ actions, but his comment has convinced some that there will be further cuts to oil production.

The price of oil is declining for several reasons. Concern is swirling among some investors that the China reopening theme will disappoint, and demand for oil could fall in Q3 and Q4 2023, further straining prices. There is also a belief among some analysts that the economy is in a recession or is headed for one with continued interest rate hikes on the table, but far from certain. Oil is trading at US$ 73 a barrel on May 24, far below its highs set almost a year ago in June 2022 of US$ 118 a barrel.

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