Oil has been catching a bit of a bid in the last hour and some of that is due to a report from Reuters highlighting the thinking of Saudia Arabia and Russian leaders.
Saudi Arabia and Russia, the de facto leaders of the OPEC+ oil producer group, see $100 a barrel as a fair price that the global economy can absorb, sources familiar with government thinking in the two countries told Reuters.
The report says that recent signals suggest a preferred price level of around $90 to $100 a barrel for Brent crude, according to three government sources and analysts who spoke with Reuters. Read more here.
OPEC had previously talked about $75-80 as a fair price for oil but once they got a taste of that $100 oil, they certainly liked it. Saudi Arabia is slated to be the strongest global economy this year.
It's also increasingly clear to me that there won't be enough investment in oil supplies to sustain future demand if oil isn't close to $100. That's an argument Saudi Arabia frequently uses. The recent decline in US rig counts along with Bakken production bears that out. Long cycle oil projects aside from Guyana are virtually extinct.
