EDITOR’S NOTE (Nick Stamatakis): If you had any doubt that the new peace deal between Iran and Saudi Arabia has consequences, now you should not. We woke up this morning to two big pieces of news coming out of the “House Of Saud.” First, When the Saudis heard that the American establishment would impose oil price caps on them, they laughed uncontrollably. They responded swiftly: “We will not sell oil to any country that imposes price caps!!!” Second, the Saudi National Bank, a significant investor at Credit Suisse, announced that it will not pour “good money after bad”, to save the failing bank. The repercussions will be enormous in the American and European banking systems. And we will have to face them soon….
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Saudi Arabia will cut oil supply of nations that impose price cap: Energy Minister
The Saudi official also criticized efforts by US lawmakers to pass the NOPEC bill, which would allow sovereign states to be sued in federal court
(Photo Credit: Aramco)
“If a price cap were to be imposed on Saudi oil exports, we will not sell oil to any country that imposes a price cap on our supply, and we will reduce oil production, and I would not be surprised if others do the same,” the senior Saudi official said in an interview published by Energy Intelligence.
Bin Salman stressed that price caps – whether imposed on a country or a group of countries – would lead to “individual or collective counter-responses with intolerable consequences in the form of massive volatility and instability.”
In December, the G7, the EU, and Australia imposed a $60 price cap on seaborne cargoes of Russian oil as part of wide-ranging sanctions meant to stifle the Russian economy, causing alarm in oil-producing states.
The Saudi official went on to add that the OPEC+ alliance would uphold significant oil production cuts until the end of the year, saying: “There are those who continue to think we would adjust the agreement … I say they need to wait until Friday 29 December 2023 to demonstrate to them our commitment to the current agreement.”
Elsewhere in the interview, Bin Salman criticized the efforts of US lawmakers to re-introduce the so-called No Oil Producing and Exporting Cartels (NOPEC) bill in congress.
“The NOPEC bill does not recognize the importance of holding spare capacity and the consequences of not holding spare capacity on market stability,” he said, highlighting that the contentious legislation would undermine investments in oil capacity and cause global supply to fall.
If passed, NOPEC would change US antitrust law to revoke the sovereign immunity that protects nations and their oil companies from prosecution.
Tensions have been running high over the past year between Saudi Arabia and the US. These nearly boiled over last October OPEC+ – a bloc of OPEC and non-OPEC oil-producing nations, including Russia – decided to cut oil production levels by two million barrels per day (bpd) despite intense lobbying from the west.
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Credit Suisse shares tank after Saudi backer rules out further assistance
- Shares of embattled bank Credit Suisse hit another all-time low for a second consecutive day.
- Credit Suisse’s biggest backer, Saudi National Bank, has said it won’t provide further financial help for the bank.
- Speaking to CNBC’s Hadley Gamble during a panel session in Riyadh, Saudi Arabia, on Wednesday morning, Credit Suisse Chairman Axel Lehmann declined to comment on whether his firm would need any sort of government assistance in the future.
Shares of Credit Suisse on Wednesday plunged to a fresh all-time low for the second consecutive day after a top investor in the embattled Swiss bank said it would not be able to provide any more cash due to regulatory restrictions.
Trading in the bank’s plummeting stock was halted several times throughout the morning as it fell below 2 Swiss francs ($2.17) for the first time.
Swiss-listed Credit Suisse shares ended the session down 24%, paring some of its earlier losses after dropping more than 30% at one point. The U.S.-traded American depositary receipts of Credit Suisse were last down about 15%.
After European markets closed, Swiss regulators said that Credit Suisse currently meets capital and liquidity requirements and that the Swiss National Bank will provide additional liquidity if necessary.
The share price rout renewed a broader sell-off among European lenders, which were already facing significant market turmoil as a result of the Silicon Valley Bank fallout. Some of the biggest decliners included France’s Societe Generale, Spain’s Banco de Sabadell and Germany’s Commerzbank.
Several Italian banks on Wednesday were also subject to automatic trading stoppages, including UniCredit, FinecoBank and Monte dei Paschi.
Credit Suisse’s largest investor, Saudi National Bank, said it could not provide the Swiss bank with any further financial assistance, according to a Reuters report, sparking the latest leg lower.
“We cannot because we would go above 10%. It’s a regulatory issue,” Saudi National Bank Chairman Ammar Al Khudairy told Reuters on Wednesday. However, he added that SNB is happy with Credit Suisse’s transformation plan and suggested the bank was unlikely to need extra money.
The Saudi National Bank took a 9.9% stake in Credit Suisse last year as part of the Swiss lender’s $4.2 billion capital raise to fund a massive strategic overhaul aimed at improving investment banking performance and addressing a litany of risk and compliance failures.
