It is a bolt of lightning out of the blue for the oil bulls.

Saudi Arabia introduced a voluntary 500k bpd oil manufacturing curb via yr finish and that was adopted by a number of different gulf states becoming a member of in:

• Iraq to chop by 211k bpd
• Kuwait to chop by 128K bpd
• Oman to chop by 40k bpd
• UAE to chop by 144k bpd

Add all of it up and that is 1,023,000 barrels per day, or about 1% of world oil output.

That is an enormous swing in a bodily market that already regarded like it might tighten considerably into the summer time. The transfer reveals the vulnerability of the US after unloading about 1 million barrels per day for six months final yr (and into this yr).

What’s particularly notable is that this announcement goes via yr finish. It is also a slap within the face to experiences that the UAE was considering of ditching OPEC as their participation is especially notable.

Tomorrow is OPEC’s JMMC assembly and we’d see speak from them that the oil market is oversupplied and that motion was wanted. In any case, that is places a bow on this month’s oil backside and I might be shocked if we do not see $80 WTI on Monday.